As Recovery Window Tightens, Developer Opportunities Grow

January 23, 1997

BR As Recovery Window Tightens, Developer Opportunities Grow Data disaster time constraints make 24-hour turnaround critical By Ed McKenna Disaster recovery products and services are becoming critical to large computer systems users as the definition of a disaster changes to reflect tighter deadlines for successful data recoveries. In its recent study of data loss, data recovery specialist Ontrack Data Recovery, Eden Prairie, Minn., observed that

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As Recovery Window Tightens, Developer Opportunities Grow

Data disaster time constraints make 24-hour turnaround critical

By Ed McKenna

Disaster recovery products and services are becoming critical to large computer systems users as the definition of a disaster changes to reflect tighter deadlines for successful data recoveries.

In its recent study of data loss, data recovery specialist Ontrack Data Recovery, Eden Prairie, Minn., observed that both personal and corporate users are storing mission-critical data on their computers and networks. Combined with increasing vulnerability of systems, this trend is putting a great deal of pressure on organizations to devise strategies for potential disasters.

Key variables in devising a recovery plan are time and money. In deciding on a disaster recovery plan, a company must determine whether the loss of revenue or market share from a prolonged systems failure will jeopardize the company's position, said Joseph P. Flach, project manager with Contingency Planning Research, White Plains, N.Y. Increasingly, organizations are finding it difficult to go 24 hours without incurring significant costs.

These developments are spurring changes in the way industry defines a disaster. Previously, a disaster had been defined as any unplanned, extended loss of critical business applications due to lack of computer processing capabilities for more than 48 hours. But SunGard Recovery Services, Wayne, Pa., now says that window has narrowed "to 24 hours or to 12 hours, or in some cases, to 12 minutes."

This new level of vulnerability has prompted more firms to market products and services for protecting or restoring data. For example, MGE UPS Systems Inc., Costa Mesa, Calif., offers power management tools and solutions to guard against data loss from power outages. There are many companies marketing backup and data storage products, such as Procomm Technology, Irvine, Calif., with its RAID subsystems offering more than 1 terabyte of storage capacity. Stac Inc., San Diego, offers its Replica disaster and recovery software, which can back up and replicate a server while users are still on the system.

BMC Software, Houston, offers a three-tier data management system, including backup and recovery, pre- and post-recovery management and enterprisewide management. Since introducing its system in April, backup and recovery sales to the government total about $1 million, said Alfredo Perez, director of BMC's federal business division. Government clients include the Air Force, Federal Aviation Administration, U.S. Postal Service and NASA.

EMC Corp., Hopkinton, Mass., also offers a data management system, as well as a system that performs remote mirroring without intervention from the host computer. Database mirroring allows for instantaneous recovery because the central processing unit writes simultaneously to two databases at two different locations.

In addition, there are companies offering vaccines and treatments for computer viruses, such as McAfee Associates Inc., Santa Clara, Calif., as well as firms providing data recovery, such as Drive Savers Inc., Novato, Calif., and Ontrack. They have clean rooms, emergency 24-hour turnaround for critical data, and in some cases, on-site services. Ontrack became the first data recovery company permitted to offer data recovery services to government agencies on the General Services Administration Schedule and has provided services to numerous government agencies, including the FBI, NASA and the Department of Defense.

While regaining data is important, for many organizations it is more important to get running again as soon as possible. A glance at the costs for down time to some institutions underscores this urgency. Typical outage costs for a retail brokerage, for example, are $6.45 million per hour and for credit card authorization $2.1 million per hour, according to Contingency Planning Research. This does not account for the social impact if, for example, an outage holds up Social Security payments or affects the nation's defense systems or air traffic control.

These organizations are increasingly turning to the full-service or "hot site" disaster recovery companies such as Comdisco Disaster Recovery Services, Rosemont, Ill.; SunGard Recovery Services; and IBM Business Recovery Services, Sterling Forest, N.Y. Together these firms accounted for $549 million of the $594 million of all hot site recovery revenues last year.

Clients pay annual subscriptions for the recovery services, which can run from a few hundred dollars to $500,000 a year for higher-end services. The latter might include financial institutions "with small recovery windows that need to be shadowed and duplicated in our facilities," said Diane Laux, corporate communications manager
at CDRS.

In return, the recovery firms offer many services to protect the customer's system and data. Most important, clients gain access to hot sites at the time of a disaster, where there are pre-installed computers, raised flooring and the necessary telecommunications and networking equipment to continue operations.

A company preferring to furnish its own equipment will get a cold site or a computer ready room that comes with pre-installed wiring and raised floors.

A division of Comdisco Inc., CDRS is the largest disaster recovery company in the United States, posting revenues in 1995 of $267 million. The company had revenues of $318 million for fiscal 1996, which ended in September, and $37 million in pre-tax profits, said Laux, adding that Comdisco expects to double those figures by the end of the decade.

Along with its work in private industry, Comdisco also is providing disaster recovery solutions to federal agencies under a $50 million interagency contract from the General Services Administration that is being managed by GSA's Federal Systems Integration and Management Center, known as FEDSIM. Under the contract, the company is currently serving between 40 and 50 clients, said David Krohmal, FEDSIM program manager, including critical functions of the Social Security Administration, Centers for Disease Control, the National Institutes of Health and the Internal Revenue Service. The contract runs for another two years.

In June 1996, Comdisco formed an alliance with Digital Equipment Corp., Maynard, Mass., and later unveiled a new program for testing services for the year 2000 software problem.

With its new site in Columbia, Md., opened this summer, CDRS now has 30 facilities in the United States. The company also has facilities in England, France and Asia and is about to open a site in Germany. It has about 5,500 workstation positions worldwide and employs 800.

A division of SunGard Data Systems Inc., SunGard Recovery Services posted $162.3 million in revenues in 1995, up from $138.4 million in 1994. It had operating income of $34.9 million, up slightly from $29.2 million in 1994. For the first six months of 1996, the unit's revenues were $90.5 million, up from $77.4 million for the same period in 1994. Last summer, the company bolstered its position in the market, acquiring the recovery assets of Digital Equipment Corp. In 1995, Digital garnered $9.2 million in sales with 150 subscribers.

SunGard's customers are largely from the private sector with only about 5 percent of its clients from state or federal government, said Robert Bronner, senior vice president at SunGard Recovery Services. However, he noted that there is a growing demand for services from state and city governments.

The company has MegaCenters in Atlanta, Chicago, Philadelphia, Warminster, Pa., and Scottsdale, Ariz., offering total recovery services, with support for the client's technology, applications and people. It has 17 smaller MetroCenters designed to help key work groups continue operations after a disaster in the United States and more than 2,000 work stations and eight mobile facilities. The company plans to open a new MetroCenter site in Denver next year and is looking at the possibility of opening facilities in Seattle and Charlotte, N.C. It is also evaluating expansion into Europe, said Bronner.

Posting $120 million in U.S. revenues for 1995 and $150 million for 1996, IBM Business Recovery Services expects to see its earnings grow by 22 percent to 25 percent per year through the end of the decade.

The company has $1.5 billion in business under contract, said John Nevola, manager of service delivery for IBM's Business Recovery Services in North America. IBM has 10,000 subscribers in 62 countries, 111 locations and 4,000 end-user seats. The company has 1,000 employees and 150 consultants.

Only about 1 percent of its clients come from the government, said Nevola, adding that the low number may indirectly indicate the government's preparedness for a
disaster.

The company launched earlier this year an Internet recovery service aimed at recovering Internet applications of its own customers.

Also, it is offering similar services to corporate business users of Icon CMT Corp., New York, under an agreement with the corporate Internet and intranet provider. The company is also working with a public/private coalition, including as charter members the United Nations and the American Management Association International, to promote disaster preparedness and management issues worldwide.

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