Washington Technology Online Disaster Recorery

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Disaster Recovery
Is a Booming Business

Worldwide spending on disaster recovery could grow
20 percent annually through the end of the century

By Ed McKenna


Industry and government computer users are becoming increasingly vulnerable to disastrous system breakdowns as they boost their use of local area networks and the Internet for their mission-critical operations. A natural disaster, such as last summer's Hurricane Fran, a computer virus or a power outage could shut down an organization and inflict costs that endanger its future. These threats and their consequences are spurring spending on disaster recovery and sparking an expansion in that industry.

Pegged at about $3.1 billion in 1995, worldwide recovery spending is estimated to grow 20 percent annually through the end of the century, according to G2 Research Inc., Mountain View, Calif. This growing market is bolstering the earnings of industry veterans and driving development of new products.

"Success in data warehousing breeds success. It attracts users and more demand, which requires more storage. These don't amount to percentage issues; these are orders of magnitude issues."

-Mitch Seigle
EMC Corp.

Comdisco Disaster Recovery Services, Rosemont, Ill., a leading supplier that posted $267 million in revenues in 1995, had earnings of $318 million in 1996. Smaller companies are also finding opportunities. Specializing in extracting data from damaged drives, Ontrack Data Recovery, Eden Prairie, Minn., saw its revenues climb from $5 million in 1992 to $18.6 million in 1996.

The recovery industry is offering several preventive measures and recovery solutions, including advanced backup and recovery systems capable of storing terabytes of data and allowing access to that information in a few milliseconds. Others are electronic televaulting or mirroring, which allows for almost instantaneous recording of backup data at remote locations. In some cases, vendors provide cold and hot sites - alternative places where a company can continue its business operations as its home system is fixed.

Armed with these advanced technologies, companies are also taking on more complex challenges. Aside from the inevitable human errors and natural disasters, they are facing new threats from terrorism and computer viruses, as well as the problems inherent in the Internet. According to many observers, recovery experts' greatest challenge is restoring the network.

Meanwhile, infotech managers are battling for increased funding to upgrade their own organizations' disaster recovery efforts. Many managers expressed concerns about the lack of focus by their organizations on disaster recovery in an IBM survey of 226 business recovery managers conducted last summer. They also expressed concerns about determining what technologies will be needed to address future threats.

The survey also showed that fewer than 10 percent of the companies represented in the survey had plans to deal with Internet problems despite a surge in its use for business transactions. IBM has launched its own program offering recovery plans for the Internet. "Keeping up with recovery technology continues to be a leading concern for many companies," noted John Nevola, manager of service delivery for IBM Business Recovery Services in North America, Sterling Forest, N.Y.

In addition, less than half of the respondents said their chief executives were familiar with their companies' recovery plans, portending an uphill battle for many of these managers in their attempts to gain additional funding to bolster their recovery plans.

Imposing some of the largest costs on the users and posing the greatest technical challenge to the disaster recovery firms is the increased use of distributed systems and local area networks, according to Joseph P. Flach, project manager with Contingency Planning Research, White Plains, N.Y.

"The real challenge is to recover the original network; recovering the hardware is easy," he said. It is the greatest deficiency in most companies' plans, he added, noting most end at hardware recovery and do not continue on to the end user.

In its 1995 Vulnerability Index, Comdisco reported the exponential growth of LANs. While they are "housing a high level of mission-critical applications," Comdisco noted that "up to half of the data residing on these LANs are unprotected," prompting the report to conclude that "disaster recovery plans are not keeping pace with the growth of these networks." As the use of LANs continues to grow, most observers see little reason to believe this finding will change in the company's 1997 Vulnerability Index.

Comdisco's study shows that financial services have taken the greatest strides to protect themselves against data center or mainframe and network disasters. While it reduced its vulnerability to LAN breakdowns since 1993, the public sector's vulnerability index, however, is on the high end of the spectrum on both counts but made progress in the LAN area over its standing in 1993. The government also ranks low in use of full-service disaster recovery providers, with SunGard Disaster Recovery Services, Wayne, Pa., the second largest of these firms, pegging its government clients at about 5 percent and IBM at 1 percent. Comdisco is now doing work for about 40 government clients - the only provider to have made inroads in the government market.

The systems themselves are under threat from a varied and growing list of sources. Ontrack Data Recovery reports that in its experience, hardware or system malfunction and human error have accounted for 76 percent of all data loss. Ontrack reported the leading cause of system breakdown as electrical outages - a finding reflected in most other industry studies.

Regardless of the external sources, some of the hardware shortcomings are intrinsic to the increased complexity of the systems. "As part of this advancing technology, the drive tolerance [which is the distance between the read/write head and the platter where data is stored] is steadily decreasing," Ontrack said in its report on data loss, released in September 1996. "A slight nudge, a power surge or a contaminant introduced into the drive may cause the head to touch the platter, resulting in a head crash."

The company also found frequent failures of backup and recovery systems. "They fail because systems are designed with a set of requirements that rely on a combination of technology and human intervention for success," according to the report.

Although natural disasters rank last on Ontrack's list, the effects of such occurrences can be the most costly and damaging as reflected in data from the "hot site" industry.

Hurricanes, floods and earthquakes have spurred the largest number of hot site recoveries. In 1992 and 1993, Hurricane Andrew and flooding in the Midwest and in Chicago sparked a surge in the use of disaster recovery hot sites, according to Contingency Planning Research. For those two years, the number of hot site disasters was 235 - 132 occurred in 1992, which is more than double the amount in any of the prior 10 years.

While often associated with hardware failures, power failures "can be caused by external sources such as hurricanes," added Robert Bronner, senior vice president at SunGard, noting that after Hurricane Fran, SunGard was called to handle several power failures, and it used diesel generators to get the equipment running again, he said.

Between 1992 and 1996, IBM Business Recovery Services provided four of the largest simultaneous hot site recoveries, noted Nevola - 39 for Hurricane Erin and 17 each for Hurricane Andrew, the Northridge earthquake in Southern California and Hurricane Opal. The company also had 12 hot site recoveries resulting from the earthquake in Kobe, Japan.

The Chicago River flood of 1992 generated 18 simultaneous hot site recoveries for Comdisco, said Diane Laux, corporate communications manager at Comdisco Disaster Recovery Services.

The bombing of the World Trade Center in 1993 introduced another key menace to the security of systems - a threat that was underscored two years later with the destruction of the Murrah Federal Building in Oklahoma City.

"We had six recoveries in the World Trade Center," said Bronner, noting that SunGard now counsels clients on terrorist threats through planning, publications and seminars. After the World Trade Center bombing, Comdisco had 500 employees from different clients affected by the event in its hot site facilities, said Laux, noting that Comdisco had eight recoveries resulting from the event.

Responding to the Oklahoma City bombing, IBM worked with some of its partners involved in construction to rebuild the federal courthouse across the street from the Murrah building, said Nevola.

The recovery firms are encountering other forms of terrorism. "One starting to crop up is employee terrorism with layoffs and industry downsizing," said Bronner, noting this could involve a fire or sabotage. Also, there is information warfare with electronic attacks from outside the system. Perpetrated by part of the hacker culture, these attacks are aimed at disrupting the flow of commerce, said Nevola.


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