Business Sees Boom in Recovery Planning
By Nancy Dunne
Published: Financial Times, October 7, 2004
It is eerily as if a miniature
neutron bomb had wiped the 70,000 square feet of office space
free of human presence. Ghosts seem to hover over the empty
cubicles with their desks, telephones, faxes, computers and
empty file cabinets. In fact, the Cervalis business continuity centre is awaiting occupation after a crisis hits Manhattan
or elsewhere in the US.
Before September 11, 2001,
companies had contingency plans to keep operations going in
case of bad weather or power blackouts. But the threat terrorism
now poses to the entire economic system has added urgency to
the movement of back office, continuity and crisis operations
outside Manhattan.
The beautiful Hudson Valley,
which stretches from the wealthy Westchester, New York suburbs
to the state's capital in Albany, has been the beneficiary
of many of these moves. It offers a large stock of ready-wired
buildings, many left by the contraction of International Business
Machines in the early 1990s, with auxiliary power systems and
well water. It also offers a well-trained, educated 1.1m-strong
workforce. The loss of jobs in the telecoms and dotcom crashes
has left an estimated 200,000 underemployed or unemployed.
Driving the resettlement
of contingency operations to the valley has been a push from
regulators for greater back-up capacity, necessary for recovery
and resumption of critical operations in case of serious disruptions.
They have called for geographically disbursed back-up sites
for back-office operations and data centres. Clearing and settlement
organisations were told to be in a position to resume activities
within a business day.
New York City has long
moved its criminals "up the river" for imprisonment.
For decades, city dwellers have been swarming to the suburbs
and beyond into the valley in search of land, safety, greenery
and healthy air. The number of data back-up and disaster recovery
operations which followed up the river is unknown and likely
to remain so. Anthony Campagiorni, president and chief executive
of the Hudson Valley Economic Development Corporation, insists: "They
are discreetly here. This is part of the post-9/11 world. They
don't want you to know where they are." But he has led
the formation of a new consortium of utility, telecommunications
and information technology companies to provide advice to companies
interested in establishing back-up operations.
The centre, run by Cervalis
in a former IBM facility in Wappinger Falls, New York, is an
unmarked, closely-guarded facility, where cameras survey all
movement and security guards are armed. Inside, two dozen engineers
are monitoring or running the information technology operations
on thousands of servers for more than 100 unnamed companies.
Two televisions run constantly
in the control room. One stays fixed on the weather channel,
so engineers can watch for hurricanes and other major storms;
the other is fixed to a cable news channel. A prominent hedge
fund has leased an enclosed area with a conference table with
computers and telephones at the ready in case traders suddenly
arrive.
During the blackout that
affected the north-east US in August 2003, the building never
lost power, says Zack Margolis, vice-president of marketing. "We
never knew there was a blackout. Our systems switched to back-up
power because the network was already unstable two hours before
the blackout."
On average, the industry
is growing between 6 and 9 per cent a year, says Pat Corcoran,
director of strategy and marketing for the IBM Business Continuity
and Recovery Services site in Sterling Forest, New York. IBM's
business is growing even faster, he says. "Everyone is
very coy about the numbers. There are a lot of niche players.
Some specialise in e-mail recovery, or software planning, or
consulting."
IBM launched its service
in 1989. With financial companies its key customer base, its
operations have expanded to 140 countries and 76 data centres.
When Norwegian Cruise
Line got hit by a hurricane, the IBM group came to the rescue,
taking over the company's call centre until the clients were
set up in a temporary facility.
Among the lessons of 9/11
was the importance to business of e-mail communication capacity.
IBM's clients - in trouble and unable to communicate with their
employees or customers - can now go to a specially designed
IBM web site to recover their mail.
In September 2001, the
centre went to "code red" 12 minutes after the first
plane hit the World Trade Center, Mr Corcoran says. Within
minutes it had identified every client within a five-mile radius,
most of them banks, security firms and government agencies.
Many came to work out of the centre or in other IBM recovery
sites. Some stayed for weeks. The company brought therapists
in to help.
On orders from the top,
the unit extended its services to clients of other IBM businesses.
Company volunteers drove in from all over the country, bringing
project management, hardware and software skills. One client,
which had lost its facility, needed space for 2,500 workers.
IBM found a building, gutted and redesigned it, and started
operations a week later.
There have been suggestions
that New York City has been losing population as well as companies
to the Hudson Valley since 9/11. Ann Davis, director of the
bureau of economic research at Marist College in Poughkeepsie,
New York, is dubious. The evidence is not there yet, she says.
Both the city and the valley experienced slower growth rates
after 2000, but the valley is growing faster.
It is leading the rest
of New York state in new job creation. Its unemployment rate
dropped to 4.2 per cent in August, compared with 5.4 per cent
for New York State. New positions have been created in information
technology, finance, and professional and business services.
Morgan Stanley and Nomura Securities are among the financial
firms that have set up back-up trading facilities or data centres.
New York Life is adding 1,000 jobs in the area. Avon is building
a $100m global research and development centre. Sony is investing
$325m in a new IBM semiconductor plant.
In the information age,
the strong presence of a talented workforce, good schools and
transport and environmental progress apparently trump high
taxes. nancydunne@ftnetwork.com
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