Title: Will the Life Buoy Be There When You Need It? (Cover Story)
Abstract: Because only a small number of customers are likely to experience a disaster at any given time, hotsite vendors sell the same physical assets and services to many customers, which 'share' the hotsite, thereby reducing the cost. If multiple simultaneous disasters occur, hotsite vendors either make their facilities available on a first-come, first-served or they allocate their capacity among customers. --opinion of Judge Ellen Segal Huvelle, U.S. District Court Judge, Nov. 14, 2001, U.S.A. v. SunGard Data Systems, Inc. et al Jim Allen believes in it yourself disaster recovery. Until he came to Danvers Savings Bank two years ago, Allen, vice-president, technology, had always worked for companies, such as Fidelity Investments, that did the work on their own. When the $724 million-assets savings institution began rethinking its disaster recovery strategy back before Sept. 11, management decided to part ways with the vendor. Allen was relieved. He felt the hotsite had never been given a real test. Further, he felt that Danvers was putting a great deal of stock in something that might not be there when needed--like a life buoy that five people all have their eye on. Services are provided on a first-come, first-served basis, says Allen. So, if more than one client is affected by a disaster at the same time, one of them might be out of luck. A senior official at the bank told Allen that the vendor had said it could handle three companies the size of Danvers at a time. Still, we might be left high and dry, Allen says. We wanted to be better protected. To that end, Danvers Savings bought a new mainframe for its data center and retired its two-year-old mainframe, moving it to space it owned 50 miles away. site is now the company's own hotsite, run entirely in-house, and available for testing or emergency use at Danvers' own decision. Allen is happier now. The more you can do in-house, the better, he says. Musical chairs syndrome Danvers Savings isn't alone in worrying about the availability of shared hotsites. Other bankers have voiced similar concerns with ABA Banking Journal. Both the potential and actual problems related to hotsite availability are due to the shared model of purchasing redundant capability, long a common practice in the industry--mostly due to the prevalence of mainframes in banking, which are costly to mirror--that is, to make redundant. There are reasons to take a closer look, according to Jeffrey M. Kopchik, senior policy analyst in the FDIC Division of Supervision's Technology Branch. Kopchik, part of an interagency team now revamping the examination guidelines for disaster recovery planning, has heard similar instances of what one might call musical chairs syndrome. That did happen, says Kopchik. In some places bankers found they had all signed up with the same disaster recovery firms. Most of the contracts banks signed are based on a first-come, first-served arrangement. He say's he has heard that there were instances in the New York area on Sept. 11 when institutions couldn't obtain services they had contracted for. There are also rumors that some DR clients were still mad about the way they were treated in the wake of the World Trade Center disaster, and have taken the vendors to court. However, no pending lawsuits could be confirmed. Shortage of data The backup sites statistically work, says Carl Faulkner, managing director, Cornerstone Advisors, Inc., Scottsdale, Ariz., But the contracts don't guarantee anything except service on a first-come, first-served basis. Indeed, if one steps back from Sept. 11 and simply tries to get scientific about it, there is a shortage of data about the capacity of the disaster recovery/business continuity industry. No one, not even trade magazines or securities analysts specializing in that industry, appears to track it. …
Publication Year: 2002
Publication Date: 2002-09-01
Language: en
Type: article
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