When it comes to disaster- recovery systems, investment firms can't afford to be cheapskates, given what's at stake. However, in a cost-conscious environment, it doesn't mean they have to be spendthrifts, either, and squander their firm's resources.
That's why good IT managers are watching their pennies when it comes to disaster recovery and looking for ways to better leverage technology to ensure fail-safe systems.
Wealth-management firms don't have unlimited budgets, when it comes to planning for disasters, says Nicholas Voutsakis, chief technology officer at Glenmede Trust Company in Philadelphia. "The challenge is to be able to manage it on a tight budget."
Voutsakis' disaster-recovery plan, which was beefed up after the events of 9/11, were put to the test when his building lost its power after the July 4th weekend last year.
Employees who arrived at 7:30 a.m. were cast in darkness thanks to a power blackout at the investment-management firm, which has more than $13 billion in assets under management.
Glenmede's systems went into shutdown mode and its staff had to evacuate the 61-story building, grabbing their red disaster-recovery bags as they left. The bags included things like flashlights, maps, phone numbers and copies of the firm's disaster-recovery plan.
The employees met at two pre-arranged sites, armed with cell phones from two different carriers in case one of the telecommunications networks crashed. They also had walkie-talkies.
Company executives declared an emergency and Glenmede's systems, which were backed up using SunGard Availability Services, were restored at Glenmede's offices in four cities. The Philadelphia employees made their way to a SunGard hot site in the city, where 30 workstations were being prepped, and Voutsakis arranged to have phone lines shifted to the hot site. That combined with the other offices gave it 80 workstations, about one-third the normal amount. By 10 a.m., clients were being contacted, and within an hour, the firm was up and running and making trades for clients.
Voutsakis says that events like Y2K and 9/11 woke the firm up to the need to build better business-continuity plans. Voutsakis says Glenmede thought about using its existing offices as backup, but "we didn't feel comfortable." Instead, the firm decided to outsource that task and use SunGard's hot site as the backup site and link to the other offices through it.
There's evidence that suggests outsourcing continuity services, rather than building their own internal-backup sites, can help firms with their total cost of ownership and return on investment. A 2003 study by research firm IDC found firms that outsource their business-continuity needs actually lower their revenue loss, improve the utilization of IT staff and reduce their expenditures.
The report by IDC Analyst David Tapper found firms that don't own their internal back-up structure:
- Had an average revenue loss of only $1.1 million compared to $4.2 million for financial institutions that do.
- Reduced their business-continuity expenditures by more than 80 percent.
- Lowered their IT-capital expenditures by more than 20 percent.
- Were able to improve the use of IT staff and the network to support employees by almost 37 percent.