Headlines Provide Reminders on the Importance of Disaster Recovery Planning

By Bob Lund

Speaking Wednesday on ABC TV's Good Morning America, Craig Fugate, head of the Federal Emergency Management Agency said, "We don't always get to pick the next disaster."

Fugate was referring, of course, to the magnitude 5.9 earthquake that shook surprised residents in the Northeast Tuesday, and the strengthening hurricane that could hit the Eastern seaboard this weekend.

For some businesses, these headlines are a wake-up call to get their disaster recovery plans in order. The good news: cloud services make disaster recovery preparations more affordable than ever.

Higher Stakes
Although disaster recovery was once considered an expensive insurance policy for rare but catastrophic events such as earthquakes and hurricanes, enterprises are expanding their plans to address all sources of downtime, including mundane power outages (the number one cause of data loss for small businesses, according to research from Aberdeen Group), application failures (the top cause of data loss for large enterprises), network outages and human error.

And downtime occurs a lot more frequently than most people think: more than two-thirds of large enterprises (69 percent) need to recover data on a weekly or daily basis, Aberdeen Group reports.

With information technology now such a critical part of daily business operations, even brief business disruptions -- which may begin harmlessly, involve only one part of a company, and not appear as a more commonly thought of "disaster" -- can have a significant impact on a business, not to mention its customers. Consider the consequences of a lockbox processor missing bank deposit cut-offs on behalf of its customers. More often than not, it is these "quiet catastrophes" that generate the most significant threat to a business and its brand, according to research from Forrester.

Quite simply, there is less and less tolerance for downtime in a 24x7 economy, warns Forrester's Stephanie Balaouras.

By making disaster recovery planning a priority, operations can protect themselves from disasters big and small. Businesses get it. Improving business continuity and disaster recovery is the No. 1 priority for small and medium-sized businesses and the second-highest priority for large enterprises in 2011, according to research from Forrester. Similarly, AT&T's 2011 business continuity study reveals a trend towards greater emphasis on planning and responding to potential threats.

The problem for many of these companies is that it's hard to make capital investments in disaster recovery capabilities when they are under pressure to cut IT costs.

A New Model
Cloud-based archive and document management services offer a way for businesses to safeguard critical content and protect against a disruption in service, at an affordable, transaction-based price that requires no upfront capital investment or ongoing maintenance contracts. What's more, with some cloud services, businesses can leverage an infrastructure that includes mirrored, geographically dispersed data centers for real-time business continuity and automatic fail-over.

More businesses are recognizing the benefits of incorporating cloud technologies in their disaster recovery planning. A majority (54 percent) of organizations surveyed by AT&T currently use or are considering using cloud services to augment their business continuity and disaster recovery strategies. These businesses recognize that cloud services offer tremendous affordability and functionality for business continuity and disaster recovery planning.

The Bottom Line
Businesses can't pick when they'll be impacted by a disaster. But they can control how their organization plans for, and responds to, these events. Using cloud services, such as those for electronic document management, can be a critical element to preventing a disruption in service, protecting client data, and safeguarding the organization's reputation.

Bob Lund is chairman and CEO of eGistics, Inc., a leading provider of cloud-based document management solutions. Lund can be reached at 214-256-4610 or via blund@egisticsinc.com.

Economic risks of data overload

By Ed Pearce (epearce@egisticsinc.com) of eGistics (http://www.egisticsinc.com/)

When data pours in by the millisecond and the mountain of information builds continuously, professionals inevitably cut corners and go with their 'gut' when making decisions that can impact financial markets, medical treatments or any number of time sensitive matters, according to a new study from Thomson Reuters. The study indicates that when faced with unsorted, unverified "raw" data, 60 percent of decision-makers will make "intuitive" decisions that can lead to poor outcomes.

Many government regulators have flagged increased financial risk-taking, which can be traced in some degree to imperfectly managed data, as a contributor to the recent financial crisis. Moreover, the world is awash with data -- roughly 800 exabytes -- and the velocity of information is increasing, Thomson Reuters says.

The challenge is that the staffing and investment needed to ensure that information and information channels are trusted, reliable and useful is not keeping pace. In fact, it is estimated that the information universe will increase by a factor of 44; the number of managed files by a factor of 67; storage by a factor of 30 but staffing and investment in careful management by a factor of 1.4.

"The solution to data overload is to provide decision makers with what Thomson Reuters calls Intelligent Information: better organized and structured information, rapidly conveyed to the users preferred device," says David Craig, executive vice president and chief strategy officer.

Fortunately, as the Thomson Reuters study notes, the same technological revolution that has resulted in the explosion of information also opens the way to new and improved tools for providing intelligent information: better organized and structured information, rapidly conveyed to the user's preferred device.

"We must use the benefits of the information technology revolution to minimize its risks. This is a joint task that the private sector and governments must closely focus on if we are to avoid systemic crises, in the future, whether we speak of finance, healthcare delivery, international security and a myriad of other areas," comments Craig.

How is your organization managing information overload?

Same-day ACH settlement highlights need for better dispute management tools

By Ed Pearce (epearce@egisticsinc.com)

Last week's announcement by the Federal Reserve Board of posting rules for a new same-day automated clearing house (ACH) service brought the topic front and center. Everyone from industry analysts and bloggers to trade publications and associations have expounded the pros and cons of same-day settlement. But virtually unmentioned in the all the hubbub is the potential for more ACH disputes as a result of accelerated settlement -- a scenario most banks are ill-prepared to manage.

Starting next month, the Federal Reserve Banks will be offering a same-day settlement service for certain ACH debit payments through its FedACH service. FedACH customers may opt-in to the service by completing a participation agreement. The service will be limited to transactions arising from consumer checks converted to ACH and consumer debit transfers initiated over the Internet and phone. Same-day forward debit transfers will post to a financial institution's Federal Reserve account at 5 p.m. eastern time, while same-day return debit transfers will post at 5:30 p.m.

As a result of the faster settlement, banks undoubtedly will see more consumers coming into their branches complaining of unauthorized transactions. The limitations of traditional in-house ACH systems and the strict time constraints and complex processing requirements imposed by NACHA rules and Regulation E already have led to sharp increases in operations expenses and higher charge-offs associated with ACH disputes. A new influx of consumer disputes will require financial institutions to implement a more centralized, more streamlined approach to dispute management.

Several features will be critical:

• Real-time distributed data access to any authorized user, anywhere
• Intuitive search capabilities
• The ability to annotate comments to disputed transactions
• The ability to export data
• Expanded search capabilities
• Filtering capabilities to block and restrict access to certain transactions
• Unlimited data storage

It may be some time before same-day ACH settlement achieves critical mass. But the next generation of consumers will demand it. This means that banks must begin adapting their ACH infrastructure today or risk even higher operations costs, as well as falling behind the competition. And this includes deploying sophisticated solutions to manage the inevitable spike in ACH disputes.

No pennies from heaven: controlling technology costs

GEORGE BAILEY: You don’t happen to have eight thousand bucks on you?

CLARENCE: Oh, no, no. We don’t use money in heaven.

GEORGE BAILEY: Oh, that’s right. I keep forgetting.

Comes in pretty handy down here, bub.

IT’S A WONDERFUL LIFE

By Randy Davis (rdavis@egisticsinc.com)

While lost on Clarence the angel, the need for capital is obvious “down here.” It you are not raising capital, you are preserving it. Whatever is preserved can help manage cash flow or can be used for other purposes. Cost control is one means of preserving capital.

To my way of thinking “cost control” requires at least the following three things:

• Keeping total cost of ownership as low as possible (including maintenance and upgrades)
• Paying for something only once if possible
• Keeping costs predictable yet variable based on current factors

It is difficult if not impossible to achieve 2 and 3 above with traditional software/hardware or do-it-yourself cost models. Hardware and software require on-going maintenance, upgrade and replacement costs. Although maintenance costs may be predictable, they are in fact a perpetual payment protecting the use of hardware and software. Upgrades and replacement costs are not entirely predictable partly because there are simply too many external factors (end of life, advances in technology, merger/acquisition or divestiture, etc.) controlling the timing of their expenditure. As things stand now, technology approaches obsolescence every three years.

(If you don't think this is a hot -- even emotional -- issue, see my blog below, "Putting the kibosh on the soaring software maintenance and upgrade costs.")

As an example of cost requirements, here are the findings of a Global Concepts study on the cost breakdown of an in-house digital archive:

• Explicit base costs (such as servers, communications, disk storage, long-term storage, software, maintenance) are only half the total cost 
• Staffing adds another 40% on top of the base costs 
• Replication (disaster recovery/business continuity) requires an additional 36% above base costs 
• Implementation and Development adds another 24% to base costs

Once you have added all your costs together for a secure and reliable in-house archive, the total cost percentages break down as follows:

Rather than a solution that requires fixed and sunk costs, what would be helpful is a solution with an entirely predictable “pay once” fee structure. A “pay once” fee structure should be the simplest, most predictable and controllable fee structure you can get from any of your vendors – partly because of what is avoided, namely on-going costs for users, hardware, software, and maintenance.

The critical difference between using such a fee-based solution and any other cost structure, is that while all other cost structures require on-going, perpetual costs to keep things going, “pay once” does not. You avoid paying – every day for the life of the solution – for the privilege of using that solution. More importantly, you don't pay for excess capacity that either is waiting to accommodate future requirements or becomes unused because of a contraction in business.

I'm certainly not naive enough to think that a "pay once" fee structure is applicable to all, or even most, hardware, software or services. However, it appears that more and more businesses are demanding such a choice.

What is your experience with fee-based solutions?

The state of storage

By Mark Brousseau (markbrousseau@tawpi.org)

Randy Davis (rdavis@egisticsinc.com) of eGistics, Inc. (www.egisticsinc.com) finds several interesting trends in The 2010 State of Storage Report from Networking Computing.

1. The top planned storage project for 2010 is improved allocation
2. Forty-seven percent of respondents say insufficient storage resources for mission-critical applications is their No. 1 concern
3. Storage area network (SAN) vendors are responding to demands for lower-cost storage
4. Storage virtualization is growing
5. Thin provisioning is catching on
6. There is a significant increase in interest in cloud-based storage

How do these trends reflect your storage strategy?

A welcome cloud during the economic recovery

By Ed Pearce (epearce@egisticsinc.com)

In spite of hopeful signs that the economy is on the mend, the 2010 State of Storage report from Network Computing finds that the fallout from the recession has left IT execs without the resources necessary to store the rising volume of information required to support their business applications.

Nearly half (47 percent) of the respondents to the survey say they have insufficient storage resources for their mission-critical applications, while 30 percent say they have insufficient tools for storage management. Another 30 percent of respondents say they have insufficient storage resources for departmental/individual use. Nineteen percent say they lack staff for their storage requirements.

And -- regardless of economic "green shoots" -- the situation isn't likely to change any time soon: 34 percent of respondents say they have an insufficient storage budget to meet their business demands.

Against this backdrop, it's little wonder that survey respondents are showing increased interest in cloud storage services (34 percent in 2010 versus 19 percent in the 2009 State of Storage report).

With a hosted variable cost storage model, if your business struggles, and your volumes drop, your operations costs will be aligned with your usage, and you won’t pay for a “just-in-case” capital investment. The variable cost model also eliminates the need for capital investment (software licenses and hardware) or maintenance contracts; customers typically are charged a one-time load fee to archive documents. And when an array fills up, or a server must be replaced, it’s your service provider’s problem. Using a thin-client interface, there may not even be software to install, manage or maintain. In addition, variably priced storage solutions can facilitate more effective operations by providing scalability that would be very cost prohibitive in a traditional, licensed in-house system.

CBA Chief Information Officer Michael Harte spoke for many users when he recently told the Committee for Economic Development in Australia that, "I will never implement an internal solution for a common problem that I could procure on subscription across the Web."

With the economic recovery still gaining strength, the trend for 2010 will be the more efficient use of existing IT resources. That should make hosted solutions a welcome cloud during the turnaround.

Putting the kibosh on the soaring software maintenance and upgrade costs

By Randy Davis (rdavis@egisticsinc.com)

Finextra reports that in a recent speech to the Committee for Economic Development in Australia (CEDA), CBA Chief Information Officer Michael Harte lambasted legacy technology vendors for their slow embrace of cloud-based computing and their apparent preference for solutions that lock-in users to a "never-ending spiral" of costly maintenance and upgrades.

"We're saying that we will never buy another data center. We will never buy another rack or server or storage device or network device again," Harte said. "I will never let any organization that I work for get locked into proprietary hardware or software again. I'll never tell my teams in the business that it will be weeks to get them hardware provision. I'll never pay upfront for any infrastructure and certainly would never pay for any, or rent any, infrastructure that I would never use."

Harte concluded: "I will never implement an internal solution for a common problem that I could procure on subscription across the Web."

With increasing demand for cloud-based solutions, combined with a general reluctance to pay hefty upfront capital costs, Harte's comments would seem to reflect growing dissatisfaction with the traditional licensed software model -- and its “never-ending spiral” of ongoing expenses.

Are you as fed-up as Harte?