Disaster-recovery plans needed for all types of businesses

This article originally appeared in the Central New York Business Journal on Jan. 5, 2007. It was written by Paige Palmateer.

Several years ago, local insurance agency Haylor, Freyer & Coon, Inc. was given 30 days to find new phone service after Telergy, Inc., its phone-service provider, went out of business.

"We were able to find another phone provider, but having disaster-recovery service would have really made that time less stressful," says Cyndy Smith, vice president of technology at Haylor, Freyer & Coon.

Subsequently, the agency has spent the last two years creating a disaster-recovery plan.

"It is a really time-consuming process, but definitely worth the effort," Smith explains.

Haylor, Freyer & Coon currently has the tools to resolve business interruptions. The agency's data is backed-up remotely and off-site. A third party will provide emergency telephone support via the Internet and redirect e-mails if the servers go down.

However, according to Smith, the plan was missing an integral piece: What should the agency do to house employees and service customers if headquarters at 231 Salina Meadows Parkway was lost?

The answer: become a member of Agility Recovery Solutions, Inc., a company specializing in disaster-recovery and business-continuity services for small and mid-size businesses nationwide. Companies that contract with Agility receive access to services including disaster-recovery plan formation, mobile-unit use, and telephone capability.

"Agility can come in with a mobile unit and satellite services, set up in the parking lot, and provide a cool and experienced head during the disaster situation," Smith says. "Having that voice of reason during a difficult time is very beneficial to us."

Haylor, Freyer & Coon became a member of Agility two months ago. Smith encourages other businesses to formulate disaster-recovery plans, though she says becoming a member of Agility doesn't make the plan complete.

"We are still putting together plans for employees and testing scenarios," Smith says. "What you don't prepare for is usually what happens."

Haylor, Freyer & Coon is a privately held insurance agency, employing 250 people in 10 locations across Central New York.

Business interruption is especially damaging to insurance companies during a regional disaster, says Robert Boyd, president and CEO of Agility Recovery Services, based in Charlotte, N.C.

"People expect that their insurance agency will be open and ready to help them," Boyd says. "The insurance company might suffer from that same event, but if they are a member of Agility, we will have them open to customers in 48 hours."

AT&T statistics have reported that if a business suffers an interruption and doesn't have a plan to recover, 80 percent of those businesses won't exist within two years, according to Boyd.

"A month is too late to recover because customers have already gone elsewhere," he adds. "We guarantee to have your business up and running in 48 hours."

Misconceptions

Agility reports that only 25 percent of nationwide businesses have a recovery plan. Most of these plans consist of backing up data, which doesn't keep a business running after a disaster.

Boyd says that the hurricanes of 2005, especially Hurricane Katrina, made businesses realize that they needed to develop a disaster plan.

"You can't just work off cell phones and buy more computers if something happens," he explains. "If the disaster is a regional event, finding those things becomes increasingly difficult."

Boyd also says that just backing up data isn't good enough. Businesses need to consider how and where the data will be stored.

"You have to have a plan," Boyd says. "Back up your tapes and take them home, or store them online, but make sure you can access the data when you need to."

Businesses should also consider having a secondary site to work in if something should happen to the main office. However, taking headquarters employees to a branch office will most likely strain resources.

"We had a New Orleans-based client try to bring his employees to his second location in Baton Rouge," Boyd says. "There was obviously no room so Agility brought mobile units in to resolve the space and systems issue."

Boyd says having business-interruption and businesscontinuity insurance is good, but not enough to recover from a disaster.

"Having that insurance only provides funds and lost revenue, it doesn't help the business re-open or find a new location or find fuel," he says.

Lastly, though some companies hire a team and make a disaster-recovery plan, they don't test it. Actually going through and testing assumptions at least once a year is critical to the success of plans, Boyd says.

"Katrina clients thought they could recover in their parking lots, but that wasn't possible," he explains. "Test your plans and see if your assumptions break down."

Plans should be stored safely off-site or hosted electronically by a third party.

Suggestions

A company with up to 200 employees can become a member of Agility Recovery Services for as little as $250 a month. The cost of membership increases dependery on how much technology (computers an( servers) a company needs to recover from business interruptions.

Ninety percent of Agility's member pay $250 monthly. Clients that call Agility are billed for any out-of-pocket expense or "incurred costs," according to Boyd.

"The client doesn't pay for things until they actually need them," Boyd says. "For example, if we have to send a client a new server, then we send them the freight bill and that is the only thing they pay."

Suffering an interruption to business is devastating for most companies. Boy encourages businesses to assess their location risks: Do you live in a hurricane or earthquake zone? Is your business locate next to a nuclear power plant or a railroad line?

Once a business has assessed its situation, it can adapt a disaster-recovery plan to fit the circumstances.

Secondly, Boyd says to identify critical business functions that need to be completed despite a disaster.

"You know you have to do payroll and accounts receivable," he says. "Manufacturing might not be occurring, but finances, customer service, and sales are important."

Companies should also consider personnel loss: What happens if the only person who knows how to do payroll is unavailable?

Thirdly, businesses should examine their supply chain, Boyd says. If your partner goes down, will it affect your business just as badly as if you went down?

The appointment of a crisis manager is an important step in the formation of a business-recovery plan. This individual should determine how everyone will leave the building safely, in addition to other concerns.

"At the time of the disaster, if there are too many people trying to make decisions, nothing will be done," Boyd says.

Additionally, though most companies say their employees are their most important asset, very few companies have a plan for their people. Creating a communication plan is essential. If cell phones don't work and there is no access to land lines, how will you connect to staff, clients, and vendors? Boyd suggests having an on-line phone tree or community voicemail box. He also says that businesses should try to have four contacts for all employees.

"The sooner you can locate employees and let customers know you are in business, the easier it is to mitigate the consequences of the damage," Boyd adds.

Companies should assemble an emergency kit including: a notary stamp, flashlight, special forms, and other key items. In the event of a disaster, having an emergency kit stored off site can be extremely helpful.

Boyd also recommends reviewing insurance coverage.

"People think insurance covers everything, but it has a lot of exclusions," he says. "Sit down with your insurance agent and make sure you are covered."

Lastly and most importantly, Boyd advises the testing of a company's plan to make sure the restoration and recovery of communications goes smoothly.

"Every day we support our clients in mock disaster tests," Boyd says. "It is an important part of the recovery plan. We do 400 a year, almost a client a day."

Boyd adds that implementing his suggestions isn't hard, only time-consuming.

"It takes diligence to create a plan," he explains. "Part of our standard offering is helping clients with all these issues."

Agility Recovery Services has rescued three clients in New York this year: an insurance company in November; the snowstorm-impacted H.R. Keller & Co., Inc. in Buffalo, and a Long Island-based company that needed a new power system.

About Agility

General Electric (GE) founded Agility Recovery Services in 1988 to act as disaster-recovery provider. Agility sold computers and mobile units to IBM and SunGard Data Systems. IBM and Sungard utilized the products to help large Fortune-2000 businesses recover from interruptions.

"Companies like New York Life used to pay $1 million a month for these services," Boyd explains. "They might not know Agility was in the background helping, but we would provide communications, or space, or power."

Today, Agility has restructured its business plan to provide its services to midsized and smaller businesses, six million of which are located in North America, Boyd says.

Greenwich, Conn.-based Generation Partners, a privateinvestment firm, purchased Agility from GE in 2002. Boyd was hired in 2004 as part of a new management team.

Agility currently employs 70 people: 20 in Toronto, 20 in Charlotte, and 10 in Atlanta. Remaining employees are spread throughout North America, along with 100 locations in which Agility stores its mobile units.

Agility houses the majority of its computer components in Toronto and Atlanta.

The company has 80 to 100 clients in New York State, including insurance agencies, banks, law firms, medical facilities, schools, and manufacturing plants. Agility is currently signing new clients at a rate of 100 a month nationwide, Boyd says.

"Clients want us to be that logistical quarterback for them," he concludes.