Companies rethink IT investments

When the worst-case scenario became a reality with last week's terrorist attacks in the US, organisations of all kinds were...

When the worst-case scenario became a reality with last week's terrorist attacks in the US, organisations of all kinds were forced to re-evaluate how they run their IT shops, providing a possible boon for several sectors of the IT industry.

The majority of the financial services companies affected most directly by the collapse of the World Trade Centre had impressive data recovery and data management systems already in place.

But other companies around the world have not prepared themselves for a disaster of this scale, and are now turning to data management providers and video-conferencing vendors to solve internal issues raised by the crisis.

Carrie Lewis, an analyst at Yankee Group, said: "Now that companies know what the worst-case scenario is, they are asking themselves, 'could we survive this?' Almost every company out there is rethinking what they are doing."

Customers are flocking to vendors that provide data-hosting and data security services, such as Electronic Data Systems (EDS). Several of the company's clients had offices in the World Trade Centre, but none lost any of their key information stored in data centres, said Rebecca Whitener, director of privacy services at EDS.

But while customers' data was secure, they did require massive relocation help from EDS, with the company bringing in fleets of PCs, servers, storage and technicians to help them resume at least limited operations.

Since the attack, EDS has seen inquiries for its services increase by about 150%, and it is not just companies in the US seeking help. Potential customers in South America, Asia and Europe all have expressed a new interest in outside help to survive a disaster, Whitener said.

Financial services companies have been reluctant to outsource many IT functions in the past and will probably continue along that path because of the kinds of information they manage, said Yankee Group's Lewis. But companies in other industries - such as energy, manufacturing and health care - probably will look to strengthen their data protection abilities.

Penn State University manages information for tens of thousands of users and had not designed a full-scale data protection plan for this type of crisis, but may now turn to outsourcing.

When the terrorist strikes occurred on 11 September, school leaders were in the middle of a meeting to discuss what would happen if students, for example, were to take over a computer science building.

"The conversation went from talk about what was possible or hypothetical to a very serious discussion about what would happen if someone bombed the building," said Steve Kellogg, director of the Advanced Information Technologies Centre at Penn State. "It was a sobering thing. The meeting was a heck of a lot more serious."

University administrators are now setting priorities concerning which systems need most protection, and how schools should go about making sure those systems stay up and running.

Like EDS, several storage companies proved themselves during the crisis, according to analysts, and those vendors expect to see an increase in their business over the next few months. Hitachi said companies would increasingly turn to remote management and automated back-up features in high-end storage units as a form of insurance against disasters.

"I think we will really start to see demand pick up in about 60 days from now, when the dust settles and everyone focuses on how we can do things better," said Scott Genereux, vice-president of US sales and services for Hitachi.

Hitachi and EMC helped keep data loss to a minimum by providing storage products that, for example, automatically begin backing up data to remote centres when they sense temperature changes or power loss in parts of a building. Even following the World Trade Centre attacks, these systems were able to back up data to a remote facility before the buildings collapsed, the vendors said.

Hitachi looks for security companies, airlines, government agencies and financial institutions to upgrade their storage systems in the coming months. Some companies may not have assessed their storage environments in some time, but now will be taking a new look to find better and more cost-effective options for data protection.

"Storage has gotten to the point where it financially makes sense to copy and mirror data," Genereux said. "I think we will see companies taking their infrastructure to the next level in the next month or so."

The terrorist attacks have also raised new concerns about business travel. The new complications of air travel include the inconvenience of tighter security procedures, reduced flight schedules and some employees' fear of flying. Companies offering video-conferencing tools have seen huge increases in their product sales as employers try to avoid these disruptions.

Video-conferencing service provider V-Span saw an increase in demand of between 30% and 50% immediately following the attacks, an upturn that has continued, said Mark Evans, director of marketing for V-Span.

"In 1991, the industry in general experienced a similar spike during the Gulf War, when there was a fear of flying overseas," he said. "At that time there was a real boost in hardware sales." V-Span, which provides conference connectivity services, has experienced "a boost across the board," this time, Evans said.

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