So it'll never happen to you?



P> The Internet changes everything, so the saying goes, and while most investor attention has been focused on dotcoms, then infrastructure and security,...



P> The Internet changes everything, so the saying goes, and while most investor attention has been focused on dotcoms, then infrastructure and security, business continuity companies have been quietly but effectively building their business too. Results from ICM this week underline the growth in this sector.

Companies such as ICM, IBM and Guardian IT used to be known as disaster recovery specialists and provided large companies (primarily financial institutions) with the peace of mind that if something unexpected took out their computing capability they would step into the breach.

Historically only large companies have signed up, primarily due to the cost and the fact that even having computers down for a day or two would have only a minor impact on smaller enterprises.

It didn't seem to matter that the disaster recovery specialists could point to statistics which "proved" the signing-up fee was a small fraction of the cost of a failure - most IT users adopted a "won't happen to me" approach.

Until the Internet and call centres came along, that is, bringing with them the expectation from customers of instantaneous service. When even a 22-second response time is too long from a Web site, woe betide any company that is out of contact for hours or even days because of a catastrophic computer failure. And these days more and more businesses rely entirely on their IT and telephone systems - without them many simply cannot trade.

It's no surprise, then, that these businesses are seeing contingency plans as a vital element of their strategy.

Two weeks ago an ICM customer, a telesales operation, was hit after a JCB working in the street outside destroyed all the cables into the premises. Although it was 48 hours before the lines were repaired, by invoking the continuity arrangements it was running again within four hours.

During the period it would have otherwise been twiddling its thumbs, the company made £35,000, more than covering the £21,000 cost of the continuity deal.

That said, a survey by the major business continuity firms found that the reason for over 80% of failures which required the recovery contract to be invoked was not fire, flood or JCB damage, but simply hardware or software failure. ICM is unique in the market in that it has both an IT support and business continuity division.

This approach makes sense, as if a support issue becomes so serious that IT operations will be disrupted for a significant length of time, the continuity contract can be invoked quickly and trading resumed. As one IT manager remarked, "Support is for little disasters, continuity is for big ones."

Of course, to compete effectively in this space requires infrastructure, and companies looking to build market share, like ICM, have to invest heavily in datacentres, including both mobile and static relocation sites. ICM's Nottingham site, for example, which officially opens next week, cost about £4m to build and develop.

Ian Mitchell is an IT analyst at stockbroker Beeson Gregory. His opinions should not be construed as investment advice.

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