How to Stay Afloat

WTC disaster shows need to plan for backup work space.

On Wall Street, a week after the collapse of the World Trade Center towers, it seemed almost like business as usual. Traders returned to their trading desks and logged on to trading systems that, because of well-executed disaster recovery plans, in most cases returned online with no losses of data.

Behind the scenes, however, it was anything but business as usual. Besides dealing with the horrifying loss of life, many companies in and around the WTC—companies such as Lehman Brothers Holdings Inc. and Aon Corp.—were forced to scramble to find the work space, desktop computers, network access and other essentials needed to resume operations. They crowded into hotels and even sought help from competitors. A few lucky ones were able to send employees back to work at standby recovery sites arranged long before the attacks.

The WTC disaster shed a harsh new light on many things, among them the often-overlooked need for companies to include alternative work space in disaster planning.

While most companies planning for business continuity traditionally concentrate first on the recovery of data and systems, now more than ever they must also make sure they plan for providing their most critical employees with alternate ways and places to work. That means deciding where to find additional work space, prioritizing critical business functions and employees, planning how theyll communicate with employees during and immediately after an emergency, and equipping employees to work remotely.

Getting employees back to work quickly after a disaster can mean the difference between staying in business and failing. Two out of five businesses that are struck by a disaster will cease operations within five years, according to Gartner Inc., of Stamford, Conn. Too many have yet to get prepared. Gartner also found that 60 percent of companies dont have adequate business continuity plans to begin with, let alone procedures for alternative work space.

"Its important to have computers up and running. Theyre a key tool," said Michael Mayhall, director of business continuity planning at Nestlé USA, a division of Nestlé S.A., of Vevey, Switzerland. "But a computer running without people is useless."

Theres no shortage of service providers willing to help companies find work space in case of a disaster. The services divisions of major IT vendors such as IBM, Compaq Computer Corp. and Hewlett-Packard Co., offer work space recovery options as part of their overall business continuity and disaster recovery services. So do the services from more specialized vendors such as Comdisco Inc., SunGard Data Systems Inc. and Rental Systems Inc., known as Rentsys.

Most commonly, service providers offer work space at the same sites they use to house backup data centers. Along with the physical space, they provide equipment such as desktop computers, LANs and business telephones. With the desktops, for instance, the customers IT department either configures them itself or contracts with the provider to do it by regularly providing updated mirrors of the standard desktop.

Using a providers space, though, isnt the only outsourcing option. Providers such as Rentsys offer mobile work space units that can travel to a customers site. The company also rents out desktops, servers and other hardware in emergencies.

Work space recovery services are typically priced either by the number of seats required or negotiated as a flat fee as part of an overall business continuity deal. The cost of a contract for a full range of business continuity services that include work space can reach as high as $200,000 per month, providers such as HP and Compaq said.

One of the first questions that enterprises will have to answer is whether to use outsourced alternative work space services or arrange for alternative space on their own, either from within their facilities or by finding a local hotel or other operation that can provide it on short notice. The answer often depends on how distributed a companys operations are, to what extent that space can quickly be transformed for displaced workers and how many workers it plans to relocate, experts say. A service provider is often the best fit, for example, when a companys operations are concentrated in a single geographic area with few office space alternatives nearby.

When Boston-based Pioneer Investment Management Inc. began searching for recovery space in 1992, for instance, it turned to providers because its operations were concentrated in one downtown skyscraper. Contracting for space from a provider made the most economic sense for Pioneer, compared with leasing alternative space on its own, said Michael Cady, assistant vice president of business continuity for the mutual fund company.

Pioneer initially contracted with a competitor, Boston Financial Data Services Inc., for use of call center space for about 50 people at the companys Quincy, Mass., location. In 1994, it added space for 75 more seats by working with SunGard. Today, Pioneer has plans to accommodate a total of about 225 employees out of about 800 between the providers, Cady said.

Other companies—particularly those with highly distributed operations—however, dont want to rely on outside providers. Business continuity plans at FedEx Corp., in Memphis, Tenn., for example, call for employees affected by a disaster to be sent to different FedEx locations or temporarily assigned new tasks. When the WTC attacks shut down FedEx hub operations in Newark, N.J., for four days, employees immediately were instructed to reroute packages to other FedEx airstrips in Memphis, Dallas and Indianapolis. Employees not directly responsible for the transport of packages were sent home and told to communicate with the office via mobile phones, two-way pagers or e-mail.

Enterprises should be aware, experts say, that using outsourcers doesnt guarantee that there will always be enough room if disaster strikes. The WTC calamity strained all providers of recovery space because they dont plan for such a massive, sudden loss of office space but instead expect that only a few clients in any given region will need space at once, said Colin Rankine, an analyst at Giga Information Group Inc., in Norwalk, Conn. Rankine estimated that there are only a few thousand commercial recovery seats usually available throughout North America.

"Nobody ever thought wed need 75,000 work spaces at once, and, hopefully, we never will again," Rankine said.

While there were no reports of enterprises paying for alternative space being turned away following the Sept. 11 disaster, service providers themselves in some cases were forced to scramble. An IBM spokesman, for example, said the Armonk, N.Y., company used space normally used for internal IBM operations.

Of course, finding backup office space doesnt have to be an either-or proposition. Carlson Companies Inc. has plans to use its internal resources and space from providers to keep as many as three-quarters of its 5,000 employees from its Minneapolis headquarters campus working. Internally, it has rewired and configured the conference rooms at its three buildings so they can be used as recovery space if one or more of the buildings werent accessible, said Chuck Wachter, manager of disaster recovery and business continuity at the travel, hospitality and marketing company.

It can also tap into one of its core lines of business: hotels. Carlson owns a Country Inns & Suites across a highway from the campus and has plans to convert its rooms into office space for 400 people in case of a disaster. To help meet the increased demand for more PCs in the conference rooms and hotel, Carlson has contracted for 1,000 desktops from Rentsys, which would be drop-shipped to the Carlson sites.

But Carlson hasnt stopped there. It also has the option of using Rentsys to deploy mobile units to Minneapolis or one of its other locations. Just in case that werent enough, Carlson can relocate critical employees to a SunGard recovery facility in the Minneapolis area, Wachter said.