Companies rethink some IT investments

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

Most of the financial services companies affected most directly by the collapse of the World Trade Center had impressive data recovery and data management systems already in place. Other companies around the world, however, have not prepared themselves for a disaster of this scale and are now turning to data management providers and videoconferencing vendors to solve internal issue raised by the crisis.

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

Customers are flocking to vendors, such as Electronic Data Systems Corp. (EDS), that provide data-hosting and data security services. The company has several clients that had offices in the World Trade Center, none of which lost any of the key information stored in data centers, said Rebecca Whitener, director of privacy services at EDS. Although 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 clients resume at least limited operations.

Since the attack, EDS has seen inquiries for its services increase by about 150 percent, and it is not only companies in the U.S. that are 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 due to the kinds of information they manage, said Yankee Group's Lewis. Companies in other industries, such as energy, manufacturing and health care, probably will look to beef up their data protection abilities, Lewis said.

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 last Tuesday, school leaders were in the midst 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 Center 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 the most protection and how the school should go about making sure those systems stay up and running. Penn State could rely on its geographically diverse computing centers to spread resources and lessen the impact of a disaster on its main campus, but the school is also considering turning to a company such as IBM Corp. for hosting additional backups to those centers, Kellogg said.

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 Ltd. said companies will increasingly turn to remote management and automated backup 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 U.S. sales and services for Hitachi.

Hitachi and EMC Corp. helped keep data loss to a minimum by providing storage products that, for example, automatically begin backing up data to remote centers when they sense temperature changes or power loss in parts of a building. Even following the World Trade Center 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, and now, due to recent events, will take a new look and 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."

In addition to new concern about protecting data, the attacks have 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 videoconferencing tools have seen huge spikes in their product sales as employers try to avoid these disruptions.

Videoconferencing service provider V-Span Inc. saw an increase in demand of between 30 percent and 50 percent immediately following the attacks, and that uptick has been sustained in the days following, 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.

In addition to a combination of limited flights and a fear of flying right now, a lot of large companies have told their employees to stay on the ground, Evans said. "Most enterprises have put a ban on corporate travel," he said. "Some have limited it to essential travel."

South Burlington, Vermont-based Proximity Inc., which has more than 3,500 public videoconferencing rooms around the world, has seen its business more than double since last week., said Bob Kaphan, president of Proximity.

Although most of the current demand is from customers who had a meeting scheduled and weren't willing or able to travel to it, Proximity has also seen an increase in its corporate events business, which brings videoconferencing to large-scale corporate events, Kaphan said.

"Most of the (increase) seems to be from companies that have not used the technology before," Kaphan said. "When things get back to normal, I suspect we will have a larger volume than we've had in the past."

EDS, in Plano, Texas, can be reached at +1-972-403-3945, or at http://www.eds.com/. Hitachi, in Tokyo, can be contacted at +81-3-3258-1111 or http://www.hitachi.co.jp/. V-Span, in King of Prussia, Pennsylvania, can be reached at +1-610-382-1099 or http://www.vspan.com/. Proximity, in South Burlington, Vermont, can be reached at +1-802-264-2900 or http://www.proximity.com/.

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