NEW YORK (CNN/Money) -
In the wake of tragedies like Hurricane Katrina and the devastating terrorist attacks of Sept. 11, 2001; it stands to reason that companies are now examining their disaster plans to figure out how best to recover critical data and keep their businesses up and running.
But that's not necessarily the case, a new survey suggests.
AT&T and the International Association of Emergency Managers surveyed 1,200 businesses from January to August 2005 and found that nearly one-third of U.S. businesses do not have emergency continuity plans in place – up from 25 percent one year ago. (The survey did not break down the data by company size; some experts said that larger and/or publicly traded companies are far more likely to have plans in place than smaller companies.)
The survey also found that two thirds of companies that suffered through a disaster lost business, with 16 percent losing between $100,000 and $500,000 per day and 26 percent saying they did not know how much it cost their company per day.
Business recovery experts are concerned that even in the wake of recent events that crippled networks, many executives still under emphasize business recovery in their plans.
Eric Shepcaro, vice president of business strategy and development for AT&T, said one of the biggest challenges is convincing companies to spend money on a "what if" scenario.
"Companies... view this more as an insurance policy versus a part of their business," he said. "Far too many companies wait until something disastrous occurs, like Katrina or (something else to expose) a major vulnerability in their own business process."
Added Belinda Wilson, executive director of Hewlett-Packard's business continuity services unit, "The number one reason business fails is a lack of senior management commitment and support -- really understanding what would be the impact to a company if it went out of business for four hours."
One company's story
Neal Hennegan, technology director for Covington, La.-based insurance services firm Gilsbar, Inc., has first-hand experience with implementing a disaster recovery plan and said it made a huge difference in getting his firm up and running again.
Hennegan's firm, which employs 350 people, most of whom work out of its headquarters, had hired an independent business continuity consultant that it met with every two weeks. The firm had also retained Sungard Availability Services, which helped the firm implement a plan and conducted drills and rehearsal scenarios a couple of times a year.
The hardest part was getting in touch with other employees during a time when telephone lines, cell phones and Internet connections weren't working, Hennegan said.
"The first two days after the storm were just chaos," he said. "The first time I got in touch with the owner of the company and one other executive was standing on a road at 6 p.m. on Tuesday (after the hurricane hit), trying to find each other amongst the fallen trees," he said.
But Hennegan added that once the executives made the decision to invoke the disaster plan, implementing it was fairly straightforward. While the lack of phone service was an ongoing obstacle, Hennegan said the employees discovered after a couple of days that they could communicate with each other by text messaging.
Hennegan had to drive 70 miles to get a workable phone; he called Sungard, which redirected the company's calls to a temporary call center in Chicago. The company's phone system and Web site were recovered in just a couple of days; the temporary headquarters there were fully operational by Monday, less than a week after the hurricane hit.
Hennegan said that to be able to communicate better with employees in emergencies, his firm has constructed a redundant web site that can be activated in the event of power loss at the company's headquarters, as well as contracting with an external 1-800 phone number provider to be able to divert inbound calls and employee hotline calls to that number if necessary.
Despite the communication issues, however, he said he feels having a plan in place made a huge difference in getting the company back up and running.
"No plan survives a first encounter with a disaster – you do all this planning and whatever happens never follows a scenario," he said. "The process of thinking through it is the whole value. No one got rattled. We all knew we could do it. We all had a clear goal in mind and it worked."
What companies can do
AT&T's Shepcaro said a disaster recovery plan is not a "set it and forget it" undertaking. Companies need to consistently test and revisit their disaster recovery and business continuity plans to reflect the constantly changing nature of their businesses.
Victor Janulaitis, CEO of Park City, Utah-based management consulting firm Janco Associates, said the most common mistakes companies make when it comes to disaster recovery and business continuity plans have to do with some surprisingly common-sense areas.
"You have to make sure (the) back up site has to be in a different power grid," said Janulaitis. "You might have a disaster recovery site across the street -- if you lose the power grid or (telephone access), you are down anyway."
Shepcorn added that he's seen disaster recovery plans in which a potential loss of power was not taken into consideration. He added that having a backup physical location is also critical.
But one of the main factors is personal, HP's Wilson said. "What people don't think about is, any time there is a catastrophic event like an earthquake or 9/11, where people's personal lives and families will be impacted, they may not be rushing into the office to bring up the data. You have to factor that in. The first responsibility is making sure employees' family is all hooked together."
Ultimately, though, the crucial first step is having a plan at all and making sure your company backs up its critical data.
"If you haven't backed up the data, there's not a lot Sungard or any other company can do for you," said David Palermo, vice president of marketing for Sungard Availability Services. "Recovery is about having something to recover. And practice (the scenario)," he added. "You don't want to wait until you have to jump out of an airplane to make sure the parachute works."
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