A Bethlehem-based firm will soon open a site in Central Pennsylvania to help companies stay productive in the face of disaster.
DBSi hopes to locate in a 22,000-square-foot office facility near Harrisburg before the end of the year. The building will be equipped with desks, computers, faxes, Internet service anything necessary for companies to remain productive during floods, computer shutdowns or a bigger emergency, such as a terrorist attack.
IBM, SunGard and Hewlett Packard dominate the local disasterrecovery market now, said Bill Bachenberg, DBSi's founder and chief executive officer.
But the Central Pennsylvania area is underserved because the closest emergency sites for local companies are in Philadelphia or New Jersey, Bachenberg said.
"That's a long way for employees to go if something happens," he said.
Bachenberg's 23-year-old company has disaster-recovery subscriptions with more than 100 companies. Many of those are pharmaceutical firms, manufacturers or financial-services companies in eastern Pennsylvania, New Jersey and Washington, D.C. About twothirds of those initiated contracts after Sept. 11, 2001.
Industry analysts predict that disaster-recovery firms will grow steadily in the coming years as more companies become aware of how threats of terrorism, computer viruses or regional disasters such as hurricanes or floods can affect their bottom lines.
Legacy Bank contracts with the Bisys Group Inc. for its computer and software issues. That company, in turn, has subcontracted with a disaster-recovery company in Cherry Hill, N.J., should something unexpected occur at the Susquehanna Township-based bank, said George H. Groves, Legacy's chairman and chief executive officer.
During an emergency about 10 to 15 Legacy employees would go to a temporary New Jersey site, Groves said.
"I don't know (DBSi's) marketing plan, but it seems like a viable industry. it would certainly be easier to get to their site than to Philadelphia or New Jersey," Groves said.
Other companies, like Wirehead Business Technologies in New Cumberland, do not have a disaster plan.
"We're going to be one of those lucky companies that never need a disaster plan," joked Wirehead President Andrew Rill. "It's one of those things that would be great to have, but it's easy to ignore."
Rill would consider such a plan for his 20-employee systems integrator company if it were not too costly. Such a plan makes sense for larger companies that would lose significant revenue if they were closed for a few days, he said.
"We're small. We could go anywhere," Rill said.
Companies that hire disaster-recovery firms typically pay a monthly subscription fee, as welt as a disaster declaration fee, which is charged every time a disaster is declared. There are also daily usage fees charged for every day a client uses the facility during a disaster.
Disaster-recovery contracts usually run for a term of 36 to 60 months, and the monthly subscription fees can range from $1,500 to $100,000, depending on the amount of equipment and technical services needed, according to DBSi.
After Sept. 11, more companies requested disaster-recovery sites outside major metropolitan areas, Bachenberg said. He hopes to draw clients from Philadelphia and New York City to his firm's Harrisburg office.
DBSi also intends to increase marketing efforts to mid-size companies - those with $100 million to $500 million in annual revenue - in Central Pennsylvania.
The disaster-recovery industry began in the mid-1970s with the introduction of several computer backup facilities in the Midwest. Since then, about 15 to 20 companies - which generated $3 billion in subscription fees in 2001 - represent the majority of the hotsite providers, according to DBSi. A hotsite is an alternate facility that has computer, telecommunications and infrastructure for business functions.
SunGard and IBM dominate the national industry today Those companies control more than 70 percent of the market in both revenue and subscriber base.
SunGard has 170 hotsites and 10,000 clients throughout the world. Seven out of 10 Fortune 500 companies are within 50 mites of a SunGard facility said Mike Walsh, the company's marketing and communications director.
SunGard's Harrisburg customers would use a 300-seat facility in Philadelphia.
Walsh said most of the company's clients have saved permanent seats at their emergency location, and the company's hotsites have never been 100 percent filled.
The definition of "disaster" varies by client. Some may consider a computer system malfunction an emergency. Others may turn to a hotsite during the threat of a power outage, such as the one that affected New York City on a Friday in August 2003.
"If that event had happened on the weekend, we probably would have had clients use our sites on Monday because they wanted to make sure they had power," Bachenberg said.
The most common disaster for companies today is equipment failure, Bachenberg said.
Once a firm pays for a disaster-recovery subscription, rehearsals for potential emergencies are important. Most companies practice their disaster-recovery plans at the hotsite locations several times a year, said Walsh and Bachenberg.
During the rehearsals, the clients' equipment is duplicated, and companies' information-technology employees ensure they are able to carry on critical business functions at their off-site location.
"A key component of disaster recovery is to rehearse two or three times a year," Bachenberg said.
Both Bachenberg and Walsh declined to name their local clients because of privacy issues.
Recovery costs
Companies that hire disaster-recovery firms typically pay a monthly subscription fee, as well as a disaster declaration fee, which is charged every time a disaster is declared. There are also daily usage fees charged for every day a client uses the facility during a disaster.
Disaster-recovery contracts usually run for a term of 36 to 60 months, and the monthly subscription fees can range from $1,500 to $100,000, depending on the amount of equipment and technical services needed, reports Bethlehem-based DBSi.
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