from the front line: Insure Your E-Store

As part of my organizations recent merger, resulting in the creation of a fourbillion-dollar/year entity, I was asked to provide a comprehensive Disaster Recovery Plan.This was my first foray into the field of providing backup for a 200-person company, andwas a very eye opening experience.

I quickly discovered, through inquiries of my peers, that there were three majorplayers in the Disaster Recovery (DR) arena. After having submitted my Request for PriceQuotation to all three, I was amazed to find that there were major differences in theservices, and pricing, among the submitted quotes.

I would have thought that all three would be fairly close in the submitted quotations,due to the specs being identical, and relatively straightforward. After spending a fairamount of time in creating apples-to-apples comparisons, I thought it worthwhile lettingthe readership in on some of the knowledge that I gained as a result of my experiences.The following list of proposed services represents those areas that had the widest gaps ofcost, response time, and additional fees.

  • Access to DR facility varied from Immediate to ‘within 24 hours.’
  • Declaration fee (the cost to the insured to declare a disaster) varied from $3,900 to $16,000.
  • Cost of Mobile Data centers varied from included in the monthly premium, to being an additional charge.
  • Ability to conduct a ‘live’ test in the Mobile Data Center varied from ‘testable’ to outsourced and ‘not testable’.
  • Internet access ranged from 'included' to 'extra charge'.
  • Daily charge for Recovery facilities spanned from $900+/ day to $6,000+ / day.
  • Limitations on liability ranged from unlimited Direct Damages to limited.

Even though the differences in charges are not enormous, if you start factoring in thenumber of days you might have to utilize the DR service, they can begin to add up quickly.

I calculated, from the highest to lowest quote, with the disaster occurring two yearsafter my ‘insurance’ started, lasting for 15 days, and came up with thefollowing:

Monthly fee (24 months) Lowest $ 76,320 Highest $ 110,400 Difference $ 34,080
Declaration fee Lowest $ 3600 Highest $ 16,000 Difference $ 12,400
Daily charge (15 days) Lowest $ 13,500 Highest $ 90,000 Difference $ 76,500
Total difference $122,980

What amazed me the most was the fact that the highest quote I received gave me theleast coverage.

In addition to the monthly premiums, and other ‘disaster ‘ related fees, youshould investigate the ‘Disaster Plan’ consulting services offered by thesefirms. Simply put, all three of these DR organizations offer a service consisting ofvisiting your site, interviewing key employees, and preparing a complete printed planwhich would be put into effect at such time as a disaster occurred. The consultingengagements normally are priced in the $10,000 to $ 30,000 range. In addition, there aresoftware/internet programs offered to assist the customer in keeping their hardware andsoftware configuration up to date.

At an average monthly premium of $3500, I feel that this is ‘cheap’insurance, considering what the monetary impact on your firm would be if the entire IToperation was subject to a major disaster.

P.S. If you also have responsibility for your voice communications, check out theavailability of similar recovery services offering temporary access to portable PBXsystems.

Bob Lewis is VP of IT at the FoodService Purchasing Cooperative Inc. (Louisville, Ky.). He can be reached at bob_lewis@fspc.com.