The Days the Earth Stood Still
Gross, Daniel, Newsweek
Byline: Daniel Gross
With a huff and a puff, mother nature grounded the global economy--and pointed up the need to fix our fragile system.
As the ash cloud emanating from an Icelandic volcano wreaked havoc on global travel, Cisco Systems completed its $3.3 billion acquisition of Tandberg, a Norwegian teleconferencing company. Marthin De Beer, Cisco's senior vice president of emerging technologies, found that his flight from San Jose, Calif., to Oslo, where he was to discuss the deal, had been canceled. So he and Tandberg's CEO, Fredrik Halvorsen, held a virtual press conference using the merged firms' equipment. Since the volcano erupted on April 14, Cisco's TelePresence service (think a very high-end Skype) has boomed. Thanks to cheap and pervasive information technology, TelePresence and similar products from competitors have emerged as a sort of redundant network for business meetings. When face-to-face meetings are impossible, executives can go to a specially equipped conference room, flip a switch, and share bad jokes and PowerPoint presentations.
For business, investing in that kind of redundancy is a form of insurance. And for those in the business of trading information, this insurance comes relatively cheap. They won't divulge the locations, but most major Wall Street firms have backup trading floors in the Northeast--desks, chairs, and computer equipment that lie fallow. If a man-made or natural crisis shuts down their Manhattan headquarters, workers can show up and start trading derivatives. Google says, "Every action you take in Gmail is simultaneously replicated in two data centers at once." If one fails, the user won't experience a disruption. A company spokesman says Google has put a lot of thought into the "geographic diversification" of data-center site selections, so that if one area of the globe is affected by a disaster, traffic can be routed to another. And with the rise of cloud computing, everyone can have a backup network.
But as the global economy learned last week, it's much harder--and in some instances nearly impossible--to build redundancy into the vital networks that now move people, goods, and services around the world. The same technology-abetted forces that spur globalization and efficiency have left the world economy particularly susceptible to disruptions.
The International Air Travel Association reported that airlines lost $1.7 billion due to the shutdowns in Europe. But disrupted business travel and tourism (this writer's family vacation to Paris was buried in volcanic ash) are only the tip of the iceberg.
A hundred years ago, even 30 years ago, an eruption from Iceland wouldn't have affected menus in Florence or the ability of autoworkers in Tennessee to assemble cars. But things have changed. …