Magazine article Risk Management

The Value of Pre-Owned Network Equipment

Magazine article Risk Management

The Value of Pre-Owned Network Equipment

Article excerpt

High-profile, regional catastrophes such as hurricanes and tsunamis are not the only kinds of disasters that companies need to prepare for. They may be the most publicized, but smaller and less dramatic events, such as power outages and equipment failures, can have an equally devastating impact if companies are caught without a plan for safeguarding essential technology systems and mission-critical business processes.

In particular, there is little tolerance for any network downtime or disruption in today's fast-paced business environment. For that reason, most organizations develop and implement strategic plans with variable options, alternate sources and methodical procedures to ensure uninterrupted access to vital corporate information and applications if a disaster strikes.

The Cost and Effects of Downtime

The price for being unprepared can be steep. A recent survey of Fortune 1000 network administrators revealed that more than two-thirds of respondents said their networks could not endure an outage of more than 60 minutes. Most stated they require network uptime of at least 99.96%, meaning no more than three hours of downtime over an entire year.

Yet, according to Infonetics Research, large corporate networks suffer 1.76 outages per month, with most lasting more than 90 minutes. In a 2005 survey of 80 large U.S. companies, Infonetics found an average of over 500 hours of network downtime per year, at a cost of about 4% of each company's revenue. Research from Gartner estimated network downtime costs large corporations across North America $42,000 an hour, with typical operations enduring an average of 105 hours of downtime annually. And on a worldwide scale, in 2000, PriceWaterhouseCoopers estimated network downtime costs the global economy some $1.6 trillion a year--or $51,000 every second.

So why are so many corporate network infrastructures still vulnerable to disasters and downtime? In most cases, the answer is simple: protection is cost-prohibitive. According to Gartner, 24% of companies responding to a 2003 survey admitted the lack of sufficient funds was why they had not implemented a formal disaster recovery plan. An equally harrowing admission: 37% of companies with a plan still lacked the necessary funds for deploying their disaster recovery strategies to even a "satisfactory" level.

In an effort to minimize risk, some organizations will opt for an equipment replacement plan from their network equipment providers. Unfortunately, many primary networking equipment manufacturers and their authorized resellers charge exorbitant premiums for a "network insurance plan," which guarantees expedited delivery of emergency replacement gear. It is not uncommon for manufacturers to charge 15% of a company's total networking equipment purchases each year for this service--a sum beyond many companies' budgetary limits.

For many risk managers, it is becoming increasingly difficult to incorporate costly replacement gear into disaster recovery plans--despite the contradictory internal pressure to maintain heightened disaster preparedness. As a result, they can only protect the touters and switches at the "network core," while equipment at the edge and in remote offices remain vulnerable to the next regional or local calamity.

Eliminating the Other Point of Failure

During the 2004 and 2005 hurricane seasons, scores of network managers learned firsthand about the inherent problems of relying on a sole equipment supplier during times of regional disasters. Top-selling routers and switches were in such demand that inventories were low, forcing equipment providers to redirect gear to top-tier customers while others faltered. Additionally, only the latest generation equipment typically was available, so some companies were forced to conduct in-field upgrades without the luxury of a learning curve--and during times of extreme pressure.

One of the overarching lessons from the regional disasters over the past couple of years is that it pays to have a backup procurement plan to ensure that gear can be readily obtained when needed. …

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