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October 25, 2007

Evaluating Hot-Sites and Contracts

Written by  William Langendoefer
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The evaluation of hot-site backup processing locations, processing and contract terms and conditions is perhaps one of the most crucial aspects of completing a Disaster Recovery plan. Hot-site evaluation and selection often suffers the lowest priority of any of the contingency planning efforts.

Many individuals, groups or teams have spent countless hours identifying the crucial processing requirements of your company. All critical files and programs have been identified and documented. Fail-safe techniques have been implemented. Off site storage of critical files backup have been contracted and utilized. There remains one major task to complete the contingency plan: the selection of an appropriate place to process data and carry on the company business in the event of a major interruption or disaster. This effort may determine the corporate viability (survival) of your company.

Selecting a hot-site is one of the final steps in the contingency planning process. Let’s first define a hot-site. A hot-site is a remotely located computer facility that has business and computer systems of sufficient capacity to meet your companies‘ business needs for an extended period.

When evaluating or selecting a hot-site there are several factors to consider. First, there is location. The remote hot-site should be sufficiently distant to insure processing capability should an area or regional disaster occur. In the central United States, for example a company in St. Louis would probably not want to select a hot-site that is also built in close proximity to the New Madrid faultline.

A hot-site should be selected that will prevent abnormal or excessive travel and transportation requirements. After all, you may have to transport your whole company to the hot-site depending upon the level of disaster. If access and travel requirements present a problem you may need to weigh the high cost of access and transportation against a more accessible but perhaps more expensive hot-site.

Transportation of critical files and documents to a hot-site should be contracted to a commercial carrier. They are insured and the nature of the goods being transported are generally less known. In addition, experience of the employees regarding the protection of critical items is much greater than most company’s delivery personnel.
An important thing to remember is that time and the expedient utilization of all available personnel is critical to continued operation and must be well planned.

Capacity of the hot-site is another critical issue in the evaluation and selection process. There is little value in selecting a hot-site that has only a portion of the business and computer systems that your company will need to continue operation. In addition to computer resources the hot-site must have sufficient environmental resources to conduct business on a continuing basis. Adequate housing of personnel must be considered. How many of your most knowledgeable employees will be needed to conduct your business at a remote site? The work space required will be an important factor.

Voice communication is another important consideration and just as important as data communication. If your daily business requires 10 local telephone lines under normal conditions, in a disaster situation that requirement may double or triple. You will need to communicate with clients, customers, suppliers and a host of others in addition to the almost continuous communication with the hot-site personnel and vice versa.
Data communications is a paramount issue. If facilities are not available when you select the hot-site, you can be certain that they will not be available when you move into the hot-site and adequate resources may take months to install.

Air conditioning should be carefully evaluated. A computer system will fry itself in a relatively short time if cooling is not adequate for the system, files, tapes, personnel and all the support equipment that are needed.
Contracts are the most difficult to evaluate because of the differences in terminology between vendors.

embership fees may be called subscriber fees, annual fees, or any number of other terms. However, all hot-site vendors charge several fees, one of which is an annual fee to subscribe to the hot-site as a potential user. These funds are generally used to offset the cost of building and maintaining the facilities and equipment and are shared among a number of users . The larger the group of users, the less time available to utilize the systems, should multiple disasters happen concurrently. At the same time, the fewer users, the more expensive the annual fees will be. Assuming that all annual fees have been paid, there will be an “emergency notification” fee. This is a fee that is charged to a hot-site subscriber when the hot-site is notified that an emergency has occurred. The notification fee generally serves two purposes, it prevents subscribers from overreacting to unsavory situations rather than true emergencies and it reserves the hot-site for it’s subscribers in the order in which the checks for the notification fees arrive.

Beware of “greeks bearing gifts”. Some hot sites have established “levels of subscribers”. If a level 1 subscriber pays $15,000 per year for annual fees and a level 3 subscriber pays $5,000 per year the following scenario can occur: Level 3 subscriber has an emergency and has notified the hot-site. In addition, the level 3 subscriber has transported personnel, files and documentation to the hot-site. After a period of uneventful processing, a level 1 subscriber notifies the hot-site of an emergency. Where does that leave level 3? A level 3 subscriber can be “bumped” or evicted in lieu of the level 1 user. The level 3 subscriber then receives a prorated reimbursement of processing fees.

Processing fees are the fees charged for the actual utilization of the facility. The fees charged by a hot-site in one area may be significantly different than those charged by a hot-site in another area depending upon availability of services, utility rates and other factors. There may also be damage fees imposed if equipment is damaged or destroyed by your company’s employees. Some hot sites may also charge an initiation fee. The initiation fee is a charge for first time subscribers in addition to annual and other fees.

Rarely should a vendor be selected that offers a single hot-site facility. The single location hot-site can be an insurmountable problem if any unforeseen circumstances limit the ability of the hot-site to provide adequate resources. If the hot-site is prone to extended power outages, for example and an outage occurs while processing in an emergency mode you are now faced with the second disaster. Emergencies or disasters are cumulative in nature and therefore the recovery is compounded and may prove fatal for your company.
The following list may help you in selecting a hot-site to complete your contingency plan:

1. Location

  • Remote enough to be safe in area wide or regional disasters.
  • Easily accessible to your staff.
  • Adequate for all your business needs.
  • Multiple location hot sites.
  • Data communications adequate.
  • Voice communications adequate.

2. Contracts

  • Avoid “levels” of classification of subscribers.
  • Avoid “initiation” fees.
  • Obtain and compare actual copies of contracts.
  • Insure that a “test period” is included in annual fees.
  • Insure that your equipment vendors have
  • Adequate space for delivery of additional equipment and supplies.

Most companies will feel safe when the contingency plan is written and filed safely away in the corporate catacombs; having been approved by whatever auditor may have glanced through it. However, the obligation to the board, or stockholders is by no means complete until the plan has been successfully tested. The corporate officers fiduciary liability begins when the contingency plan fails. A contingency plan is acceptable only after it has been tested and proven in simulated emergency conditions.


William Langendoerfer is an editor with the Disaster Recovery Journal.

This article adapted from Vol. 2 No. 1, p. 6.

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