Terror Spurs Disaster Recovery

Threats to the the safety of financial firms in the New York City and Washington, D.C., areas have drawn attention to the burgeoning market in disaster recovery products and services.

Indeed, several announcements about new DR solutions came out today, even as U.S. Secretary of Homeland Security Tom Ridge held a press conference in New York to address new warnings issued this week by the Department of Homeland Security.

Today's news included a new deal between backup-and-recovery software maker EVault Inc. and SunGard (NYSE: SDS), which now will sell EVault solutions worldwide; new replication software from Veritas Software Corp. (Nasdaq: VRTS) (see Veritas Releases Replicator); and an agreement by which FalconStor Software Inc. (Nasdaq: FALC) will be marketed as part of a French disaster recovery consultancy's services (see FalconStor Signs With D2B Informatique).

Ridge announced Sunday that government agencies have picked up rumblings of attacks planned by Al-Qaeda against the Washington headquarters of the International Monetary Fund and the World Bank Group; the Newark, N.J., headquarters of Prudential Financial; and buildings belonging to Citigroup and the New York Stock Exchange in New York City.

Ridge told reporters earlier this week that terrorists are mainly interested in blowing up physical facilities, though they also seem intent on disrupting data processes. Today, in a press conference with New York Governor George Pataki and New York City Mayor Michael Bloomberg, he said that despite reports that some of the Sunday's intelligence is over four years old, the threats remain urgent: "I don't want anyone to disabuse themselves of the seriousness of this information," he said.Ridge also said today, however, that business continuity planning is helping improve the odds against major U.S. financial institutions suffering from terrorist attacks.

"Now we have in place numerous backup systems to ensure that funds could be made available instantly to prevent any major financial disruption," Ridge said today. "These layered protections throughout the financial community are part of a larger and overarching effort by this Administration to raise our standard of security and readiness to new and greater heights with each passing day."

This isn't to say that government and private sector haven't clashed on the issue of disaster recovery. Two years ago, banks and financial institutions, as well as vendors, cried out against what they perceived as unrealistic government expectations for DR plans (see Post-9/11 Plan Meets Resistance).

Several of the threatened institutions have announced SAN relationships in the past -- the World Bank with EMC Corp. (NYSE: EMC), for instance (see EMC Trots Out Symmetrix Customers). But there's been a flurry of new activity, given the heightened alerts associated with the election year and recent events in Iraq.

"Basically, since 9/11 we've seen sustained growth, mostly around disaster recovery planning and analysis at first, and then in the last one to two years in implementation," says Steve Higgins, EMC's director of business continuity solutions."In our case, we've seen an increase of 25 percent in revenues on a quarterly basis," says CEO Leonid Shtilman of XOsoft, which makes backup-and-recovery software. He says government and financial institutions, mostly on the East Coast of the U.S., account for that growth. He also sees an increase in demand for products from service providers serving midrange businesses with disaster recovery site planning.

Shtilman and others attribute the upswing in DR demand specifically to heightened terrorist threats. According to a spokesperson for EVault, for instance, the vendor has picked up 10 new bank and credit union customers in the Madison Square Garden area of New York City within the last two weeks alone.

Mary Jander, Site Editor, Byte and Switch