Quickship, Dropship and Emergency Equipment Replacement Services: Perspective

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1 Kristen Noakes-Fry Technology Overview 18 September 2002 Quickship, Dropship and Emergency Equipment Replacement : Perspective Summary Quickship, dropship and emergency equipment replacement services will deliver the client s specified configuration of equipment to a recovery site within days of a disaster. Table of Contents Technology Basics Technology Analysis Business Use Benefits and Risks Selection Guidelines Technology Leaders Technology Alternatives Insight List Of Tables Table 1: Sales and Leasing Gartner Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Technology Basics The recovery phase of a business continuity plan often requires setting up a long-term recovery site. Key to setting up this alternate site is sourcing the exact replacement equipment to permit business to resume critical functions as soon as possible either in place of contracting for a hot site, or to move from a hot site to a cold site within a minimum amount of time. Equipment replacement services often called quickship or dropship will deliver the needed equipment to the recovery site within hours or days of a disaster. The terms quickship and dropship are often used interchangeably. Technically, the primary difference between them is the degree to which equipment is physically warehoused. The quickship approach combines a physical warehouse (from which much of the equipment may be shipped) with a virtual warehouse consisting of a network of other suppliers. Dropship, on the other hand, is a warehouse-free approach in which the dropshipper is an expeditor that takes orders, processes payment and forwards orders to an outside supplier. Generally, the outside supplier takes care of shipping the items. After an organization calls the quickship (or dropship) vendor to declare a disaster that is, to activate whatever disaster recovery services have been contracted for either the actual quickship vendor or a supplier partner goes into action. The vendor must retrieve the needed equipment (as listed in the contract) from inventory; pre-configure it; pack it into shipping cases; and transport it by truck, plane or train to the client s specified location. A 48-hour guarantee is standard for shipment to a specified area, such as within the continental U.S. Technology Analysis Client Should Prepare for Possible Delays One of the lessons of the World Trade Center disaster in New York City in September 2001 is that the usual methods of transportation and communication may not be readily available in a wide-reaching disaster. The equipment replacement vendor needs to have the resourcefulness and flexibility to deliver the required equipment via several different methods. Even without transportation problems, the guaranteed quickship delivery time ranges from 48 hours to a week before the equipment at the alternate site is up and running. Organizations that are contracting for equipment to be shipped over national borders should be aware that, for U.S. quickshippers, guarantees of delivery time do not apply outside the U.S. The Vendor Needs to Understand Disaster Recovery Needs For business continuity purposes, it is not enough that the vendor is capable of delivering equipment quickly. A vendor specializing in disaster recovery will generally maintain an up-to-date inventory of the client s most recent equipment configuration on file and, as specified in the contract, will be capable of delivering the needed equipment to the appropriate site. These inventory lists are very important because it cannot be assumed that staff members will have the time, the means or even in some cases the information needed to make a lengthy telephone call to the equipment vendor or vendors ordering all the equipment needed for the recovery. In addition, the vendor will give priority to shipping emergency configurations of equipment to subscribing clients. A Note About Commercial Hot Sites and Cold Sites A hot site is an operationally ready data center offering specific hardware platforms ready for almost immediate use, and all the equipment, office space and furniture needed for the enterprise to 18 September

3 continue operation and the employees to report to work at the hot site instead of the usual location. It is not unusual for monthly subscription rates for hot-site services to fall within a range of $500 to $20,000 per month In fact, Gartner is aware of several organizations that are paying in excess of $30,000 to $50,000 per month. Contracts generally allow hot-site use for up to eight weeks in disaster mode. After that, the subscriber will need to move to a cold site. A cold site is an empty, environmentally conditioned computer room with office space, telephone jacks, and so forth, ready for the computer equipment to be moved in. The cold site is also available on a subscription basis, much more cheaply than a hot site costing between $500 and $2,000 per month but because the customer provides and installs all the equipment needed to continue operations, it takes longer to get an enterprise in full operation after the disaster. Business Use Benefits and Risks Benefits An Inexpensive Do-It-Yourself Recovery Site A contract with a quickshipper does make it possible for an organization to locate and prepare its own recovery space. One major quickshipper charges $1,500 at the time the contract is signed and $300 a month to keep the subscription active. These incremental quickship fees are necessary because of the need to keep the replace-unit records very current and to maintain the readiness to ship systems quickly on a round-the-clock basis. Permits Minimum Number of Days at Commercial Hot Site For companies that have contracts with hot-site vendors, Quickship services can cut down the number of days spent at an expensive hot site. For small, midrange configurations, clients are paying around $2,500 per day for the use of the hot site plus usage fees in addition to costs for any other special services. For large mainframe configurations, clients are paying somewhere around $5,000 to $10,000 per day plus costs for any special services, such as telecommunication usage fees, professional services, supplies, food and so forth. Quickship services make it possible for subscribers to occupy the hot site only until a cold site is ready for occupancy. While it is certainly much cheaper to locate recovery space privately and arrange for a quickshipper to deliver the equipment to that site in an emergency, quickshipping is by no means a direct alternative to a hot-site contract. While a hot site is expensive, it provides far different service levels and the hot-site vendor delivers value for the price. Risks Enough Equipment for Everyone in Regional Disaster? In a regional-level disaster, the quickshipper or dropshipper may have trouble locating equipment from suppliers. The quickshipper usually maintains a selection of the most commonly used equipment in a warehouse. However, a dropshipper holds no actual stock and works with a virtual warehouse. Thus, massive demand may delay an individual company s recovery. Selection Guidelines Types of Vendors of Quickship Equipment Sales and Leasing Companies 18 September

4 Sales and leasing companies are in a good position to be in the emergency replacement business, depending on 1) experience with disaster recovery, 2) understanding that emergency equipment replacement takes precedence over regular equipment orders. A vendor specializing in equipment replacement services is often a unit within a larger company, often an equipment sales and leasing company. Such a company has the advantage of experience in both disaster recovery and equipment sourcing. Business Continuity/Disaster Recovery Vendors The vendor of business continuity services generally offers a number of services, including hot sites, cold sites, data backup, consulting, and so forth. Generally, such a company will outsource the equipment replacement functions to a business partner and will be likely to offer installation and setup assistance. Equipment replacement services are likely to be available only as part of a package including other recovery services. Equipment Manufacturers Hardware vendors often maintain system configurations as part of the billing and shipping records for certain types of customers for example, customers in a mission-critical support and maintenance program or customers with extensively customized and integrated systems purchased directly from the vendor. These existing systems for detailed record-keeping can be packaged as quickship services for disaster recovery. Unless the manufacturer also offers business continuity services, the process here is much the same as with the equipment sales and leasing companies. Questions to Ask the Vendor When a company is evaluating various vendors, some very practical questions need to be addressed. An organization would do well to have some or all of these items specified in the contract and to have the contract reviewed at least twice a year. How is equipment sourced? How much equipment is physically in stock, and how much sourced from outside suppliers? What assurance can the vendor provide that the needed equipment will remain in stock for the duration of the contract? How is the equipment priced? Will it be list price as of the day of the order or will an extra charge be added to the equipment price? In the event of a regional disaster, what sort of priorities exists? What compensation may be expected in the event of late delivery? What are all the costs involved? Initial fee for subscription how is fee determined? (In some cases, the initial fee and the monthly subscription payments are the same regardless of the amount of equipment involved.) 18 September

5 Does the vendor maintain a current list of the client s equipment to be matched in the event of a disaster? Or does the client order the equipment subsequent to the disaster? Is there a cost for a client to declare a disaster? Shipping costs paid for by vendor or client? If setup/installations services are offered, what is the cost? To what extent does the vendor pre-configure equipment before delivery? Will the vendor provide technical staff to assist with installation and setup? At what cost? What exactly does the guarantee cover or not cover? Does it cover all equipment and all locations, or just one vendor s equipment within a particular geographical area? What monetary compensation does the vendor offer in the event it does not live up to the guarantee? Will the vendor support a full test of a company s disaster recovery plan including the delivery of the equipment to the alternate site? What would be the cost involved? Considerations When the Vendor Is Delivery Only How much of the recovery effort can be expected from the supplier of emergency equipment? The basic service may well consist of a truckload of computer equipment appearing at the specified address. If the vendor s accountability for the recovery effort stops at the door, and if the recovery space is arranged for privately by the organization, then the organization must be prepared to ensure: Recovery space outside the risk perimeter of the main facility that has been selected one that is on separate power grids, has separate water infrastructures and served by separate telephone company or network service provider switching locations. That the site is large enough for the equipment and the workers generally, 30 square feet per end user is the suggested minimum. Transportation for workers to the recovery space and sufficient parking for those that will be driving to the center. Adequate number of workers to install the equipment and software and establish all required connectivity within the expected time frame. Sufficient electrical power and access to phone connections to restore telephone and network communications. Knowledge of and verification that local codes and zoning requirements are met and that any permits needed are obtained. Technology Leaders from Sales and Leasing Vendors For a number of years, equipment replacement services have been an adjunct to a supplier s sales and leasing of equipment. Some experienced vendors in this category include those listed in Table Sales and Leasing : 18 September

6 Table 1: Sales and Leasing Vendor Type of Service Offered Guaranteed Delivery Time Comments/Additional CIT Technology Rentals and (TRS) (A unit of CIT Group, Inc.) Over 5,000 models of equipment from over 300 vendors, including Sun, IBM, HP, Dell and Compaq. Several levels of contracts, starting at 24 hours to client s site via air or motor freight. Located on the grounds of Dallas/Fort Worth International Airport in Texas. All equipment delivered functionally tested or calibrated for immediate use. Comlanta Business Recovery Provides equipment from IBM, Sun, Compaq, HP, Intel and Cisco. Deliverywithin24to48hoursto client s site or to one of Comlanta s hot-site locations. Provides engineers to help get your system up and functioning. Recovery sites: Baltimore, Maryland; Boca Raton, Florida; Chicago, Illinois; Dallas, Texas; or Irvine, California. GE Disaster Recovery (GEDRS) (Formerly GE Capital IT Solutions) Guaranteed Technology Replacement (GTR) replaces client s affected computer and internetworkin g technology with a predetermined emergency configuration within a specific time frame. Guaranteed 24 hours from disaster notification call to installation at client s site or one of GE s recovery sites. Shipment tracked via a GEDRS service partner. Guarantees 24- hours from disaster call to installation. Also offers a wide range of other planning or recovery services, including Mobile Recovery. 18 September

7 Table 1: Sales and Leasing Vendor Type of Service Offered Guaranteed Delivery Time Comments/Additional Mainline Recovery (Formerly El Camino) Provides IBM and IBM/plugcompatible mainframe and midrange hardware. Equipment from other companies, such as Dell, Sun, Compaq, HP and Unisys handled on a limited basis. Guaranteed to arrive at client s site within one to five days guarantee does not apply to non- IBM or to deliveries outside U.S. Customer must locate recovery site, unpack and set up equipment. Rentsys Recovery Systems Dropship service provides fully configured, ready-to-use replacement equipment. Mobile Recovery services, 24 to 48 hours. Dropship services, equipment on-site the next day. Installation and dismantling services On-site support Modular Banking Centers Mobile Call Centers Recovery Centers Boston, Massachusetts, and Houston, Texas Electronic Vaulting Data Center Design/Build From Hardware Manufacturers Traditional hardware vendors are beginning to move into the disaster recovery space, recognizing equipment replacement as a natural extension of their business and a means of selling additional products and services to existing customers. Dell calls the approach virtual integration the factory maintains the configuration profiles for applications, with the current driver and software patches, and can replace units ready for data on short notice. Hardware vendors can consider this approach because of an increasing reliance on custom factory imaging to pre-load servers from the factory as opposed to having business partners perform this work in the aftermarket. Sun, for example, plans to integrate all the systems it sells within the factory and to maintain detailed records to prepare for future expansion or quickship needs of its customers. Sun anticipates that most configurations will take approximately 24 hours to reach the customer location within the U.S. While hardware manufacturers claim, quite correctly, that they have the existing capabilities to support disaster recovery, most of them with the possible exception of HP and IBM are not service companies and lack the experience in providing disaster recovery services. 18 September

8 Technology Alternatives Purchase and Store Extra Equipment An organization always has the option of purchasing backup equipment, storing it in unused company space and moving it to the recovery site itself in the event of business interruption. A couple of drawbacks to this approach are 1) the capital expense of buying new computer equipment and then storing it unused, and 2) as technologies and company needs change, the equipment could well be obsolete by the time it is needed. Generally an enterprise will take this expensive step only with very specialized equipment. It is not practical to store a complete configuration of backup equipment. Have a Reciprocal Agreement With Another Company Another option is to make an arrangement with another company or another company site that has similar hardware to use a certain amount of space and equipment in the event of a disaster. Often these arrangements are reciprocal. While on the surface, such a cooperative agreement appears to be a simple and inexpensive option, Gartner does not recommend such arrangements. The agreement quickly becomes a problem in the event of a disaster that causes both companies or sites to require recovery space and equipment at the same time resulting in a conflict of priorities. Have Everything Done by the Hot-Site Vendor With a hot-site contract, the subscriber is unlikely to need to make private arrangements for equipping and bringing up the site, all of which will be handled by the hot-site vendor s staff. For the high monthly fees, the subscriber may fully expect to receive premium service, which should allow the subscriber to restore full operations at a hot site as soon as the subscriber s personnel can get there. (The guaranteed time from declaration of the disaster to systems up and running needs to be specified in the contract with the hot-site vendor.) Other issues to consider are the vendor s priorities and the vendor s proven capability to source equipment in the face of a widespread disaster. In addition, it is important to be aware of all the policies of the hot-site vendor. For example, some vendors may not permit equipment not listed on the hot-site schedules to be moved into one of their cold sites by a third-party supplier. Insight The nature of the vendor s delivery guarantee and the vendor s demonstrated understanding of business resumption/disaster recovery needs are the key considerations in selecting a just in time quickship solution for equipping an alternate site soon after the disaster is declared. The faster the delivery needed, the more the service will cost. However, most organizations do not need all of their processing up and running at the recovery site within 24 hours; thus, a phased approach could be prudent, starting with the critical systems. If the organization can afford a delay of about two days, buying or leasing the replacement equipment at the time it is needed through a quickship program makes a lot of sense, saving the expense of buying and storing backup equipment that might never be needed. Many issues are involved here, of course, making it important to view equipment replacement services as a means of implementing a thorough business continuity plan. 18 September