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Andreas Georghiou
CEO
Spacenet Inc.

Editor's note: Each month, we ask a Directors & Boards reader to comment on critical issues facing directors today. If you'd like to participate in this section in the future, please email Scott Chase.

Business Protection through Non-Stop Networking: A Board Imperative in the 21st Century

What is business protection through “non-stop networking”?

Every organization, be it a financial institution, large retail outlet, healthcare facility, or government agency, is dependent on its voice and data communications to keep operations running. A severed communications line can render an organization out of commission. Many organizations are developing elaborate business continuity programs to protect against major storms, earthquakes, or other large scale disasters. But the reality is that most communication failures are actually the result of small localized incidents. A construction crew accidentally cutting the communications lines along a freeway can render hundreds or thousands of people without telephone or broadband connections for days.

Non-stop networking delivers a high-reliability redundant and diverse connection using a combination of both wire line communications (like DSL or T-1) and satellite technology to ensure that telephone service and critical data applications will stay online if a disaster strikes – whether large or small.

To guarantee that business-critical networks will be dependable, major telecom operators are now collaborating with satellite communications providers to complement wire line networks. Unlike traditional connectivity (like DSL, cable services, and even tower based wireless services) that is dependent upon land-based infrastructures, satellite completely bypasses the local terrestrial infrastructure. It is a completely independent, wireless last-mile solution. Non-stop networking leverages this unique strength to provide an ultra-reliable service that seamlessly integrates the price/performance of today’s broadband wire line technologies with the independence and dependability of satellite.

Why is the topic of non-stop networking gaining more interest among corporate boards and business leaders?

Even a small scale telecommunications outage can create significant risks for an organization. The inability to communicate on voice and data networks, even for short durations, can result in financial, security and even safety concerns. Realizing that “risk management” responsibilities extend beyond just financial statements and EEOC claims, many corporate officers are incorporating continuity of operations into their strategic planning process.

In addition to the public awareness generated by large scale disasters like September 11 and hurricane Katrina, changing regulatory requirements are driving corporate executives to put business continuity closer to the top of their priority list. In the healthcare industry, for instance, new policies require certain facilities to have a 24X7 network back-up solution. Financial institutions face their own set of stringent operational regulations and requirements. It is evident that business-continuity planning is gaining more awareness and is affecting the regulatory environment.

More corporations now understand the importance of telecommunications risk mitigation as a way to minimize potential lost revenue and instill a sense of customer confidence. As directors and boards strive to protect their companies, investors and customers, proactively developing telecommunications business-continuity plans can ultimately provide competitive advantages and long-term corporate benefits.

What tangible benefits does a non-stop networking solution provide?

A survey conducted by the Association for Computer Operations Management (AFCOM) found that out of 200 data centers, 77% had at least one business disruption in the past five years as a result of a communications failure; 42% of the disruptions were “serious” and 15% of the disruptions were “very serious” – resulting in significant down-time and lost data.

A business-continuity plan that includes a hybrid of wire line and satellite technologies can mitigate this risk by providing redundant communications and a diverse network path. By employing a hybrid satellite backup system, customers can achieve network uptime of 99.99% or better. The fail-over system is seamless with the satellite taking over the disabled terrestrial connection in 3 minutes or less.

In the past couple of years, the process of deploying a satellite based non-stop networking solution became even easier with the advent of the “IP VSAT Network Module” from network equipment manufacturing giant Cisco. This slim little card is actually an advanced satellite modem that can be slid into the back of Cisco’s most popular series of routers. Now any reasonably well trained IT person can set-up and configure a satellite back-up connection as easily as any traditional communications link.

With a rapid switch-over capability, nationwide coverage, and easy integration into an existing IT infrastructure, a non-stop networking solution can enable a company to maintain nearly constant operations right through a terrestrial network failure. Lost revenue from frozen financial transactions, decreased productivity from off-line applications, and safety and security concerns over disabled telephone systems can all be minimized or even eliminated.

How can a business-continuity plan for telecom be cost justified?

The critical question to ask is not “How much business continuity communications can I afford?” The really important question is “How long can my business afford to be without critical communications – minutes, hours, or days?” The level of “communications insurance” required depends directly on the criticality of the operations to the organization’s viability and the degree to which a CEO, COO, and CFO is prepared for the unforeseen costs of a significant telecom failure.

A study conducted by Infonetics Research found that typical large companies may lose between 2% and 16% of annual revenues due to network downtime. As part of the same study, mid-cap companies reported dollar losses averaging $4.2M per year due to network outages ($3.3M related to complete outages, $0.9M related to partial outages). Further losses from decreased employee productivity of $3.6M annually were related to full or partial outages. This amounts to a total average annual cost of telecom outages for mid-cap companies of approximately $8 million a year.

Based on the average losses that result from network outages, the cost of implementing a satellite solution to ensure non-stop data networking is relatively minor. A single momentary outage in a five year period can easily return the investment in the system. CFOs can expect to incur up-front capital costs of up to $3,000 for standard equipment and installation per location. Recurring monthly costs start at around $100 a month per site for an on-demand data only back-up network and can range up to several hundred dollars per month for a truly converged service supporting voice, data and video communications at broadband speeds.

Finally, a satellite back-up system, as part of an overall non-stop networking solution need not sit idly by waiting for a disaster to occur before springing into action. Many companies help make the business case for a non-stop networking solution by using the satellite during “normal mode” for broadcast applications like Business TV, digital signage, or distance training. In the event of a disaster, these applications are temporarily suspended, while more critical voice and data traffic is routed over the satellite until terrestrial communications are restored.

What are the challenges of implementing telecom business continuity plans?

The real challenge is preparing in advance. Business continuity is a broad topic, and having the resources to assess every area of operational risk mitigation can be a challenge. Any CEO who has experienced a network disruption knows that going without communications for even a few minutes can have a disruptive impact on business. Waiting until a network outage occurs, instead of preparing ahead of time, can only serve to extend the potential disruption.

Risk mitigation for telecom outages can only be effective if built into disaster recovery and business-continuity plans well in advance. The importance of planning for redundancy to wire line telecom systems, and pre-positioning equipment for rapid deployment cannot be overemphasized.

What role does the corporate board play with non-stop networking?

It is commonly accepted that one of the major responsibilities of board members is to protect the business from forces that can endanger its well being and inhibit its growth. As part of this responsibility, business-continuity plans, specifically telecom risk mitigation, is a matter of corporate governance. Board members play a significant role in ensuring that sufficient plans are put in place by CEOs and CIOs.

The wide range of business-continuity planning options may seem overwhelming and keeping up with the latest industry trends and regulations can be a challenge. Directors and board members do not need to be aware of every detail. However, they do need to ensure that effective policies are put in place. Talking with and influencing CXOs about the importance of telecommunications risk mitigation and a non-stop networking solution should be an important part of corporate long term planning.

Andreas Georghiou is the Chief Executive Officer of Spacenet Inc. Previous to Spacenet, Mr. Georghiou was the Chief Commercial Officer for SES Americom, and its predecessor, GE Americom, a unit of GE, and a member of Americom’s Management Committee. Mr. Georghiou had been with SES Americom for over 20 years in various leadership roles including President of Americom Asia Pacific, Senior Vice President of Engineering and Operations, and Senior Vice President of Sales and Marketing. While the company was still GE Americom, he served as a GE Capital Officer. He started his career at the RCA David Sarnoff Research Labs.

Mr. Georghiou holds an undergraduate degree from the University of Pennsylvania, and a master's degree from the Wharton School of Business, where he studied as a Fulbright Scholar.