Disaster Discovery
Here’s a sobering thought for any private equity investor: losing a data centre is usually catastrophic.
In 2002, 93% of companies that lost their data centers to a disaster for more than 9 days filed for bankruptcy within a year*.
So if you make an investment today and your newly-minted investee has a fire in their server room tomorrow then their chances of survival are somewhere below 1 in 10.
The lesson? Technical due diligence should always cover disaster recovery procedures. These are often overlooked, but it’s vital to verify that a proper, reliable back-up system is in place.
That means evaluating the effectiveness of all the back-up methods used against the likelihood of failure, and addressing questions such as:
- How are back-ups performed (to a local tape drive, over a LAN, a WAN or the internet) and how comprehensive is the process?
- Are back-ups scheduled regularly and do they occur on schedule? Are they initiated automatically or by human intervention?
- Is the backup-and-restore process tested regularly and how reliable is it?
- Where are the back-up tapes and copies stored, how is the location monitored and what has been done to make the back-up location secure in the event of disaster?
- What is the process for retrieving backed-up files and how long does it take?
- Are back-up logs created and are they correct?
- Are back-up procedures properly documented so that they can be followed by all staff and external contractors?
- How resilient is the process to hard/software changes?
There are many factors to consider and our due diligence teams often include a data storage expert just to cover this area.
* According to the National Archives & Records Administration in Washington