Latin Finance - July 2008 - (Page 47)

investment banking Solution In the mid 19th Century, business started using electricity to power manufacturing equipment. However, only very large business could afford buying and operating a power plant. The fragmentation of the generation of electricity was inefficient and expensive. Thomas Edison understood the problem and created a solution. On September 4, 1882, the first electric utility started operation in New York’s Lower East side. A few years later, most of Manhattan was illuminated. The goal of technology utility companies like Terremark Worldwide, Inc. is to achieve what Edison achieved by providing cheap electricity to every home, except that instead of supplying electric power, they supply computing capacity. They do this by building and operating very secure computer center buildings with a (2N + 1) reliability of its electromechanical infrastructure, and all this placed on top of a massive communications platform. Clients are provided with total interconnectivity between communications carriers and users with the carriers using sophisticated switching platforms. A technology utility, in essence, actually provides time savings and versatility to the executives responsible for providing the IT services. Even more so, the use of a technology utility liberates the executives of the burdensome and highly exposed tasks related to the maintenance of the data center. By taking the burden for maintenance and operation of the infrastructure from in-house, much of the executives’ valuable time is saved and the institution enjoys a great versatility in the selection of carriers and other services that are available at zero distance. Furthermore, the banks IT infrastructure usually enjoys, as a result of the change, a higher magnitude of reliability. Going back to risk mitigation, by leasing the space and services from a technology utility, a company can achieve a much higher degree of risk mitigation based on: Higher reliability of the building and electromechanical infrastructure Higher degree of logical and physical security Availability of mass connectivity provided by many carriers allows for redundant communications at zero distance Lower cost achieved through sharing rather than absorbing them individually Immediate availability of specialized technical support 24/7 It is still imperative for executives to answer a number of questions derived from the above. Should this technology utility become the company’s recovery center? Or since it can be demonstrated that it’s far more resilient and considerably less expensive than my primary center, should it be the primary center? Moreover, if this new facility becomes my primary information technology center, should a second disaster recovery center be necessary given the high service levels guaranteed? The answer to the first is a business proposition; the answer to the last should be a risk management decision. intervention. An aircraft has built-in redundant systems and procedures that have been developed to address most major contingencies. However, a pilot is needed to activate them. Since the types of catastrophic events that would render a bank’s data center inoperable would likely affect the bank’s employees, staffing can become a problem. Since the regular workplace is also liable to have been impacted by the same risk event, alternatives have to be in place. The first step to insure business continuity is to mitigate the impact of the catastrophic risk event. A quick, easy and inexpensive way to ensure this is to disperse operating units of the bank to different locations. Using workflow techniques, most processes in the institution can be reengineered to eliminate the use of physical paper. The same process can flow through several distant physical locations much more efficiently than if they were located in the same building. The gains in labor efficiency would pay back the investment within a short time. More importantly, the financial institution would have distributed the risk, and as the old saying goes, not put all of the eggs in one basket. If the bank has several branches with unused space, it should immediately start distributing its process infrastructure, ensuring that critical departments are located in at least two separate locations. Modern MPLS native IP networks considerably reduce the cost of communications, which in this case should involve video, voice and data. Once a total virtualized processing environment is created, business continuity following a catastrophic risk event is simplified. The financial institution management can quickly develop within the same technology platform different responses to actual situations. The ultimate response would be to order all employees home and run the institution from the homes of the employees, using the internet as a means of communicating and home computers as work stations. Some of the newer data centers being built do provide some limited office space within the protected structure so that clients can run some of their supercritical applications during red-alert situations. Conclusion The best laid plans can never fully consider the myriad of circumstances related to a catastrophic risk event affecting your IT infrastructure. Nothing will substitute having experienced personnel directing the recovery. However, not even the most experienced and dedicated employees can recover a financial institution after a catastrophic event if they don’t have the necessary tools. This is much like a pilot that cannot recover the plane from a risk event, if the aircraft design does not provide him with the necessary tools. The bank’s objective when developing a disaster recovery and business continuity plan is to ensure the people are provided the necessary tools to perform and enact a speedy, efficient and successful recovery. I Terremark Worldwide, Inc. The Human Factor – Business Continuity Even if there is a viable disaster recovery plan, the financial institution’s business continuity is not assured. While all processes are technology enabled, they still require human Agustin J. Abalo, President - Latin America Telephone: +(1) 305 860-7829 Email: aabalo@terremark.com Website: www.terremark.com 2008 LATINFINANCE 47 guide http://www.terremark.com

Table of Contents Feed for the Digital Edition of Latin Finance - July 2008

Latin Finance - July 2008 Contents Investment Banking Outlook Compensation Survey Colombia Investment Banking Borrowers vs. Investors Banorte Profile Braskem Financing Strategy Brazil Hydro Finance Peru Port Privatization Panama Money Flows Argentina Local Markets Guide to Banking Technology Who Said That?

Latin Finance - July 2008

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