I had the unnerving experience of hearing the chirping sound emanating from my UPS (Uninterruptible Power Supply) unit, followed by intense crackling. Fortunately, this was not followed by any equipment malfunctions. An hour later it happened again and then once more by the close of the business day. It turns out that my building was experiencing micro-outages and alternating power surges caused by extreme demand on the grid from air conditioning usage. Without the protection of the UPS unit, my computer would have been fried. My cinema display monitor survived the first two electrical assaults, but capitulated after the third one. Fortunately, the monitor is not damaged; I just need to replace the power cable. I am glad I followed my own advice; protecting sensitive computer equipment with a UPS unit really paid off today.
Archive for the ‘Third Party Failure’ Category
Taking My Own Advice
Thursday, July 29th, 2010Improving Power Recoveries After Major Storms
Tuesday, May 18th, 2010Researchers have developed a computer model that may predict power failures prior to major storms, which insight may allow for better facilities planning for the benefit of consumers. Geography professors Seth Guikema of Johns Hopkins University and Steven Quiring of Texas A&M University examined data from five hurricanes that caused power losses, some for more than ten days: Dennis (1995), Danny (1997), Georges (1998), Ivan (2004) and Katrina (2005). They considered the locations of the power failures, the configurations of the power systems and the specific characteristics of the individual hurricanes, such as wind speeds. They believe that the data they have collected result in a model to improve the accuracy of predicted power failures, allowing utility companies to better utilize resources in advance of a storm with crews assigned to the areas likely to be affected. More accurate forecasts can reduce the millions of dollars utility companies pay in power restoration to the benefit of the hundreds of thousands of affected residents and businesses. With hurricane season just around the corner, small businesses located in the Atlantic and Gulf Coast states should ask their utility providers for specific details of their contingency plans for major storms. Make sure that your electricity and gas providers are aware of this research, it could make a difference to your business.
Excellent Communication Around Gmail Outage
Wednesday, September 9th, 2009Small businesses require inexpensive contingency to deal with the inevitable failures of third-party service providers. In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, second edition paperback version, 2009), I recommended redundant e-mail accounts which allow you to send, if not receive messages others have sent you, from one service when the other one is down. This advice was put to the test when Google’s Gmail web mail service went down for 1.5 hours. Ironically, the company took down a few servers for routine maintenance, but the request routers, servers that direct traffic to Gmail servers, could not handle the increased load. While the e-mails servers remained operational, the Gmail web interface was not, frustrating the user. So while mail was inaccessible for a short while, the messages remained in the user’s queues. You have to commend Google for their open communications around the mishap. Ben Treynor, VP of Engineering, immediately provided an explanation and an apology. Gmail remains 99.9% available to all users and the company is always working to improve reliability.
Mobile Data Outage Disrupts Small Businesses
Sunday, August 2nd, 2009AT&T experienced a substantial mobile data area-wide EDGE/3G outage in the Northeast and Midwest, which disrupted iPhone service as well. If your business was affected and you ask your AT&T service representative, the company will credit $25 to your account. But be sure to request the credit, because it appears that the company is not volunteering the credit. The way to minimize disruption from such inevitable mishaps is to have redundant systems in place to deal with third-party failure. I have two separate wireless providers for my business, such that if one fails, I use the other. For a relatively modest fee, I build in some contingency for mobile data services, which can be a lifeline for small businesses.
No Longer Held Hostage
Thursday, May 28th, 2009
Home Offices Have Choices, Too
In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (John Wiley & Sons Inc., second edition, 2008), I recommended that small business mitigate the risk of the failure of third party service failure by having redundant services. In some multi-tenant buildings that is not feasible, as real estate management companies enter into exclusive agreements with service providers, denying their tenants freedom of choice. These arrangements result in fees paid to the real estate management companies for delivering the tenants as hostage customers. The existence of such agreements and the fees associated with them are not typically disclosed to the tenants who are told that there is only one service provider choice.
The Court of Appeals in Washington has just upheld the Federal Communications Commission (“FCC”) ruling that prohibited such exclusive agreements on the ground that they are anticompetitive. The FCC’s ruling states that cable operators can not enter into such exclusive contracts and existing contracts of this nature can not be enforced. Now both commercial and residential tenants (remember more than ten million businesses are home-based) have choices and can choose redundant service providers for contingency. This is particularly important as cable providers deliver not only television, but also voice over internet telephony and other services essential for small businesses.
Credit Crunch for Small Business Cardholders
Saturday, May 16th, 2009
Complex and Interconnected
At the end of last year, Advanta Corp. was the 11th largest U.S. credit card issuer with approximately $5 billion in outstanding balances and the only major credit card company focused on the small business segment. More than one million of those small business customers are searching for new sources of credit as Advanta will stop lending against credit card accounts on June 10, 2009. The stated reason for this action was that uncollectible debt reached 20% of the total outstanding, according to public filings of the company. Advanta has set aside $1.4 billion to buy back securitized credit card loans at 65 – 75 cents on the dollar. Advanta finds itself caught in a squeeze: it has been unable to sell its receivables for cash in the asset-backed securitization market since June 2008 and rising unemployment rates suggest further deterioration in their credit card receivables. William Dunkelberg, chief economist of the National Federation of Independent Businesses, questioned how many business owners depend solely on their Advanta credit card and noted that credit is harder to find than ever before.
As I had advised in Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, second edition, 2008), mitigate your risk of third party failure by diversifying your suppliers. Never rely on a single provider, unless it is absolutely unavoidable, which was certainly not the case with U.S. credit card issuers.
Storms Leave 150,000 in Missouri Without Power
Tuesday, May 12th, 2009
Power Outages Affect Us All
This weekend, hundreds of homes and businesses were damaged or destroyed in Kansas, Illinois, Kentucky and Missouri as a result of powerful storms. The Governor of Missouri declared a state of emergency as 150,000 residents of his state were without power. This is a timely reminder to evaluate your protection against power outages, starting with the protection of computers and data. Even when electrical power is available, there are quality issues, like peaks in voltage as well as micro-outages. Since IT equipment is sensitive, use an uninterruptible power supply unit (UPS), which is usually a surge protector, together with a small buffer battery that would supply energy for about 10 minutes after the electricity supply is terminated, enough to finish important work and to shut down the system. Most units support an automatic shutdown before the battery is completely depleted. Some buildings supply self-generated backup power. Please note that this power is usually much “dirtier” than power from the outlet. Under these circumstances, you must use a UPS unit, preferably one that is designed to smooth out erratic electricity supply.
Certain high-rise apartment and office buildings have back-up generators that provide low levels of power for up to fourteen hours after termination of the central electrical supply. Many workers and residents of these buildings mistakenly believed that a volt of electricity is a volt of electricity irrespective of whether it comes from the central utility or a back-up generator. During a recent power outage, they used their home and office computers with electricity delivered from a back-up generator, without the benefit of a UPS unit, and damaged their computers in the process. Also, remember to turn off appliances and equipment during a power outage as power supply may be erratic when it is initially restored.
Diversify Your Banking Risks
Friday, May 1st, 2009
Watch Where You Put Your Money
In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (John Wiley & Sons Inc., second edition, 2008), I advised readers about the disaster category of third party failure. This is the risk of failure of the provider of a product or service upon which your small business depends such as, for example, your Internet service provider or your telephone service. In the context of the banking crisis, a particularly relevant example was presented in the pages of the Wall Street Journal this week.
The Journal reported the story of a depositor who, eight years ago, put her life savings of nearly $600,000 into accounts at Superior Bank of Hinsdale, Illinois. Approximately one month after this deposit was made, the Federal Deposit Insurance Corporation (“FDIC”) seized Superior as a result of allegations over improper financial and accounting practices in its sub-prime business. The FDIC limits deposit insurance to $100,000, with the result that this depositor lost much of her money, as did hundreds of other customers of Superior Bank.
One way to mitigate the risk of third party failure is to diversify your suppliers. Your small business should have, for example, a primary Internet service provider and a secondary, unrelated, Internet service provider which you can use if the primary provider’s service is disrupted. The same is true of your banking services. This depositor would have benefited by making deposits in separate accounts of no more than $100,000 each in at least six different banks. Then, when Superior was seized by the FDIC, she would have had immediate access to the other $500,000 deposits in the other institutions, while she waited for the FDIC insurance to make restitution for the $100,000 she had deposited with Superior.
Of course, since this event occurred, the FDIC raised its insurance limits to reassure depositors of the safety of our banking system during this difficult time. Even so, as a small business owner, if my liquid cash were, let’s say, $50,000, I would not deposit it all in a single bank, even though the entire deposit would be covered by the FDIC. Why? Because I have a business to run and that depends on immediate availability of funds. I cannot have my small business experience even a short period of illiquidity while waiting for a benefit from the FDIC. So I re-assert the advice I had previously given: think redundancy of suppliers. This depositor learned a lesson the hard way; make sure that your small business does not.