High-profile, regional catastrophes such as hurricanes and tsunamis are not the only kinds of disasters that companies need to prepare for. They may be the most publicized, but smaller and less dramatic events, such as power outages and equipment failures, can have an equally devastating impact if companies are caught without a plan for safeguarding essential technology systems and mission-critical business processes. 

In particular, there is little tolerance for any network downtime or disruption in today’s fast-paced business environment. For that reason, most organizations develop and implement strategic plans with variable options, alternate sources and methodical procedures to ensure uninterrupted access to vital corporate information and applications if a disaster strikes.

The Cost and Effects of Downtime
The price for being unprepared can be steep. A recent survey of Fortune 1000 network administrators revealed that more than two-thirds of respondents said their networks could not endure an outage of more than 60 minutes. Most stated they require network uptime of at least 99.96%, meaning no more than three hours of downtime over an entire year.

Yet, according to Infonetics Research, large corporate networks suffer 1.76 outages per month, with most lasting more than 90 minutes. In a 2005 survey of 80 large U.S. companies, Infonetics found an average 

of over 500 hours of network downtime per year, at a cost of about 4% of each company’s revenue. Research from Gartner estimated network downtime costs large corporations across North America $42,000 an hour, with typical operations enduring an average of 105 hours of downtime annually. And on a worldwide scale, in 2000, PriceWaterhouseCoopers estimated network downtime costs the global economy some $1.6 trillion a year—or $51,000 every second.

So why are so many corporate network infrastructures still vulnerable to disasters and downtime? In most cases, the answer is simple: protection is cost-prohibitive. According to Gartner, 24% of companies responding to a 2003 survey admitted the lack of sufficient funds was why they had not implemented a formal disaster recovery plan. An equally harrowing admission: 37% of companies with a plan still lacked the necessary funds for deploying their disaster recovery strategies to even a “satisfactory” level.

In an effort to minimize risk, some organizations will opt for an equipment replacement plan from their network equipment providers. Unfortunately, many primary networking equipment manufacturers and their authorized resellers charge exorbitant premiums for a “network insurance plan,” which guarantees expedited delivery of emergency replacement gear. It is not uncommon for manufacturers to charge 15% of a company’s total networking equipment purchases each year for this service—a sum beyond many companies’ budgetary limits. 

For many risk managers, it is becoming increasingly difficult to incorporate costly replacement gear into disaster recovery plans—despite the  contradictory internal pressure to maintain heightened disaster preparedness. As a result, they can only protect the routers and switches at 

the “network core,” while equipment at the edge and in remote offices remain vulnerable to the next regional or local calamity.

Eliminating the Other Point of Failure
During the 2004 and 2005 hurricane seasons, scores of network managers learned firsthand about the inherent problems of relying on a sole equipment supplier during times of regional disasters. Top-selling routers and switches were in such demand that inventories were low, forcing equipment providers to redirect gear to top-tier customers while others faltered. Additionally, only the latest generation equipment typically was available, so some companies were forced to conduct in-field upgrades without the luxury of a learning curve—and during times of extreme pressure.

One of the overarching lessons from the regional disasters over the past couple of years is that it pays to have a backup procurement plan to ensure that gear can be readily obtained when needed. Having an alternate source of core equipment can ease the challenges of having a single point of equipment procurement. 

Alternate sources of equipment procurement also can alleviate distress during more typical occurrences, such as delivery delays that can adversely impact network upgrades or expansions. What if your organization is undergoing a network build-out and the OEM fails to deliver as promised? This happens all the time. This situation is especially painful when companies are contractually bound with customers to be up and running by a certain date or otherwise face stiff penalties. 

In assessing the risks associated with network downtime, it is important for network managers to define disaster recovery in broader terms since even everyday occurrences can bring down a network. 

For instance, when a small real estate company in Texas had its Cisco switch knocked out by a spilled cup of coffee, the response from its authorized reseller was that it would take at least four weeks to replace the gear. At the suggestion of their IT consultant, the realtor was able to purchase two identical switches from an alternate source—at about one-third the cost of a brand new switch—enabling them to keep a spare on hand for backup purposes.

Embracing the Alternate Source
Increasingly, budget- and time-constrained network managers are turning to the secondary networking equipment market to alleviate the single point of failure in their equipment procurement strategies. While this improves the chances of keeping the corporate network running in the aftermath of a disaster, companies also are finding the secondary market enables them to boost their level of disaster preparedness while staying within budgetary limits. By looking outside familiar OEM circles to established vendors of pre-owned and refurbished networking equipment, more and more organizations are experiencing extraordinary responsiveness and highly available inventory at extremely affordable prices.

The “secondary” market has been around for more than two decades, but noticeable momentum has been gained of late thanks to the continued focus on the corporate bottom line. A 2002 survey by CIO.com revealed that 77% of companies contacted already had purchased from the secondary market and 46% expected spending in this area to increase. After all, it is difficult to deny the appeal of saving as much as 90% off manufacturers’ list prices. Distribution channels are flush with high-quality, current or past generation equipment—much of it unused or in original boxes—and virtually any network product needed today can be found in the secondary market at substantial savings.

Companies are embracing the secondary market for a variety of reasons. For example, a regional utility wanted to protect its core networking gear by adding a one-to-one sparing strategy,  but it simply could not clear the cost hurdles. By turning to the secondary market, however, the utility was able to purchase fully refurbished, pre-owned spares for all its network elements. The purchase cost was less than the OEM’s annual equipment replacement contract and 75% less than the same gear would cost new, offering an ROI of less than a year.

After all, does it make prudent financial sense to purchase new network equipment that only serves in a nonrevenue producing, backup capacity? Most companies have found that, in time of crisis, the key factor is re-establishing or maintaining an acceptable level of network availability. Refurbished equipment fulfills this readily and affordably.

For one radio station operator, buying from the secondary market already was common practice for network expansion. But when equipment was needed in an emergency, the secondary market saved the day. The OEM did not have the gear in stock, while the alternate source offered overnight shipment at a substantial savings off the list price. 

Getting Started
Clearly, there is a strong case for considering the secondary networking equipment market to accelerate the deployment of replacement gear with readily available inventory. Additionally, secondary equipment providers are gaining traction as a viable source for equipment spares while some even offer depot arrangements for stockpiling certain critical network elements. 

When Katrina hit, for example, a large cable operator contacted a secondary market company to request that a long list of pre-owned equipment be put aside in case it was needed later. Although the crisis was averted, the alternate source was the only outlet with all the items on hand.

Today, leading secondary equipment providers offer a variety of flexible procurement options to safeguard corporate networks, including: 

One-for-one sparing or replacement. Pre-owned equipment is available for virtually every network element. With significant savings off manufacturers’ list prices, an increasing number of companies are finding the secondary market makes it possible to have a fully redundant network. 

One-for-many sparing. A more cost-effective sparing strategy involves acquiring a spare for every three to five identical network elements. This delivers upgraded protection, yet stays within budgetary constraints.

Off-site spares depots. Companies with multiple locations face several challenges. Perhaps there is no place to store spares or indecision about the best place to serve all locations. Keeping spares at an alternate source’s warehouse means they are available for shipment to any location.

A temporary fix. Refurbished gear provides an excellent fill-in for companies waiting on replacement from their primary equipment providers. The secondary market’s availability on a wide range of pre-owned equipment with expedited shipping makes maintaining network uptime possible until the network resumes operation.

Testing and training. Many companies that utilize the interim solution then re-deploy pre-owned equipment for network testing or personnel training. These tasks then can be accomplished during business hours and without negatively impacting the business-critical network.

Another point to consider is that new networking gear typically comes with a 90-day warranty. What if the spare gear is not deployed for four months, and then does not work? The OEM most likely will replace it with refurbished gear. In contrast, the same equipment from a reputable secondary market provider would cost at least half as much and often includes a full one-year warranty.

Turning Plans into Reality
Aside from the range of disaster recovery options, the secondary market has emerged as a viable equipment source for companies looking to extend network capacity or configure next-generation services. Currently, a diverse cross-section of Fortune 1000 companies, small- and mid-sized enterprises, government entities, educational institutions, healthcare organizations and telecommunications service providers have embraced the secondary market as a reliable, expedient source for both primary and disaster recovery networking equipment needs.

In developing a cost/benefits analysis of incorporating this option into a network disaster recovery plan, it is clear that companies can bolster network resiliency as well as respond faster to outages. As a result, more and more companies are relying on proven secondary network equipment providers to turn their comprehensive network recovery plans into reality.

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