Technology
As technology grows in importance,
so does need for backups

by Phil Britt

   Technology can help level the playing field between small and large companies, can help improve productivity and can heighten efficiency when it works.
   When it doesn't work, however, businesses that depend on technology are back in the dark ages, at least temporarily.
   That's particularly true today when automated assistants, PDAs, laptop computers and data processing systems are part and parcel of small and big businesses alike.
   The more technology one uses, the more likely the failure of one part of a piece of equipment. Just think of the last time a computer crashed, a cell phone ran out of power, or another piece of equipment failed for one reason or another.
   Depending on the equipment, the business could have stopped until the technology was fixed. So how does a business protect itself?
   The first step, according to small business consultants, is to plan for inevitable equipment failures.
   "You need to have a backup plan so that you're ready when equipment fails," said Cathy Bass, President of 4smallbusiness.com, Coral Springs Fla., "No equipment is 100 percent reliable."
   It is also important to remember that technology itself is only a tool. Better tools will only carry an ISO or any other business so far. While technology can speed processes, reduce paperwork and enhance efficiencies, it does little good if the initial processes are poor. For example, if an ISO has a poor marketing message, the Internet will only serve to get that poor message out to more people faster. The Internet won't make the marketing material any better.
   The technology backup plan should outline how you will operate if the technology fails. This can be as simple as having an additional cell phone battery in case the one in the phone runs out of power, or as complex as fully redundant backups which have backups themselves, as in the case of some of the nation's largest data centers.
   Visa, for example, has fully redundant backup centers in different locations, protecting the information not only from computer crashes, but also from most unforeseen disaster, like the terrorist attacks of Sept. 11, 2001.

Other Failures

   It's not just the technology that fails. This writer has had the power fail twice in the last two days. A backup generator purchased in 1998 kept the office running.
   Of course, backups do carry a cost. The generator, for example, ran about $600 in 1998. Though it can power the office equipment, it isn't powerful enough to run the air conditioning. While that might be acceptable for a small Midwestern company that can operate remotely for short times when necessary, it might be unbearable for even a small office in the South. Yet to keep that second office fully functioning in the event of a power outage might require an "automatic" generator that goes on as soon as the power fails a system that can run several thousand dollars. Even at that cost, some homeowners, as well as businesses, deem that the assurance of reliable power is worth the price.

Revenue Opportunity

   You can also extend the idea of technology backups to your customer base. Though one wouldn't want to create an expectation of a failure of the POS equipment itself, power and telecommunications lines do go out particularly in an area prone to storms. So encouraging a customer to keep knuckle-busters and paper receipts on hand for that emergency is more than just a good sales idea. It's good advice for your customers, advice they'll thank you for whenever they do have power or telecommunications emergencies.

Backup Considerations

   What level of technology redundancy is appropriate for an ISO? There is no single answer. Each business owner should do a cost/benefit analysis. It doesn't need to be anything complex. However, even small ISOs may want to draft a backup plan, to help visualize what they have now, and what they need to be adequately protected.
   If the business relies heavily on e-mail, the plan might include something as simple as adding an AOL account in addition to a DSL line. The AOL account will cost about $24 a month (there are less expensive dial-up options as well), but that's relatively cheap "insurance" in the event the DSL or cable modem mail server goes down for a few hours. It's even possible to get a backup DSL or fractional T-1 line, but that cost can be quite high, so only the most Internet-dependent businesses are likely to consider it.
   If, on the other hand, the ISO rarely uses e-mail, the cost of an additional dial-up service is probably wasted. And he probably doesn't need a spare cell phone battery if he rarely uses it. Again, each situation is different.
   If the ISO operates a large business, the backup plan may be more complex and will need to be updated as the technology changes. While one spare piece of equipment may have been enough in the past, additional spares should be considered as the business grows.

Lease Option

   Rather than depend on having backup computers and other equipment, Bass, recommended leasing equipment. Bass' company, which had previously bought its equipment, changed to leases a few years ago. The company has an alliance with smallbusinessloans.com, Dallas, Tex., which works closely with merchants in restaurants and other small businesses.
   With an equipment lease, the onus of equipment reliability and repair falls on the leasing company. Depending on the terms of the lease, the leasing company may even provide free upgrades to the equipment during the terms of the agreement. As with an auto lease, at the end of the agreement, there is an option to buy the equipment. However, unlike an auto lease, the buy option for a small office equipment lease tends to cost no more than $10, according to Bass.
   Perhaps the best advantage of leasing rather than buying is that it costs less money up front, which is critical for ISOs and other small businesses that have cash flow challenges, Bass said. Of course, you will pay more for the equipment over the entire term of the lease than if you had bought it.
   Bass likened the lease to a mortgage. Many more businesses can handle the monthly payments, even if a portion is essentially a finance charge, than can handle the entire equipment purchase.
   "Leasing enables you to use better equipment than you could otherwise afford," Bass said.
   ISOs can lease computers from Gateway, Dell and other computer manufacturers as well as from private leasing companies. Telephones, pagers, PDAs and other equipment can be leased as well, enabling a small firm to quickly add the technology needed to operate. Though many ISOs operate with very limited technology, Bass advised them to have at minimum: a computer, a cell phone and a pager.
   "You have to be able to be reached. When you're out of touch, you're out of business," Bass said. "Don't give customers your cell phone number or they will call you at all hours of the night. But give them your beeper number."
   That way the customer can at least let you know that he's trying to contact you, enabling you to contact him when you're back "on duty" but you don't have a phone disturbing you in the middle of the night. Palm Pilots and similar handheld devices are becoming increasingly popular, Bass added. The handheld devices enable ISOs to keep client lists, phone numbers, calendars and other information at their fingertips.

Other Options, Other Equipment

Cell Phones

   In choosing a cell phone, Bernice McKenzie, President of Professional Cellular Services, Chicago, recommended signing a contract for no more than one year. Even though multiple-year contracts often provide a free phone, the benefit isn't worth it.
   "Some people want to hold on to their cellular phones as long as they're working," McKenzie said. "That's not a good idea. A multiple-year contract will cost you more than it will ever save you. New features are coming out all of the time. You don't want to have to pay an early cancellation fee."
   The newer phones also include smart cards that contain speed dial and other information. This enables you to transfer data by taking the card out of one phone and plug it into another. There's no need to reprogram the new phone.
   For heavy users, McKenzie recommended cellular phones with lithium ion batteries, as well as chargers with adapters so they can be charged in the car as well as via a conventional DC outlet. An additional battery is also a good idea.
   Most cell phones are built for style rather than for rugged use, according to McKenzie. The one exception is the Nextel i700, which has padding to protect it if it is dropped.

Computers

   In buying or leasing a computer, Bass advised choosing a system that is expandable, enabling the user to add features (i.e., an extra hard drive) if necessary without the need to buy a whole new machine. In selecting software, Bass urged ISOs to consider the programs used by their customers and anyone else they communicate with. Sending an e-mail attachment with a Word document does little good if the customer uses WordPerfect. The computer should also include spreadsheet programs, like Microsoft Excel.
   Whether the computer is bought or leased, the information in the device is probably worth more to the ISO than the device itself. So Bass and Dick Meyers, President of Small Business Consultants (www.small-business-consultants.net), Houston, Tex., recommended backing up data on a daily basis. The ISO has several different choices for data backup. Tape drives and associated software provide automatic backup and are often the best choice, because no one needs to baby-sit them, Meyers said.

Computer Backups

   A daily backup, while a good idea, is only the first step. If a fire, flood or other disaster destroys the computer; the backup will be damaged as well. So Meyers also recommended a weekly backup, with that tape stored in a safety deposit box or elsewhere offsite. So if the tape drive is damaged in mid-week, the user only has to reconstruct a few days of information.
   Similar procedures for daily and weekly backups can be followed using ZIP drives, CDs or DVDs. The newest ZIP drives can hold as much as a CD. They are also sealed, so they are less likely to be damaged. DVDs contain more information, but are more expensive to purchase. However, other storage media don't have the same automatic capabilities of tape drives, Meyers said.
   ISOs with numerous computers may want to consider backing up to a centralized server. If networked properly, different PCs can access the server. Therefore, if one PC crashes, another can access the information.