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January 22, 2001

Power Outages Force Mission-Critical Contingency Plans

By Matthew G. Nelson with Bob Wallace, Diane Rezendes Khirallah, and Elisabeth Goodridge

hortly after noon last Thursday, Loudcloud Inc. was hit by the rolling blackouts that swept through much of the San Francisco Bay area. Lights went out, monitors went dark, and phones stopped ringing. But the hosting company's customers weren't affected: Loudcloud's network operating center shifted to backup power, and a diesel generator kept essential systems running.

Loudcloud's contingency planning and investments in backup systems paid off. "It's not the most glamorous work, but you're pretty glad you've done it when things like this happen," says Scott Dunlap, VP of marketing for Loudcloud, in Sunnyvale, Calif.

Last week's rolling blackouts left more than 1 million Californians without electricity, including half a million in the San Francisco Bay area. More power outages are likely if the state doesn't resolve its energy shortage. The situation has companies evaluating backup systems, contingency plans, and power use.

"We're really at ground zero right now," says Matthew Melhuish, director of IS for Equilibrium Inc., a software developer in San Rafael, Calif. "We need to get electrical companies to help us understand power consumption, how to install generators, and to figure out the permits."

Like Loudcloud, other businesses have back-up systems to keep their most important operations running. PeopleSoft Inc. in Pleasanton, Calif., relies on generators as insurance against power loss.

AT&T's hosting centers are equipped with redundant generators and uninterruptable power supplies, systems it says are capable of weathering any power outage, even if it means refueling the generators every 48 hours. WorldCom's largest data centers are outfitted with four diesel generators and at least two UPS systems; smaller facilities also have the same backup systems, though fewer in number.

Some companies are initiating conservation measures. PeopleSoft sent employees an E-mail last week asking them to shut off noncritical systems, such as radios. Gobosh Inc., a San Jose Internet consulting firm, is turning on fewer lights.

Oracle executives are considering shifting employees to unaffected buildings as blackouts occur. "It's better than sending people home," says Randy Smith, VP of U.S. real estate and facilities for Oracle. "The issue for Oracle is whether our employees can be working and productive. That's our capital."

The California energy crisis also is causing some high-tech companies to reassess whether to expand operations in the state. AT&T, Intel, Oracle, and others say California is becoming a less-attractive place to do business. "We all have our eyes on this one," says Craig Mathias, a principal with Farpoint Group, a consulting firm. "This is the kind of thing that will ripple through the economy like there's no tomorrow."