By Karen E. Klein

During the summer of 2004, Sun Capital Partners' headquarters in Boca Raton, Fla., lost electrical power twice because of hurricanes Francis and Jean. The first storm sidelined the private-equity company's 65 local employees for more than three days, and the second shut down the office for a day and a half. Because the entire firm stored all its electronic data in the Boca Raton office, the outages also affected its New York City, Los Angeles, and London offices.

"Companies like ours thrive on e-mail, so not having that and not being able to pull up spreadsheets off the network drive was a big loss," says Jimmy Phillips, Sun Capital's IT director. "I couldn't put a dollar figure on it, but it was definitely detrimental to the company. We knew that it couldn't happen again."

When hurricane season ended, Phillips went looking for a better way to protect his company's computerized communications and data systems. And he's not alone: An increasing number of outfits are recognizing that their decade-old manual tape backup systems provide no real-time duplication or swift data recovery after a power outage, fire, or theft, according to a March study by Gartner Inc., an IT research firm. Gartner also found that 50% of small and midsize businesses that experience major data failure -- lasting more than 24 hours -- will go under.

DANGEROUS OVERSIGHTS.  All too often, it takes a serious scare to raise awareness of the issue. Anna Yen, general manager of San Francisco-based Lasso Logic, left her laptop computer locked in the bottom drawer of her desk over a weekend in late February, only to return on Monday to find that burglars had struck. "They'd found the key, which I had left in the top drawer, and taken my laptop and some CDs," she says. "When I took a look around, I noticed they had also taken our backup device, a little box that sits on our network. Then I started to panic."

The man-made disaster was especially distressing -- and embarrassing -- for Yen. Lasso Logic had been preparing to introduce its own integrated hardware and software product, devised especially for small businesses, that offers continuous data backup protection. While Yen had been using a competitor's product, thankfully her staff was tinkering with a beta version of the company's own offering, which backs up data to a remote site. Their files were recovered.

Despite the devastating effects of the loss of e-mail and files, even from just a short shutdown, most small businesses have inadequate computer backup in place, according to Ted Werth, CEO of PlumChoice, a Bedford (Mass.) technology company that provides online computer support for small businesses and home offices.

DATA TRIAGE.  "A survey once showed that 85% of small companies don't have adequate backup for their data, and it struck me that that's about the same percentage of people who report that they don't regularly floss their teeth," he says. "It's the same idea: People know it's important, but it takes time and it doesn't add value, so they don't do it."

Unlike dental care, however, computer backup can be automated, a crucial asset for data-dependent small businesses. "Otherwise, it doesn't happen," Werth says.

Before buying a new system, small companies should determine how critical their data are and how frequently they change. Executives can then choose from a variety of backup methods. "Some companies could operate for a week without slowing down even if they had a loss of data," Werth says. "Others who are dependent on e-mail and computerized schedules would be out of business immediately."

POWER GLITCH.  For companies that don't need files and e-mail on a daily basis, copying archived data to nonrewritable CDs and storing copies at a couple of secure locations remains an inexpensive and adequate solution. For others, daily tape backup of all data serves their purpose, as long as they store tapes off-site.

Companies in search of constant, secure backup might contract with outfits that provide Internet backup sites or replication of data to remote computer servers, hard drives, or disks, Werth says. Relatively new technology allows automatic backup that constantly makes changes to a company's files in near real time, so if even a momentary power glitch occurs, computer users can revert to data they may have entered just minutes earlier, even if they hadn't saved it before the electricity went out.

Jay Wessel, senior director of technology for the Boston Celtics, says the August, 2003, blackout that crippled much of the Northeast served as a wake-up call -- for any type of disruption. "The blackout did not affect us, but we realized we were in no position to withstand a significant outage," he says. "We have 50 administrative employees housed in a small building across from the FleetCenter, and we would lose everything if our building went up in smoke. Our database and statistics analysis program is extremely valuable. We incorporate stats from across the NBA every morning."

SLAM-DUNK PROTECTION.  Recognizing the risk, Wessel eventually chose NSI Software's Double-Take, which he tried out on a recommendation from Microsoft (MSFT ). "We wanted real-time, online backup that would get us back up and running in a matter of minutes," he says. "We needed a solution that would be rock-solid and would integrate with our current Exchange and Windows environments."

The software automatically replicates all data on the Celtics' server and sends it to a duplicate that Wessel parked in a Manchester (N.H.) facility that offers a backup electrical generator and air-conditioning for the sensitive equipment. "We specifically wanted something far enough away from Boston to withstand a major disaster here, but not so far away that we couldn't get to it fairly quickly," he explains.

The two servers he purchased cost $5,000. Double-Take carries a license fee of $1,595 for Windows SSE and $2,495 for Windows-Server Edition 4.4. An annual maintenance fee runs from 15% to 20% of the initial cost of the software. The only other cost, rental charge at the facility, adds up to just $10 a month.

CHOOSE CAREFULLY.  After cleaning up from the Lasso Logic break-in, Yen started using its new product, LassoCDP, which sits on a storage network and searches for any new files or for changes to any existing files. The system automatically replicates -- locally -- new files or changes and sends them to an off-site location. Paying customers are beta-testing LassoCDP, which should go on sale to the public in April. The cost will range between $1,000 and $2,000 initially, depending on the number of features needed, plus about $100 for a monthly maintenance fee. For the time being, Lasso's hosted off-site storage facility backs up data, but customers may be able to customize their own storage solutions in the future.

While the new technology sounds good, it carries the risks inherent in entrusting your crucial, confidential business files to another company, Werth points out. "You must be extremely sure that that company is trustworthy and security-conscious -- and that it won't go out of business overnight and lose your data."

In addition, if your documents are backed up constantly, the data are only as accurate and reliable as the information entered on any particular day. For instance, if your files are overwritten with data that include a virus, there may be no way to recover the old data. "Know who you're working with and ask questions about worst-case scenarios before you sign any contracts," Werth says. Good advice for any security-conscious company hoping to ride out a disaster.