TowerGroup estimates $3.2 billion IT recovery costs for securities industry

TowerGroup estimates $3.2 billion IT recovery costs for securities industry

TowerGroup estimates that it will cost approximately $3.2 billion to replace the technology destroyed for securities firms impacted in the World Trade Centre disaster.

Of this $3.2 billion, $1.7 billion will be spent on hardware (trading stations, sales stations, workstations, PCs, servers, printers, mini-computers, storage devices, cabling, communications hubs, routers, switches, and the like). The other $1.5 billion would cover the services and software needed to install and connect the network, operating system, and applications infrastructures of these securities firms.

Larry Tabb VP securities & investments research practice at TowerGroup comments: "We believe that while 30,000 securities positions (trading, sales, research and operations) were destroyed in the seven World Trade Centre buildings, we estimate that there will be another 15,000 to 20,000 positions that will need to be replaced in the adjacent buildings."

TowerGroup's estimates assume the replacement of approximately 16,000 trading desks (including turrets, multiple workstations—outfitted with multiple flat screen displays) at approximately $52,000, and 34,000 general PC workstations at a replacement cost of $5,000 (including monitors, extra memory, software, and networking equipment). The company calculates that approximately 8000 Intel-based servers and approximately 5000 Unix servers were lost at an approximate replacement cost of another $370 million. It further estimates that approximately $300 million in printers, hubs, switches, data storage, and other networking hardware will be needed to support the vast network of technology that was lost.

"To install, configure and manage the implementation of this equipment we believe that securities firms will need to spend approximately $1.5 billion," says Tabb. "Much of this will be allocated to internally staffed projects; however, there will be a great demand for consulting and contract services to develop, install, and implement new trading stations, and firms’ technology infrastructure."

The expenditures for replacement of this equipment will not happen overnight, he adds. Currently, many firms are working out of their disaster recovery sites, and will continue to work out of secondary and tertiary sites. Tabb says spending will occur over then next 12–24 months as firm either rebuild existing sites, which may be damaged but are habitable, or find new sites and relocate.

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