- The contingency planning that IT manager Barry Brunetto developed for his company, Blount International, covers a lot of scenarios, including failed circuits and earthquakes. But he never imagined that a company of WorldCom's stature could be a disaster, and Brunetto is now looking for a safety net for his data services. He's not alone.
Brunetto, the Portland, Oregon-based director of information systems at the sporting goods and power equipment maker, thought he had a viable business-contingency protection strategy in place: restricting business agreements to "Tier 1" companies -- the most reliable ones. That was then.
"One of the reasons we deal with Tier 1 vendors is the stability issue," says Brunetto. "But now it doesn't look like anything is stable."
The WorldCom mess has become a bad dream for many in IT. None of the IT and telecommunications managers interviewed for this article said that they seriously believe that WorldCom's service is going to be switched off, because it's too vital. But they also noted that they have no choice but to consider "what if" scenarios.
Gary Rosenberg, telecommunications manager at Nortek, a manufacturer of building products in Providence, Rhode Island, relies on WorldCom for voice and data.
Rosenberg is a 42-year telecom veteran, but WorldCom's problems are prompting him to think in new ways. He's talking with vendors about providing a standby service -- having lines in place and ready to go if WorldCom fails.
But having seven T1 backup lines in just one facility could cost $US100,000 a month, says Rosenberg. The cost is high because the vendors don't have pricing mechanisms for running lines that aren't also carrying revenue-generating voice and data traffic, he says. Rosenberg counters by telling vendors that providing an affordable standby service could give them a leg up once telecommunications contracts are rebid. Negotiations are continuing, he says.
WorldCom's problems are also a slap in the face to IT managers who review a vendor's financial statements as part of a contracting process. For 15 months, WorldCom allegedly inflated its earnings by nearly $4 billion.
Due diligence "just goes out the window if audited financial statements are not to be believed," says Andy Fisk, IT manager at the Tribune-Review Publishing, a Greensburg, Pennsylvania-based newspaper chain.
Fisk has contacted other carriers to provide backup for his WorldCom services. But like other IT managers, he doesn't want to change providers "on the off chance they [WorldCom] are going to go away," he says. But, Fisk adds, "on the other hand, I'd hate to find out that they've gone away and left us high and dry."
One person who has experienced a telecommunications failure firsthand is Brian Voss, vice president of telecommunications at Indiana University, a 96,000-student institution in Bloomington.
The university was using services from Teleglobe in Reston, Virginia, when it filed for bankruptcy protection in May. Indiana University relied on Teleglobe to provide one of two high-speed circuits connecting the university to an Asia-Pacific high-performance research network.
"Our circuit went off," says Voss. "I think what we learned from that experience is that it's probably good to be diversified."
How Ryder deals with WorldCom
WorldCom is a daily topic at Ryder System. The telecommunications company's performance is closely monitored, and once a week a WorldCom official touches base to make sure everything is OK. That's what CIO Eduardo Vital wants.
Ryder, a Miami-based transportation and logistics company with 30,000 employees worldwide and 1000 locations in North America, is a big WorldCom customer. WorldCom provides close to 80% of Ryder's data and voice services. When WorldCom's problems surfaced, Vital immediately contacted the firm to make arrangements to ensure uninterrupted service delivery. It was agreed that each week a senior account representative from WorldCom would contact Vital's operations director to discuss systems performance.
WorldCom has "not neglected on providing services that they contracted to us, and I'm comfortable there," Vital says.
Ryder renewed its contract just two months before WorldCom's financial problems were disclosed. But Vital says his company continues to have a good working relationship with the vendor, and he believes that the WorldCom officials he dealt with were unaware of the financial problems.
"I have no reason to doubt their honesty," he says.