By GARY HABER
Baltimore Business Journal

Jay LaPointe can recite horror stories about companies losing their computer data that would make a small-business owner grab for a bottle of Maalox.

There was the catering company whose computer crashed just before Thanksgiving. The outage wiped out all of the company's recipes, menus and client information just as it was preparing for its busiest months of the year. Countless hours of employee time were needed to try to re-create all that data.

Then there was the insurance company whose data center was flooded by a burst pipe, frying its computers, and the retailer whose computerized cash registers wouldn't work for days after a telecommunications company accidentally cut a fiber-optic cable.

"The lights were on, the power was on, but they couldn't sell anything," says LaPointe, vice president of sales and marketing for DP Solutions Inc., a Columbia, Md., computer-consulting company. "You think it's not going to happen," he says. "It happens."

What it's worth

Businesses rely on their computers for everything from writing contracts to communicating with clients. Some small-business owners think they can't afford the cost - typically no more than $3,500 - of putting a plan in place to back up their computer files and retrieve them after a disaster.

However, experts say the costs are less expensive than people think, and companies can't afford not to be without a plan. If a business lost its data, it might not be able to bill its customers, defend itself in a lawsuit or access the names, e-mail addresses and phone numbers of key contacts.

Data loss can be a particular problem for hospitals, physicians and other health-care providers who have to preserve records under the Health Insurance Portability and Accountability Act, or HIPAA, and for public companies that have to hold onto their data to comply with the Sarbanes-Oxley Act, says Bill Walter, a senior network engineer with Baltimore accounting and consulting firm Gross Mendelsohn & Associates' technology-solutions group, which designs data backup and recovery systems.

"More companies are realizing that without computers, productivity grinds to a halt," Walter says.

Gross Mendelsohn has had a backup and recovery system since the company started its technology-solutions group about 16 years ago, Walter says. The current system automatically backs up the company's data and stores a copy electronically at off-site centers on the East Coast and West Coast.

It's not just natural disasters and power outages that companies have to worry about. For every hurricane that knocks out power, there's the careless employee who hits the wrong button on the computer, sending data into some lost land of cyberspace.

Once bitten, twice shy

Walter says his company's "easiest sale" is to the business owners who didn't have a data backup and retrieval plan in place. When something happens, a panicked business owner quickly becomes a convert to the need for backing up data.

Walter estimates that it can be much more expensive to try to recover lost data than to install a proper system. A backup system for a small business could cost $600 to $3,500, compared with the $5,000 to $15,000 that might be spent to recover the data of a damaged computer hard drive, he says.

The ideal backup-and-recovery system involves storing the data off-site, experts say. The price, depending on the amount of data stored, can range from a few hundred dollars to several thousand a month. That avoids the problem of backing up the data on a tape and having an employee take it home each night, leaving open the possibility that the tape gets lost or stolen.

Michael Dailey doesn't want his law firm to be one of the unlucky businesses that lose data. Electronic data is the lifeblood of his six-lawyer Baltimore law firm, which defends liability and workers' compensation cases. Its 2,000 to 3,000 closed files are stored electronically rather than on paper. It's not uncommon for a workers' comp case to be reopened, meaning that Dailey and the other lawyers need access to those files.

"The concern was, what would happen if your system failed and that data couldn't be retrieved?" he says.

So Dailey's firm worked with Gross Mendelsohn to install a backup system that creates a duplicate of all the files on the firm's computer system. The tape is backed up each night and locked in a fireproof safe.

The system cost about $2,000, but it puts Dailey's mind at ease. Still, Dailey says he's considering Walters' advice that he move the data storage off-site.

Small-business owners might want to consider several low-cost services, such as Mozy or Carbonite, that can be downloaded onto a computer and automatically back up the data several times daily.

Pat Pathade, CEO of Fantail Consulting & Technologies, an Ellicott City, Md., computer company, has been using Mozy for the past two years on his personal computer. When he launched Fantail in August, Pathade started using the online backup system on his office computer too.

"I'm a tech guy," he says, "so I know the importance of it."