In the wake of the Sept. 11 attacks, financial services executives plan to rely more on their employees’ ability to work from remote locations using virtual private networks (VPNs) as firms widen the distance between office locations to mitigate the impact of possible future disasters.

In some cases, that means companies are moving their offices and IT operations out of New York and into surrounding suburbs.

Merrill Lynch & Co., for instance, is moving its primary data centre from Manhattan to Staten Island, which is on a different power grid.

Another recent example is Morgan Stanley Dean Witter & Co., which was completing a new one million-square-foot office tower at 745 Seventh Ave. in Manhattan last year. Instead, the firm sold the 32-story building to Lehman Brothers Holdings Inc. in October and began developing a new site in Westchester County.

Gregory Ferris, Morgan Stanley’s executive director of global business continuity planning, said the threat of future attacks was the primary reason for the change of heart.

“We need to be able to react to a disaster … but more important is we need to mitigate the loss of a single site,” said Ferris, one of the speakers at the Securities Industry Association’s Internet Trends and Strategy Conference here this week.

With its primary space at 1585 Broadway and 745 Seventh Ave., the firm’s trading and backup facilities would be concentrated in two buildings within one city block and would be dependent on the same transportation and power infrastructures.

Ferris said an expansion in so-called dark fibre networks is making the decentralization of staffs and data centres easier today because of the increase in bandwidth. Dark fibre is optical fibre cabling that is currently in place but not being used.

William James, chief technology officer at San Francisco-based Banc of America Securities LLC’s broker/dealer services, said his company is implementing a dark fiber network to connect data centers in San Francisco, Texas, New Jersey and Charlotte, N.C. The two-year, multimillion-dollar project is expected to be completed next year and will be used for disaster recovery as well as for backups.

Currently, Banc of America is leasing T3 lines at a “substantial cost” to load balance its servers among data centres for disaster recovery.

“There’s a one-third reduction in cost by doing that [using disaster recovery servers for load balancing] vs. having all your disaster recovery boxes in the same data center. They’re there just as space heaters that aren’t being used,” James said.

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