Enom 2011 Annual Report Download - page 31

adversely affect our business. Failure to update our technology infrastructure as new technologies become available may also put us in a weaker position
relative to a number of our key competitors. Competitors with newer technology infrastructure may have greater flexibility and be in a position to respond
more quickly than us to new opportunities, which may impact our competitive position in certain markets and adversely affect our business.
We are currently expanding and improving our information technology systems. If these implementations are not successful, our business and operations
could be disrupted and our operating results could suffer.
In 2010, we deployed the first phase of our enterprise reporting system, Oracle Applications ERP and Platform, to assist the management of our
financial data and reporting, and to automate certain business wide processes and internal controls. In 2011, we have started to implement additional build-
outs, customizations and/or applications associated with this system that require significant management time, support and cost. Moreover, there are inherent
risks associated with developing, improving and expanding information systems. We cannot be sure that the expansion of any of our systems, including our
Oracle system, will be fully or effectively implemented on a timely basis, if at all. If we do not successfully implement informational systems on a timely
basis or at all, our operations may be disrupted and or our operating results could suffer. In addition, any new information system deployments may not
operate as we expect them to, and we may be required to expend significant resources to correct problems or find alternative sources for performing these
functions.
The interruption or failure of our information technology and communications systems, or those of third parties that we rely upon, may adversely affect
our business, operating results and financial condition.
The availability of our products and services depends on the continuing operation of our information technology and communications systems. Any
damage to or failure of our systems, or those of third parties that we rely upon (co-location providers for data servers, storage devices, and network access)
could result in interruptions in our service, which could reduce our revenue and profits, and damage our brand. Our systems are also vulnerable to damage or
interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses or other attempts to harm our systems.
We, and in particular our Registrar, have experienced an increasing number of computer distributed denial of service attacks which have forced us to shut
down certain of our websites, including eNom.com. We have implemented certain defenses against these attacks, but we may continue to be subject to such
attacks, and future denial of service attacks may cause all or portions of our websites to become unavailable. In addition, some of our data centers are located
in areas with a high risk of major earthquakes. Our data centers are also subject to break-ins, sabotage and intentional acts of vandalism, and to potential
disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant, and our disaster recovery planning is
currently underdeveloped and does not account for all eventualities. The occurrence of a natural disaster, a decision to close a facility we are using without
adequate notice for financial reasons or other unanticipated problems at our data centers could result in lengthy interruptions in our service.
Furthermore, third-party service providers may experience an interruption in operations or cease operations for any reason. If we are unable to
agree on satisfactory terms for continued data center hosting relationships, we would be forced to enter into a relationship with other service providers or
assume hosting responsibilities ourselves. If we are forced to switch hosting facilities, we may not be successful in finding an alternative service provider on
acceptable terms or in hosting the computer servers ourselves. We may also be limited in our remedies against these providers in the event of a failure of
service. We also rely on third-party providers for components of our technology platform, such as hardware and software providers. A failure or limitation of
service or available capacity by any of these third-party providers could adversely affect our business, revenue, financial condition and results of operations.
Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could diminish the value
of our services and cause us to lose customers and revenue.
When a user visits our websites or certain pages of our customers’ websites, we use technologies, including “cookies,” to collect information
related to the user, such as the user’s Internet Protocol, or IP, address, demographic information, and history of the user’s interactions with content or
advertisements previously delivered by us. The information that we collect about users helps us deliver appropriate content and targeted advertising to the
user. A variety of federal, state and international laws and regulations govern the collection, use, retention, sharing and security of data that we receive from
and about our users. The existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations. We post privacy
policies on all of our owned and operated websites which set forth our policies and practices related to the collection and use of consumer data. Any failure, or
perceived failure, by us to comply with our posted privacy policies or with industry standards or laws or regulations could result in a loss of consumer
confidence in us, or result in actions against us by governmental entities or others, all of which could potentially cause us to lose consumers and revenues.
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