2e2 – a cautionary tale

Some of you may have read in the press about the recent move into Administration of the UK arm of IT Integrator Company 2E2. Here was a well-established company with an annual turnover in 2011 of over £400m, staff of around 2000 and some very high profile customers in both the public and private sector (think Marks and Spencer, RBS, Vodafone and the Atomic Weapons Establishment).

Unfortunately for 2e2 they also had very large debts with banks and equity partners built up over time mainly through acquisitions such as Netstore and Morse. Despite efforts to avoid it the directors had to bring in the Administrators who have since been working to sell off or rescue as much of the business as they can.

While the demise of 2e2 is very painful for the staff and creditors (distributors are said to be owed tens of millions), it also raises a number of important questions for companies when deciding who to choose as your IT Support Company.
Many companies and IT decision makers are looking to Cloud Services to provide the answers to their IT needs. While this is often a very sensible technical decision it also brings with it an added level of risk and with that a requirement to be more circumspect with choosing your partner and solution.

Traditionally businesses (particularly SME’s) would own their own hardware, usually locate them in their own offices, and have their data and applications sitting on those servers. They often had an Outsourced IT Provider looking after that infrastructure but should anything go wrong with that IT Partner then there was little risk to the continuity of their services and bringing in a replacement was fairly easy and straight forward.

When you start to put your data and applications into the Cloud (i.e. in someone’s datacentre somewhere) you are suddenly increasing the risk and reliance on them continuing to trade and offer the services you are paying for. It is critical that when moving to such services you seek contractual clarity from a provider as to how the service will be delivered; who is accountable and liable for these services and the continuity; and what the process will be to extract yourself and your data should something go wrong. Outsourced IT Providers are often aggregators of services and so while you buy those services from one company they are likely to be utilising a number of providers for different parts of that service. There is nothing wrong with this method but understanding it up front may help if something goes wrong in the future.

It is too easy to look at a well-established company offering such services and assume everything will be fine. There is a tendency with some companies to feel that once a decision has been made to move to a Cloud service you no longer have to worry about the security and integrity of your data. What the demise of 2e2 tells us is that even when you are dealing with a prominent company with many blue chip customers there is no guarantee that they will still be there to continue to provide services. If you lose the ability to access your systems and business data you lose the ability to trade. Make sure you are comfortable that you have a plan to move your data and applications away from any Cloud partner and ask the right questions of your IT Support Company before committing to them.

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