Opinion

What we can learn from the collapse of 2e2

4 min read

01 May 2013

With the collapse of channel and cloud hosting provider 2e2 earlier this year, David Barker looks back at the impact this has had on businesses using cloud services and what you should be looking for in your provider.

The fall of 2e2 was fast and brutal. Almost overnight companies went from having their servers hosted with a reputable provider to no longer knowing whether their websites and data would be available the following day.

Companies who were just starting to look at cloud computing, and were rightly concerned about the security or availability of data entrusted to a third party, suddenly found all their fears were justified. 

The end result of the collapse was that 2e2’s clients were being asked for a collective £1m just to keep the data centre running and get access to their data. If they were unable to pay the amount demanded, then their services would be turned off. Unfortunately, most clients had to pay this as they were so integrated into the centre’s cloud services that it was almost impossible to get their data back out in a short space of time.

There are a few lessons to be learnt from this:

  1. There are always risks when using any third party provider, so you should take the time to perform some due diligence on them before entrusting your most critical data, or even your entire business operations, to them. Take the time to examine their financials, look at the balance sheet, on-going growth and make sure to ask the tough questions of what would happen to your data in a worst case scenario;
  2. Make sure you have your own backup and disaster recovery processes in place (and that they are tested!). One of the biggest problems when 2e2 went into administration was that its clients didn’t have up-to-date backups of the data in a separate place, or any way of quickly restoring services to another provider; and
  3. Be wary of the cheapest provider. At the moment almost all decisions to move to the cloud are driven by saving the cost of operating IT infrastructure. There’s often no consideration for what is actually being put into the cloud or why. Because of this trend I’m seeing a lot of providers working towards a price-led, high volume business model for their cloud services (i.e. very commoditised), whereas suppliers should be moving towards offering something unique, such as cloud services built upon specialised storage, security or management services.

We all know the cloud is here to stay; it has just too many benefits in providing scalable and resilient infrastructure at a relatively modest cost. But end-users need to be aware of the basic principles in purchasing any service.

For instance, always check the provider out to satisfy yourself of their stability. Don’t always buy the cheapest. Know why you want to move services to the cloud, and
make sure you can get your data back, or failover to another provider relatively easily.

David Barker is founder and technical director of 4D Data Centres, which he founded at age 14, and a finalist for the Young Entrepreneur Award at the Growing Business Awards 2012.