Bankrupt 2e2 stored user data in third-party datacentres

By Graeme Burton
01 Mar 2013 View Comments

Bust computer services company 2e2 outsourced large amounts of the data it was managing for clients to third-parties, raising question marks over the due diligence that companies need to perform before putting data and applications "in the cloud".

Despite the bankruptcy of 2e2 - for reasons unrelated to its datacentre business - the datacentre construction industry is booming at the moment, with operators struggling to keep up with demand. However, new datacentre construction requires high, upfront capital expenditure, which is one reason why datacentre operators are routinely "outsourcing" storage of client data to rival companies in order to satisfy customer demands.

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But Neil Stephenson, CEO of Onyx, one of the growing datacentre companies that 2e2 outsourced some of its data storage needs to, believes that most customers are already aware that such arrangements are widespread in the industry.

"Nobody buys into a cloud infrastructure - or they shouldn't buy a cloud infrastructure - and come back later and say 'I did not realise that it was shared'," said Stephenson.

Companies that want to keep a tight rein on precisely where their data is stored ought to use their own equipment in their outsourced datacentre, he added. "The core issue is, have you got your own kit or do you share kit? And the whole idea of this [cloud computing] model is that you share kit. That's how you get your economies [of scale]," he added.

One of the reasons why the 2e2 crash "spooked" the market, he continued, is that it happened suddenly, with staff sacked by the thousand one week, and abrupt demands for payments to keep datacentres open the next - with no possibility of migrating possibly mission-critical data in the short space of time before 2e2's administrator's threatened to shut-up shop.

While 2e2's datacentres were acquired at the eleventh hour by Daisy Group, the company had also used the services of Onyx for many of its clients as 2e2 was unable to expand its datacentre business any other way.

Onyx, though, was quick to reassure customers that any data of theirs being looked after by Onyx would be completely safe. Stephenson believes that one consequence of 2e2's crash will be that organisations will take a long, hard look at their disaster recovery plans and make sure that their data is backed up in the datacentre of a completely independent provider, to prevent any one company's failure, however unlikely, from taking all their data down with it.

"The crux of the issue is that everybody has been spooked by the fact that 2e2 has failed. The question is, is it symptomatic of an industry or just a one-off? I think it's a one-off. You are not going to see a number of other players have the same problem," said Stephenson.

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