Customers rush for the exit as 2e2 nears collapse

Potential bidders could be put off by customer exodus

After much time spent negotiating with investors who failed to find a rescue plan for integrator and reseller 2e2, the firm entered administration, and now its customers are looking to jump ship.

2e2's administrators, FTI consulting, first sent out a letter to all known suppliers - also published on 2e2's website - telling them that it was "continuing to trade the business while we explore a potential going concern sale".

Then on Friday, the administrators said that the process for the sale was progressing well.

"There have been a significant number of expressions of interest in acquiring the UK and international businesses and we are confident that a sale can be concluded in the very near term," said Simon Granter, joint administrator at FTI consulting.

Telecoms solutions provider Daisy Group emerged as a potential bidder, according to the Financial Times' sources, but The Times has since reported that 2e2 has now lost major customers such as Marks & Spencer, Vodafone, Citigroup and Kellogg, leaving the proposition far less attractive to potential bidders.

Daisy Group was unavailable for comment at the time of publication, but The Times claims that the telecoms firm has since pulled out of negotiations with FTI.

Computing has been in touch with several of 2e2's customers, some of which depend on 2e2's services to run their business, while others such as the Legal Ombudsman hope that the firm's troubles won't impact them significantly.

"2e2 were sub-contracted as part of an agreement with Mouchel, who are ultimately liable for service delivery to the Legal Ombudsman. Our immediate priority is assuring continuation of this service and we are working with Mouchel to this end. At this stage we are hopeful there will be no major impact on our ability to deliver our service," the chief operating officer at the Legal Ombudsman, Rob Hezel, told Computing.

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Customers rush for the exit as 2e2 nears collapse

Potential bidders could be put off by customer exodus

Meanwhile, a spokesperson from Bridgend County Borough Council, which in 2010 awarded a five-year contract to 2e2 to deliver a software-as-a-service finance system, told Computing that the council was still liaising with the company and considering its options.

"The council has been liaising closely with the company's representatives. We understand that talks are taking place regarding the potential purchase of 2e2's managed service business by another provider, but we are currently looking at all available options," it said.

In 2009, big data analytics firm Kognitio awarded 2e2 a contract for the hosting of its data warehousing as a service environment, and it also told Computing that it was "investigating [its] options".

Alan Owens, partner at law firm Morrison & Foerster, said that in most cases, the contract will give the customer the option to terminate, and that it is now up to the customer to question whether it wants out of the contract or whether it is better off sticking with it.

"I've heard that O2 said they can cope with this, whereas NHS trusts may lean much more heavily on 2e2 and not have a practical option on terminating the contract," he told Computing.

Indeed, a spokesperson from the Sussex Partnership NHS Trust revealed that the NHS contracts would be dealt with as a priority by FTI.

"FTI Consulting has given us their assurances that the NHS will be viewed as a priority. We continue to work with 2e2 to ensure service continuity," the spokesperson said.

The trust awarded a £37m seven-year IT contract to 2e2 only last year and the spokesperson claimed that "2e2 is only one part of a programme to revolutionise our information and communications technology".