Is Barnet's data being held to ransom? - One of the risks of Outsourcing

In today's ComputerWeekly.com newsletter there is a very disturbing article relating to IT infrastructure provider 2e2who went into administration last week. The administrator has been demanding immediate payment from companies whose data is hosted by 2e2 or risk losing their data. 2e2 are the infrastructure provider for Barnet Council and I am gravely worried that some local residents' data may be affected. Given that Barnet are proposing to hand over all of the Council's data to Capita, hosted away from Barnet, surely Councillors should be learning from the current problems that outsourcing bring significant risks. As ever, in Barnet, political dogma trumps common sense. When will they learn?

I would also question who was monitoring this contract, and why were Barnet using a contractor in such serious financial difficulties. Why wasn't this flagged up earlier. Maybe it is because all the current senior management's focus is on outsourcing these types of services not making sure they are properly delivered.

The article is reproduced below:

"2e2, the datacentre service provider and systems integrator that went into administration in January, is asking its customers for nearly £1m in funding if they want uninterrupted services and access to their datacentre facilities.
The stricken datacentre company’s administrators have asked for a total estimated funding of £960,000. 

While administrators have asked 2e2's 20 enterprise-level users to pay most of the datacentre costs, smaller businesses are being asked to pay £4,000 plus VAT.
In a warning letter to customers, the administrators from FTI Consulting said: “In the event that you do not provide a commitment to pay by 5pm on Friday 8 February 2013, we may be unable to continue to provide services to you with immediate effect.”
The funding will be used to meet the costs of operating and maintaining the datacentre infrastructure and key IT professionals to ensure smooth migration of the data and systems, the administrators said.
If customers do not pay, “We will be unable to maintain the datacentre infrastructure and we will have no alternative, other than to cease all operations without any managed wind-down of those operations,” it warned.

"We will have no alternative" FTI Consulting

The administrators have also made 2e2's UK staff redundant and closed services such as flexible resourcing, business application services, unified communications and field support services.
When 2e2 went into administration, many customers wanted to gain access to their data immediately to migrate the data and applications to another service provider.
“The levels of data held in the companies’ datacentres are such that this process could take up to 16 weeks and we will need to ensure that the integrity of third-party data and security is maintained,” the administrators wrote.
They calculated the £960k funding to cover employee costs, utilities, carriers, rent, rates, administration and other central expenses, including legal costs and administrators’ fees."