UK arm of Sungard Availability Services goes into administration
- Reference: 1648642505
- News link: https://www.theregister.co.uk/2022/03/30/uk_arm_of_sungard_availability/
- Source link:
The UK wing called in Benjamin Dymant and Ian Wormleighton of Teneo Financial Advisory on 25 March, according to a letter sent to customers that was seen by The Register . The duo are understood to have secured interim funding to keep the business trading while a buyer is sought.
In the letter, joint administrator Dymant says Sungard had contacted customers in December to "recover increased electricity costs" related to colocation kit or other services in its UK facilities. Some customers reimbursed Sungard AS for this but others disputed the amounts.
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In January, Sungard may have only passed a portion of the higher electricity prices onto clients, and the administrators will now look to make "full recovery of those costs previously incurred and paid on your behalf as a result of services you have used."
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Going forward, customers will be invoiced the full amount of the increased costs, the letter adds.
"The company has not been successful in passing on incremental electricity price rises to all customers and it is no longer able to continue to absorb the significant increase in energy costs and resulting losses."
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Energy prices are currently five times higher in the UK than they were last year. Sungard AS runs 75 data centres worldwide, including 16 in the UK that are listed [5]here .
Additionally, Sungard AS tried to "negotiate rental concessions with certain landlords to mitigate cash flow pressures during this challenging period," said Dymant.
He adds in the letter: "These landlords remained unwilling to agree to concessions, further exacerbating the ongoing liquidity issues."
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Due to these factors, the directors at the cloud and data centre biz realized they "did not have a reasonable prospect of avoiding insolvency" and called in Teneo.
Customers in the UK include the Home Office and JP Morgan.
Services are currently being provisioned as normal while the administrators review operations to "maximize value" to company creditors. The administrators will continue to invoice and collect monies owed until the "cessation of trading."
The letter adds: "In order to continue providing services to you, we require your support and agreement to pay for all charges as they fall due and any incremental costs associated with services provided to you, without set-off, deduction or counterclaim.
"For any payments that have been made in advance, we will continue to provide the services whilst we continue to trade. However, prepaid amounts cannot be set-off against future costs invoiced or other amounts due. Any payments in advance received during the administration will be held 'on trust' and repaid as an expense of the administration if the services are ultimately not provided due to a cessation of trading."
The company, Sungard AS UK Ltd – the legal entity in administration – was already suffering due to the pandemic, with profit and loss accounts for the year ended 31 December 2020 showing a 10 percent decline in revenue to £139.4m and a net loss of £17.8m versus a net profit of £1.2m the year before. The accounts were [7]filed last month .
[8]Telehouse adds fifth datacenter to Docklands campus in London, UK
[9]OVHcloud datacenter 'lacked' automatic fire extinguishers, electrical cutoff
[10]Switzerland's SWIFT data centre under guard after Russian banks excluded
[11]This data center will be Europe's first with hydrogen backup power
Sungard AS UK is believed to employ 300 staff. Teneo told us there were "no day one redundancies".
One source at a Sungard AS UK client told us the company was "good at what they do" but expensive in a business environment that is "trying to reduce costs."
In a statement sent to The Reg , Dymant said Sunguard was "struggling in the face of rising power costs and the impact of COVID on its Work Area Recovery business. These factors have made many sites unprofitable and the company has been unable to pass rising costs through to customers, resulting in a near term funding issue."
He said Teneo had secured funding that "provides a platform to advance the company's discussions with landlords to optimize cost and space, and with customers, to pass through increased power costs.
"The ability for the business to continue to trade in the medium term to long term, either to enable a rescue of the business as a going concern or to deliver individual asset sales, will be reliant upon burden sharing from both customers and landlords alike." ®
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[5] https://www.sungardas.com/en-gb/facilities/?region=europe&country=uk
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[7] https://find-and-update.company-information.service.gov.uk/company/02368123
[8] https://www.theregister.com/2022/03/28/telehouse_adds_fifth_datacenter/
[9] https://www.theregister.com/2022/03/22/ovhcloud_fire_datacenter_report/
[10] https://www.theregister.com/2022/03/03/swift_data_centre_under_guard/
[11] https://www.theregister.com/2022/02/15/northc_hydrogen_power/
[12] https://whitepapers.theregister.com/
Re: The general state of the economy
The counterpoint to this is argument is that local shops are thriving in my part of East London. Since the pandemic the barber I went to near St Pauls has shut down, but there have been 3 new barbers open in our neighbourhood (none before covid). Cafes here did mad business during the pandemic, and are much busier still than pre-pandemic, and all the restaurants that shutdown during the pandemic have reopened (more accurately, mutated in to a different restaurant).
Re: The general state of the economy
What is it with barbers? We now have more barbers in my neck of the woods than charity shops or estate agents - and we don't exactly have a shortage of either of those.
Re: The general state of the economy
One point on the subject of barbers... last year during (one of) the lockdowns I couldn't stand it any more and cut my own hair very roughly. Meanwhile I noticed the politicians were on TV with their usual neatly trimmed hair cuts. How did they manage this?
Re: The general state of the economy
The thing with barbers, and certain other sorts of businesses, is they're great if you need to do a bit of laundry for your real cash generator.
That's one reason you see so many places of certain types pop up despite a total lack of actual demand.
Had some locally get shut down for it so not just an urban legend.
Cloud Revisited
....MegaUpload revisited?
Better start now RESTORING those terabytes.....or....like the restaurants in Central London.....your terabytes will be gone for good!
So many people ...
seem to be obsessed with the totally incorrect assumption that tomorrow=today+24 hours
and then come unstuck. Mainly because a worldview like that is axiomatically "all about me" and if the past 2 years have taught us anything, it's that it most certainly is not all about me.
For example.
Feburary 2020: "I couldn't possibly work from home ... because"
February 2022: "Me ? Oh I've always worked from home ..."
Autonomous cars are also subject to this whimsy. As were driver only buses in the 70s.
Sooo...
Sungard Availability Services, soon to be Unavailable?
"good at what they do" but expensive in a business environment that is "trying to reduce costs."
AFAICS the main business seems to be business continuity. That's always expensive until you need it. If you're going to save on that maybe you can save on backups. After all if you don't have anywhere to restore the backups why take them?
However WFH is going to reduce the need for the ready to go office space they illustrate but not necessarily data centres.
customer contract language
Did the customer contracts specify X services at fixed rate Y, for time period Z, or did they allow for price hikes within the contract duration?
If it's the former, then Sunguard messed up and is trying to screw over its customers to compensate for it.
The general state of the economy
Over the last couple of years during the lockdowns it was evident that many shops had closed in central London. They were not closed 'for the duration', they were closed for good. They had perhaps seen the writing on the wall and decided to jump ship while they still had a few quid in the bank rather than spending it to keep open unviable businesses.
Leicester Square is a fairly horrible tourist area these days, with Irving Street leading off it to Orange Street and Charing Cross Road. It *was* populated by restaurants mainly aimed at tourists. You can check on Google Street View if you can't visit in person. I passed through there on Saturday. Many of the restaurants have closed down. It is much the same in parts of Soho - closed restaurants. Unlike some other businesses, restaurants depend on the presence of customers. Sure, there are restaurants which do takeaways. But in the main restaurants means having customers present. Elsewhere I see that in Jermyn Street and Piccadilly there are empty shops. Perhaps they too were unviable.
Offices whose staff work from home (where possible) realised this can be done if your staff and managers can get along and not just butt heads. This means companies can physically downsize offices. Hot desks, coming in to the office once a week or once every two weeks to 'show your face' rather than using Skype or whatever is not unreasonable. We remotely manage equipment at sites I've never been to, so working from home is not even a problem to solved for me. The knock on effect, though, is the cafes local to my office no longer see my custom. It may not be much, my £4-£7 a day, but that's £25 a week or so from one person. Multiply that by x dozen in our office, and those local cafes will suffer.
I am not fixated on food shops or restaurants or cafes, but I'm mentioning them as I don't think the points I make with them can be contradicted.
The commercial mortgage holders who seem intent on building high street empires are suffering, and frankly I want to see them punished - punished by losing a lot of money. They took out huge loans, based on the stupid principle that prices can only ever go up, bought some property, then hiked the rent to the tenants. Now, AC (After Covid) those tenants can't pay/won't pay/have gone away, and these mortgage holders are getting screwed. They got greedy. Note one of the points in the article about Sungard 'failing to renegotiate landlord rental rates'.
I'm an old no-beard UNIX geezer, and I was a child in the 1970s. I clearly recall the power cuts then, and I remember seeing the uncollected rubbish in the streets. Other aspects of that time that I read about later I didn't see or wasn't aware of or didn't know about. But... London even in those troubled times seemed viable. What I have seen (and am still seeing) with these closed shops in the number 1 shopping areas is a lack of viability. The Tube was busy on Saturday, things are much like they were BC (Before Covid), but something seems to have changed. Though there are lots of people around, seemingly, the number is sufficiently less than BC to render certain businesses unviable.