We are a Managed Service Provider (MSP) and we deliver technology to our clients via 2 data centres. We provide multiple services to our clients from these data centres by utilising high end equipment with multiple levels of redundancy. A massive component of delivering highly available services is power, whilst in this country in the main we can rely on good reliability with power, we do however get blips. Data centres get power from at least two independent sources and also have battery backups along with the ability to run on generators.
At the backend of last month our data centre provider wrote to us stating that their fixed term was coming to an end on the 1st October 2022, whilst it doesn’t take a rocket scientist to work out this would be coming at some point, the supplier had been quoted figures around 10 times their existing arrangement. They were claiming that electricity providers have withdrawn all long term contract options from the market until September 2022. So at this point the only price available is a daily variable rate. Even if longer term contracts became available, it would be unwise for them to commit to a contract while energy rates are at an all time high. This would disadvantage us all in the long run.
During this time we were in constant dialog with the supplier and at the same time evaluating our options, which included moving clients to the Azure public cloud and also moving clients back to having their own equipment in their own offices. On the face of it, purely on cost, the Fusion private cloud (even with the current increases) will still deliver excellent ROI in comparison to a public cloud offering. This gap is narrowing however and moving to Azure could help us to deliver other cutting edge technology. Installing equipment at clients premises will not happen overnight and it is a backwards step in terms of availability. It also does not support remote working and moves the electricity problem elsewhere. We are keeping our ear close to the ground and continually evaluating our position going forward with our client’s best interests at heart.
Whilst we were waiting to hear from the supplier I personally spent time researching other pricing on the market and speaking to clients who rely on electricity. It was quite evident that those with a remaining period left on their fixed electricity contracts were in a good place and those who are looking at an imminent renewal were getting quotes at 5 or 6 times their current rate. In fact, only at the weekend I heard the story of Michelin-starred chef Tom Kerridge who’s restaurant electricity bills are looking to increase from £5,000 a month to £35,000 a month, which is completely unsustainable;
On the 31st August, our supplier wrote to us again to state the situation is looking better but they were still looking at having to raise the cost of delivering an AMP of power to our racks by nearly 5 times. We readied ourselves to apply some logic to our pricing that was fair, made sure that we didn’t profit in any way, but at the same time made sure we had a viable business. The monthly cost increase that we were looking at would have made anything hosted in our data centres completely unsustainable.
As of yesterday, we have a new Prime Minister and Liz as of today has given us all hope, we will hold off informing our clients in the hope that this is good news for all businesses. Watch this space.