Ready for corporate calamity

27 Jun, 2012

Neil Stephenson has built his business by asking companies to confront an uncomfortable question: "If our communications were disrupted, how would we keep going?"
After all, the threads that interweave today's businesses are more vulnerable than many proprietors care to admit. To function, modern companies need uninterrupted, secure technology. Yet whether it is floods, fires, workmen digging up cables or Olympic crowds preventing staff getting to the office, even the best-laid systems can be disrupted.

Mr Stephenson's Onyx Group is a fast-growing provider of datacentre and cloud computing services that companies can rely on, either for their core IT infrastructure or to store critical data and applications off-site. Its workplace-recovery facilities and other datacentre services offer a guarantee of business continuity should companies' in-house systems crash.

"That could be two days or two minutes," says Mr Stephenson, chief executive. "The only difference between the two is the amount of time which it takes between being dead and alive again." He is speaking at Onyx's headquarters in Stockton-on-Tees in the north-east of England, housed in a smart building located between a prison and a retail park.

It also houses one of the group's seven workplace-recovery facilities, which include fully-equipped offices and seamless communications links to which staff from companies that have had a communications collapse can be relocated. The workplace-recovery fac­ilities – located near six of Britain's leading business locations from London to Glasgow – are on standby for corporate calamity. The biggest has space for 500 people.

They are connected to the company's network of six datacentres, which house banks of IT equipment, links to multiple broadband networks and exceptional levels of grid infracture. The latest opened in Rotherham two weeks ago.

At the Stockton facility, a big silent room houses rows of computers on empty desks, each attended by an unoccupied red chair. At the far end is a Marie Celeste of a boardroom, an eerie, glass-walled enclave with a table encircled by huge swivel chairs.

They are empty today, but the recovery centres are regularly busy. The customers' identities remain confidential, however, since part of the Onyx service aims to minimise reputational as well as practical damage. Otherwise, as Mr Stephenson ob­serves: "How long before your competitors are ringing up your customers telling them you can't trade?"
After graduating in computing from Sunderland University, Mr Stephenson joined the marketing department of the city's Vaux Breweries. For a 21-year-old South Shields local lad it was a dream combination of beer and sports sponsorship. He loved it, but discovered something about himself. "They taught me a lot, inc­luding that I didn't want a job."

He wanted to control his own destiny. "It's the challenge of every potential downside and the joy of every upside. You're building things, making things," he explains.

Onyx was still an internet start-up when he joined in 1996, aged 24, as marketing manager. The company was sold in 1999 to Pacific Gateway Exchange, a US telecoms business "then the dotcom bubble burst.
But Mr Stephenson and his colleague Alastair Waite, an accountant, thought there was potential to reorient the business and asked Pacific Gateway to let them lead a management buyout of Onyx with angel investor support. They then set about relaunching as a datacentre and business continuity company.

In 2006, Onyx refinanced and began ramping up its growth through strategic acquisitions. Turnover, which was just £5.7m in 2007, reached £16m in 2011 and Mr Stephenson expects it to approach £20m this year. It has traded profitably for a number of years.

Against the background of financial downturn, Onyx has experienced prolonged fast growth – mainly by acquisition. Last October, Isis Equity Partners, a private equity firm, invested £42m in Onyx Group – £15m of which is directly earmarked for funding further strategic acquisitions. It now owns 56 per cent, with Mr Stephenson, Mr Waite and four other directors holding the rest. The new data centre in Rotherham is part of its drive to achieve national coverage.

Mr Stephenson says of Onyx's "relentless but steady" growth: "You do one thing, you get it right and you move on to the next one. You always have your eye on the next thing but you don't move to the next thing till you have done the last one right." Deals are not always pulled off, he admits: "They always collapse on a Friday afternoon. It's very frustrating."

Handling swift growth of Onyx when many UK companies have been experiencing stormy times, Mr Steph­enson values calmness. "People value if you are steady and predictable."

In the early days of the business, he would give staff an update over pizza. Now there are too many locations to do that. But he tries to remain in touch with staff personally: "If somebody has a baby there's no one more excited than me."

Calmness was certainly necessary when, in 2003, Onyx made its first acquisition, the Newcastle data centre, when the concept was not widely understood. "We didn't have very many customers. To invest in that business was quite a risk." It was personally a risk because he put the family home on the line to help finance the deal. This, he says, is what entrepreneurs do. "Everybody does that. You see an opportunity, you have to do it."

Onyx now has more than 2,000 clients for its services and products, tailored to midsized businesses in markets such as the financial sector and professional services. For such clients, trust and reliability rank above price. Its clientele includes banks, 50 London-based hedge funds and energy and IT companies such as Sage, the accountancy software specialist.

Onyx's recent appointment as an official supplier for the UK government's G-Cloud programme, an online store where public-sector organisations can buy cloud services, offers further scope for expansion.

More long days of rail and air travel look certain for Mr Stephenson. But, like many business people in the region, he stays loyal to his roots. His elder son looks set to go to the same comprehensive school he attended; Mr Stephenson's father went there in its grammar school days.

Connectivity is not only about IT; South Shields means roots. "My whole support network is there," he says.

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