Sears Holdings Corp Sues over Power Failures

Jun 10, 2013

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Sears Holdings Corp., one of America's top 10 retailers by volume, recently filed a lawsuit against multiple vendors they allege were responsible for multimillion-dollar losses earlier this year. The losses occurred when two power failures shut down the company's data centre and website for hours on end. According to the lawsuit, filed May 24 (2013), the first of the two power failure events occurred just after the Christmas holiday. On January 3, one of the company's uninterrupted power supplies (UPS) failed, leading to the eventual failure of all the remaining power supplies and a bypass power set-up. All of Sears’s computer systems were completely shut down for five hours. Once back online, keeping the systems running required running auxiliary generators for eight days. The lawsuit contends the power failure cost the company nearly $200,000 in fuel costs and more than $1.5 million in lost profits. During Q4 2012, the company lost a total of $489 million – just to make things worse. Sears alleges a second power failure occurred on January 24 due to improper settings established when the system was brought back up. The company didn't disclose how long the second outage lasted, but claims in the lawsuit an additional $630,000 in losses. The second power failure also resulted in Sears having to rent a new generator at a cost of $13,005 per week. Ultimately, the company blames hardware vendors for the power losses that disrupted its data centre during the busy post-holiday shopping rush. The lawsuit does not get into details regarding architecture or design flaws, instead blaming vendors for not properly maintaining equipment. If their lawsuit succeeds, it could spell very bad news for the vendors involved:  JT Packard & Associates and Emerson Network Power.  Neither company has offered a public response to the lawsuit.

Why Uptime Is Important

Whether or not Sears Holdings' lawsuit is legitimate or not is up to the courts to decide. However, the one lesson we can all learn here is the importance of uptime. Assuming the numbers offered by Sears are correct, to lose $1.5 million over just five hours is astonishing. Imagine what several days without power to a data centre could do to a company like Sears. This brings into focus why data centres and web hosting companies boast about 99.99% uptime. It is obviously critical for businesses of all sizes. However, this incident begs the question as to why Sears didn't have a backup system in place; a system that was completely separate from the data centre in question. At the very least, it should not have taken five hours to get generators going and bring the computer systems back up. That's way too much time, no matter what size your business is. If a company stands to lose that much money over such a short amount of time, it seems reasonable to invest in a better backup. Whether Sears prevails in court or not, they should still use this as motivation to address its own failure in this mess.