The UK’s “ Brexit ” vote in July 2016 triggered a complex set of political uncertainties. There is doubt over how the UK government will enact a departure from the EU, and in turn, the nature of its ongoing relationship is highly unclear. Trade, immigration and wider political processes all remain uncertain. It’s no secret that, aside from a handful of high-profile corporate ‘Brexiteers’, most businesses had actually opposed a leave vote.
The tech industry was especially anti-Brexit, with some firms, including Samsung, LG Electronics and TransferWise, even considering moving operations out of the UK following the vote.
Brexit has come at a time when CIOs are already having to make difficult investment decisions related to their data strategy. Many large enterprises invested heavily in building their own data centres ahead of the financial crisis of 2008. For these firms, a major technology refresh cycle is looming, both for IT equipment and data centre M&E. Now with set timelines on triggering article 50, it gives business leaders time to prepare for the any potential implications.
Key Issues For the data centre industry, Brexit has numerous implications, from investment, process, technology to the people in the workforce. Highlighted below are the five key areas that should resonate with anyone involved in IT delivery in any major organisation:
- Investment: Gartner has made predictions for negative growth in IT spending in 2016.Additionally, the IMF recently cut Britain’s growth forecasts for next year, and warned that the decision has thrown a “spanner in the works” for global growth. For the UK, Brexit has brought uncertainty about whether it can continue to serve as the ‘gateway’ into Europe. Therefore, organisations, especially ones with a pan European footprint need to plan ahead now and consider diversifying their data strategy with local data centre locations in multiple countries.
- Security: In the immediate aftermath of Brexit, the cost of procuring IT services and products, and the regulatory divorce from the EU increases the need for vigilance in security and compliance. These issues might be drivers of bigger decision making about the viability of the UK as a European hub. This is the time to start assessing the potential impact on both physical and online security of your data. Here is a list of question you should be asking.
- Regulation: The most significant impact of Brexit will be felt in regulatory changes, especially for the IT departments in organisations all across the Eurozone which might be forced to locate data in a specific location. We have just lost a strong ally in the EU – when it comes to negotiating complex data security and privacy regulations, together is clearly better. While we’ll continue to work closely with our European neighbours on these issues, we may struggle to offset Germany’s and France’s stand for stricter data rules from outside of the club. We will explore the topic of GDPR later on in this series of DC articles in much more detail.
- Staff: Many organisations have developed a UK-based workforce that draws on skills from across Europe. The long term stability of these roles – and more importantly the people who fill them – must be carefully managed. The UK government has indicated there will be no hasty evictions of EU workers, but businesses should still plan their contingency strategy.
- Business model: Technical teams will play a key role in cementing a success or loss of a business in post Brexit environment. The senior leadership teams need to understand if infrastructural change is viable, and the various routes available to them in order to minimize business risk. IT departments must shift and take on a more central and strategic role in all businesses, big or small, to keep up with the regulatory and technological changes.
This blog is part of our ‘DC – DC : Data Centre Digital Classroom series, which helps you enhance your knowledge on key issues currently affecting our industry. You can now download the free full guide here.