THE DEGREE OF IMPACT that Brexit will have on the IT organisations of UK businesses will depend on the nature of the trade deal that is negotiated.
Now, however, is the time for firms to consider the potential scenarios and plan accordingly. Let's hope there will be a structured transition period but those who have planned for different outcomes will be best placed to cope with whatever they are presented with. However, in our recent Avanade research study, "IT Leaders Have 500 Days to Get Tech in Shape", it shows that nearly half of IT leaders do not have a specific plan for Brexit.
Brexit is bringing opportunities (68 per cent of IT leaders think it could yield a competitive advantage) but is likely to create new issues and make existing ones more acute. CIOs need to plan accordingly, here are five topics they need to consider:
1. Business restructuring and relocation
Global banks are already in the process of planning the transfer of 9,000 roles from the UK to states remaining in the European Union. It's quite possible this action will accelerate and firms will need to consider how this change in profile needs to be served by technologies including potential data migration and load effects.
2. Where to locate support organisations
Should support be provided through shared services organisations outside the UK or should you support Europe from UK based shared service centres, and what are the implications? The free passage of people, goods and equipment may no longer be seamless between the UK and EU…a physical presence in form of satellite offices may be required in your key trading locations, with the associated IT and collaboration infrastructure that entails. 71% of senior IT executives have also started to investigate the disruption Brexit may have to their IT supply chain.
3. A changing talent landscape
Uncertainty around future immigration restrictions for IT professionals both from within the EU and beyond will make talent wars more vicious; compensating for that through increased in-house skills building or outsourcing of certain systems may well be a consequence. 66% of IT leaders are already concerned about the impact of Brexit on the availability of talent.
4. Sterling depreciation driving a need for cost optimisation
Sterling's loss of value has meant that imports, including IT Services, have increased, this is another squeeze on already constrained CIO budgets. In fact, 76% of senior IT decision makers say the lower value of the pound will force them to rationalise costs.
5. A potentially new regulatory environment
If the tax and regulatory regimes change, which are currently reasonably consistent across Europe, what will be the impact on IT applications and trans-national solutions? We can already see the EU making moves to govern London activity in Euro-denominated trading; there could well be considerations for your systems operating within a new (or hybrid) set of regulatory controls.
Conversely, the departure from the EU could result in a loosening of regulation; either way, how will business systems cope with a potential backlog of regulatory related updates?
71 per cent of IT leaders say that the changing regulatory environment will create a significant amount of work.
Will the UK continue to be a safe-haven or 3rd country for personal data on EU citizens? What are the impacts of Data Residency rules, specifically, will you need to reconsider your cloud plans, particularly in heavily regulated industries?
What will happen if the UK chooses to recognise the General Data Protection Regulations (GDPR) in English law, a policy fiercely criticised previously by our current Prime Minister?
Will your business choose to adhere to GDPR even if the UK chooses not to comply, to enable pan European aggregation, and what will the implications be? Again, these aspects of future trade will impact the systems that underpin business activities.
Will the UK change TUPE legislation (which is currently an extension to the Acquired Rights Directive (ARD)) or possibly introduce something else and what will be the implications for IT resourcing?
Given these considerations, what activities should CIO's include in their Brexit IT plans? I have three recommendations (which I will talk about further in a future blog):
- Develop a nimble organisation leveraging modern engineering tooling, methods and provision of ‘as a service' IT delivery to enable rapid changes in direction as and when required. There's further insight in our blogs on Software as a Service (SaaS) and Platforms as a Service (PaaS)
- Rigorously review their existing application estate to consider what can be tolerated as is, what needs investment, what needs to be modernised and what can be eliminated. I recommend reading our blogs on IT modernisation to find out more.
- Decouple business processes from their people and their physical location; by embracing automation, whether that is process automation (RPA), bot frameworks, or machine learning to differentiate in the market. This will have the additional benefit of freeing up resources to focus on what is important to your business. See Avanade's blogs on automation for more information.
Of course, all of this needs to be done not for IT's sake, but to demonstrate the CIO function is integral to business growth. Seize the business opportunities presented in your vertical and take IT-driven business propositions forward. µ
This article was written by Avanade.