Information Technology

Brexit… the pain and the opportunities

By Susan Bowen, Vice President and General Manager, EMEA at Cogeco Peer 1
Information Technology
Published: 13 July 2017

Susan Bowen acknowledges that Brexit is a time of uncertainty for UK digital businesses but at the same time it also presents new opportunities if approached correctly

The internet knows no geographical boundaries. It’s one of the reasons why this global network rapidly went from a means by which a cluster of universities communicated with each other to a ubiquitous web creating, underpinning and driving digital economies that are turning the traditional world of business on its head.

The UK’s thriving tech sector alone is dynamic, innovative and resilient and its digitally intensive businesses are big exporters to Europe and the rest of the world. A recent report last year from Shoreditch-based tech think-tank Tech City UK said the UK’s digital technology industry is growing at twice the rate of the rest of the UK’s economy.

But Brexit threatens to put a brake on this fast-moving and successful digital economy. Precisely how the changes brought about by Brexit are going to impact on UK digital businesses remains open to question. Will UK digital businesses have to pay import duties on goods exported to Europe; will they be faced with additional administration costs as well as customs clearance charges?

Shifting sands
One of the few certainties is that the political sands have shifted and these new winds are currently blowing in the direction of a free trade deal. This is surely good news for business given that it removes barriers rather than erecting them.

However, until we know exactly where we stand, the most sensible approach UK digital businesses can adopt is one which allows them flexibility to adapt to the changes to ensure they remain open, fast-moving innovative and successful.

Brexit will inevitably have an impact on the data economy. The EU has a multitude of regulations that govern the way countries trade with one another. These range from weights and measures, environmental impact and supply chain management.

One of the aims of Brexit is to slash the red tape and free up UK businesses but those that do business with Europe will likely still be required to comply with EU legislation. Clearly it’s an area for legislative concern and UK digital business will need to consider things such as security, data storage and even the formats in which data is stored. This is going to impact on everything from financial transactions to personal records.

Locked out
For instance, if the UK does not reform its law by the time it leaves the EU and retains the Data Protection Act 1998, it will likely be deemed by the EU as a destination providing inadequate protection for personal data. The EU’s General Data Protection Regulation (GDPR) is set to come into effect in May 2018 and is essentially designed to protect customer data. Companies that suffer data breaches can be hit with fines of up to 4% of turnover.

The type of legislation can be seen as a target for Brexiteers in that it imposes a significant burden on businesses to essentially redesign their internal data systems. But the bottom line is that UK businesses that don’t comply with GDPR won’t be able to do business with their European counterparts.

But there are ways to successfully navigate these issues. The UK digital economy is underpinned by technology and services such as colocation, network connectivity, hosting, and cloud. These provide the foundations for the digital economy and online businesses.

Foundation for growth
Companies that provide these foundational clouds, network connectivity and managed services can distribute data across various geographical locations. This means that UK digital business can host data in other territories to meet mandatory legislative requirements.

Further, technologies such as virtualisation mean that data stored within the EU can be backed up across multiple geographies via SD-Wan technologies. Without getting too technical SD-Wan is a means to connect enterprise networks, including branch offices and data centres, over large geographic distances.

It protects against malware, makes transporting data much more efficient and effective and has a proven track record. In short, SD-Wan enables a nimble data infrastructure, improved security and more efficient network provisioning. This should offer some reassurance to business that the impact of Brexit will be minimised.

Informed decisions
However, an important point that UK digital businesses need to look out for when engaging with service providers is flexible service level agreements (SLAs). Nobody wants to get locked into inflexible SLAs and one of the defining characteristics of online business is peaks and troughs in traffic and sometimes rapid expansion.

A business needs to able to scale without the risk of overstretching or pull back, for instance, when orders decrease following the tailing off of seasonal demand. Within this context flexible contracts can make a big difference to how an online business can operate. SLA’s provide the freedom to scale at will and make the most of business opportunities as they arise.

Unsurprisingly many see Brexit as a major disruptive trend. The internet has created a borderless society and at one level Brexit can seem like an archaic throwback which threatens to stymie and disrupt digital economies. But that said it can also be a catalyst and an opportunity for UK businesses to reset their global competitive positions, and to rethink priorities and partnerships.

Within this context Brexit actually provides an opportunity for UK digital business to review and streamline their operations. But they need to find technology partners that will help them construct a flexible data infrastructure so they can meet the changes head on and leverage the opportunities that will inevitably appear.