Two nations, one channel? The impact of Scottish independence on IT
In September Scotland goes to the polls in a referendum to decide its future and that of the UK, Alex Scroxton considers what the prospect of independence could mean for the channel
By the end of 2014, a union forged over 300 years ago could be on the verge of being consigned to history, depending on whether or not the people of Scotland choose to vote ‘yes’ to independence.
With the issue of Scottish independence already high on the political agenda on both sides of the border, it is clear that the future of the UK as a single country will be one of the defining issues of the year.
Although the true effects on the business world of a ‘yes’ vote in September 2014 will not be known until long after the event, some channel players are already beginning to assess what the impact may be.
Ian Parslow, senior vice-president of European sales at MTI Technology, says he is already watching the market with a “roaming brief”.
Parslow explains that from MTI’s perspective, Scotland is a market dominated by three conurbations – Aberdeen, Edinburgh and Glasgow – each of which acts differently. Aberdeen, for example, is dominated by oil, gas and energy markets, and in MTI’s eyes its economy is therefore insulated from the result of the referendum, as global energy, services and support companies will continue to pile in for as long as there is oil under the North Sea.
With regards to Edinburgh and Glasgow, Parslow says he has seen a number of exciting investments in higher education and government, and predicts that between 60% and 70% of the firm’s business will continue to come from this area.
“Commercial business in Scotland, for example finance and legal, where we’ve enjoyed plenty of success, remains challenging for a company like MTI, as there’s a lot of competition in that space,” he says
“Unless you have not only Scottish presence but also a unique proposition, you will struggle to deliver profitable business in the commercial space. If Scotland were to choose independence in that area, that market will remain challenging for some time, while organisations find their independence and unique selling points to be able to compete with English and European businesses.
“We also remain very excited about the public sector business, but should independence be attained we would consider carefully whether that market will be sustainable for the medium to long term as the government of Scotland considers its budgets and its procurement and tender habits going forwards.”
In spite of the possible challenges, Parslow says MTI remains optimistic about and committed to its Scottish organisation, having recruited a dedicated country manager for Scotland two years ago.
Ongoing business links
Another channel player pouring resources into the Scottish market is hosting and colocation specialist UKFast, where CEO Lawrence Jones recently cut the ribbon at a new central Glasgow office and is recruiting heavily to fill it.
Coming hot on the heels of the launch of Scotland’s dedicated internet exchange point, IX Scotland, Jones says he wants UKFast to be “at the forefront of Scotland’s digital revolution”.
Though he concedes that some have questioned the logic of the move with the referendum so close, Jones adds that Scotland will remain a huge part of global and British business whatever the outcome of the vote.
“This is why we have chosen to expand north before even considering going south to London – we’re moving up.
“As Scotland focuses more on its digital future and future-proofing its infrastructure, there is a clear gap in the market for us to help businesses in the country to grow. We want to join the market in Scotland to provide our enterprise-grade solutions for all levels of business,” says Jones.
UKFast also plans to build out more datacentre facilities and up its contribution to the infrastructure in Scotland to make it a more attractive location for financial and legal firms
Business as usual
Ian Kilpatrick, chairman at Wick Hill, is taking the prospect in his stride. “We are an international group, so we sell and ship to partners internationally already,” he says. “A ‘yes’ vote would not make any difference to us, regarding logistics or warehousing.
“Similarly, we have significant partners and sales in Scotland that are supported by our office and northern channel management. A ‘yes’ vote would therefore not alter that situation,” he adds.
A question of money
Alistair Forbes, general manager of GFI Software’s GFI MAX managed services business, believes much of the channel impact will depend on how adeptly the question of an independent Scotland’s currency is resolved. In the weeks since the launch of the Yes Campaign’s whitepaper on Scottish independence, much has been made by both camps of the potential disruption caused by an independent Scotland’s position within the sterling currency ‘zone’ made up of the remaining UK constituents, and its relationship with the EU.
Many governments in Europe, particularly in Spain where Madrid is wrestling with the prospect of a similar independence vote in Catalonia, would oppose Scotland’s continuing membership of the EU and there would undoubtedly be many months or even years of legal wrangling over whether or not an independent, EU member Scotland would be made to join the euro.
The alternative prospects of Scotland forging its own currency, or keeping the pound after negotiation with London, have also been received poorly in some quarters, with Welsh first minister Carwyn Jones among the more outspoken voices on the issue, saying Wales would be “uncomfortable being part of a currency union where there are competing governments trying to run it” and branding the idea a “recipe for instability”. Chancellor George Osborne has also weighed in on the issue, saying he would rule out a currency union to considerable anger from the Yes campaign.
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Jones and Osborne may be ploughing a lonely furrow, however, for SNP-backed polling data from December 2013 suggests that close to 50% of England, Wales and Northern Ireland residents would back Scotland keeping the pound. This finding lends additional weight to the Yes Campaign’s argument that a currency zone is necessary to sustain cross-border trade – Scotland is the UK’s second largest trading partner, with exports to Scotland greater than to the BRIC nations put together – and avoid disruption to, among other things, workplace culture and supply chains, a point that should be of considerable interest to the channel.
GFI’s Forbes sums up his position: “If both countries can agree to use the pound, the impact should not be that dramatic; it won’t be in anybody’s interest to introduce differential cross-border taxation, for example, because we have such a large internal market.
“Our customers are regional and not many cross the border operationally, but it is in neither country’s interest to disrupt cross-border trade, and certainly not in an independent Scotland's self-interest to do so.”
With the true impact of Scottish independence on business still an ‘unknown unknown’, as one might say, will it just be a case of adjusting the letterheads and referring to the UK, Ireland and Scotland country manager, or will the channel have to get used to a new currency and different taxation regimes? Time will tell.