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What CIOs should know about Brexit

CIOs should start talking with other executives and their teams and begin planning now for potential changes

The outcome of the EU referendum has triggered a sharp, negative response from the corporate sector. 

According to research by Deloitte, 73% of chief financial officers (CFOs) said they are less optimistic about the financial prospects for their company.

Over the coming months, the terms on which the UK leaves the EU will start to become clearer. In the meantime, business leaders – including the CIO – should communicate and plan for potential changes.

So how should technology leaders respond?

Immediate priorities – plan, communicate and reassure

While the result was unexpected for many, there is no need for knee-jerk reaction. Planning should begin now to mitigate risks to operations and to look for opportunity. Avoid hasty and unwarranted cost cutting, protect key investment programmes, but create space in budgets and resource plans for Brexit-related activities.

Planning should start with “Brexit labs’ (workshops), with participation from across the organisation to determine the potential business model and technology changes required. Include the “most change” outcome in these scenarios, where the UK trades by World Trade Organisation standards, looking at the implications and the timeline needed to make those changes in advance of the UK’s departure. 

This includes planning for the technology skills that may be needed. If many organisations seek to make changes to finance, digital and e-commerce systems at the same time, skills to do these will be in hot demand.

CIOs should perform an operational risk review to determine possible disruption to their IT supply chain. This should include reviewing critical contracts for risks that might change the price paid, cost to deliver or operational principles. 

Issues may include movement of goods and people intrinsic to the service, currency mechanisms including FX, territorial elements such as licensing or insurance validity (that may be determined by the EU) and related facilities. Addressing any issues now could save costs, but also reduce uncertainly for suppliers and assure service continuity.

IT departments also often have one of the most diverse talent pools in the business. This team will appreciate positive communications and reassurance that you are actively managing Brexit.

Key dimensions – data, hosting and security

There is no need to migrate data or systems between jurisdictions in anticipation of Brexit at this stage, such as moving European data to the UK or vice-versa. Indeed, this could prove counter-productive if and until any relevant legislative changes are outlined. 

Hosted and cloud services will continue to be an important component of technology strategy. Regardless of Brexit, many major public cloud providers are offering regional options within their service and we expect them to provide tools to assist with migration between regions, should this be required.  

Perform additional due diligence when selecting new software as a service (SaaS) applications though. For example, determine the proportion of customers and revenue that are from the UK and the supplier’s propensity to adapt software to the UK market.

Continue to prepare for the General Data Protection Regulation (GDPR), as it will need to be implemented by May 2018 regardless. All countries handling EU resident data must comply with GDPR, even if they are outside the EU. It is also likely that a close equivalent will be implemented in the UK post-Brexit.

Consider opportunity as well as risk mitigation

Good businesses innovate and there may be several areas where technology could support market advantage. For example, in the last period of economic uncertainty, consumer spending moved from large assets to online and “feel good” purchases. With the much-increased prevalence of smartphones and tablets providing ease of access, there is an opportunity for digital innovation to power growth through enhanced online services.

There is still much uncertainty around the UK exit from the EU. CIOs will use this time to ensure they are prepared once the specifics are clearer. Shrewd CIOs will seek out the competitive advantages that these changes may bring.

Brexit is a historic moment that requires CIOs to be proactive and show leadership. As revealed in Deloitte’s CIO Survey, technology leaders who embrace change have the opportunity to create a legacy beyond their systems. 

Stephen Mercer is UK technology consulting leader at Deloitte.


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