How Brexit Could Have a Big Impact on IT

    August 3, 2016

    With England poised to leave the EU, CIOs nervously wait for new market conditions to unfold.

    Few CIOs expected Brexit to happen, but with the votes cast and Theresa “Brexit means Brexit” May at Britain’s helm, they must prepare to deal with its ramifications, good and bad. While IT isn’t likely at the top of many Britons’ minds, the EU departure will have a big impact on the tech industry and business generally, with possible rippling effects throughout Western Europe and beyond.

    All that being said, it isn’t quite time to start sounding the alarm for IT professionals. The exact terms of Brexit are as of yet unknown, and negotiations will probably draw out for at least two years. Still, as fresh as the situation is, we can make some educated guesses (and confident predictions) about what challenges organizations will likely have to face. The sky isn’t falling, but it isn’t yet clear who will hold up the cloud.

    Full Speed Stop

    One point on which there seems to be a general consensus is that Brexit won’t be a boon for the British economy. Gartner predicts that the move will lower the U.K.’s estimated 1.7% growth in 2016 IT spending by between 2% and 5% — that is, growth will likely peter down and into the red by the end of the year, and Western Europe may follow suit. On a similarly unhappy note, they warn that business discretionary IT budgets may also take a hit, which means that CIOs will likely hit pause on large upcoming projects until forecasts improve.

    ZDNet also notes that Brexit could cause data sovereignty and compliance laws to change (the EU is pushing for a Digital Single Market, and Britain may or may not enact compatible standards). This could cause major technology vendors, and cloud vendors especially, to pump the brakes on large projects.

    For example, Microsoft could halt plans to construct two additional Azure data centers in the U.K., or worse, choose to construct on the mainland instead. Of course, speculation like this is hardly productive, but organizations will need to pay close attention to how their data is managed and stored, knowing that they may need to rethink management strategies.

    Changing border laws may also complicate the U.K. hiring situation. TechTarget notes that EU citizens may decide to repatriate (even ahead of formal negotiations), and British citizens may likewise feel the need to return from elsewhere. Still, they recommend that, short of a coherent Brexit strategy in place, organizations should not fret, and instead should focus their attention on drivers of the business.

    Maintaining Course

    That’s really the key takeaway: while Brexit may cause organizations to reorient, it won’t fundamentally alter their business strategies, nor the general trajectory of the market. In fact, despite dire forecasts, companies haven’t yet seen many consequences. Demand for AWS cloud services has held steady, for instance, even though a falling pound has resulted in what amount to rising prices, reports the Wall Street Journal.

    For the moment, organizations should ensure that their current capacity is optimally supporting their business services — until the unknowns are known, the focus should be on creating value.

    In light of this objective, having a bird’s eye view over your IT infrastructure and services is more important than ever. Capacity management tools like TeamQuest’s Vityl suite give organizations a top-down view into their IT health and risk, enabling them to make split-second adjustments in order to maximize value. That is, companies can stay the course now, then respond flexibly when regulatory or market conditions demand change.

    Volatility isn’t an entirely good or bad thing for IT markets, but without a comprehensive grasp on your systems, it’s hard to say what kind of impact it’s likely to have. In other words, the best response to market unknowns is to create a system that pitches change in your favor. Is Brexit good or bad? It all depends on your perspective.