Brexit: CIOs must “keep calm and carry on” – but realise tough times lie ahead

For CIOs across Europe (and indeed beyond), the UK’s recent decision to leave the EU (aka ‘Brexit’) has had little immediate effect but the longer-term impacts will likely be substantial. Many CIOs are already planning for that uncertain future within their own teams and playing a central role in shaping their organisation’s response to Brexit. Below we outline seven steps for CIOs to follow in the post-Brexit world.

Step 1: “Keep calm and carry on”

The UK wartime plea to not panic has become a familiar meme across the globe and CIOs know that the usual business of running an IT organisation has not changed in the slightest. You should guard against knee-jerk reactions (such as large-scale termination of projects) and remain focused on delivering great IT.

Step 2: Be at the centre of planning for the future

From our conversations with clients, we see many organisations establishing a Brexit office as a response to the referendum result. As IT is usually at the centre of an organisation’s response to change, CIOs will play an important role in that response and a strong IT voice in the Brexit office is essential. Consider seconding a member of your senior team to the Brexit office (it will be a great development opportunity for one of your rising stars).

Step 3: Re-examine your capital budget and operating costs

Short-term pressure on capital and operating budgets is an inevitable result of a major change in market conditions. While guarding against knee-jerk reactions is important, many organisations will look again at their budgets and be prudent in short-term investment decisions. Be prepared for increased scrutiny of current and 2017 capital budgets, and ensure business cases remain robust given currency fluctuations and market uncertainty.

The referendum result also provides the opportunity to look again at operating costs in your organisation. Already, we are seeing many organisations embark upon initiatives to take cost out of their business.

Step 4: Look at the next evolution of your IT strategy

An event such as Brexit will hasten changes in business strategy and IT organisations need to be at the forefront of responding to changes in regulation, in business processes and in critical data management. Opportunities for IT to encourage greater automation and agile ways of working in businesses are likely to be considered positively as firms determine their strategic and tactical response to Brexit. IT organisations will also continue to play a major role in ensuring digital initiatives deliver rapidly.

Step 5: Recognise the people issue – CIOs run multi-national teams

Whether your team is spread around multiple European countries or concentrated in the UK, it is likely that your IT organisation is a multi-national team. In most organisations, IT is one of the most cosmopolitan workforces. Uncertainty about the future status of EU nationals in the UK, and UK nationals working across Europe, will have a corrosive effect on morale and retention. It is therefore important to start thinking now about how you will retain existing and attract new talent, access key emerging skills and ‘manage the business as usual and unusual together’. 

Step 6: Be ready for the practical challenges of Brexit (1) – data segregation

While it is too early to identify all the changes that will arise as a result of Brexit there are already some clear areas where IT expertise will be required to meet the challenges of the vote and a revised regulatory landscape. Application and data segregation is likely to be an early and ongoing challenge for enterprises, with EU data being separated from non-EU data. One of the things PA has extensive experience of is the art and science of disaggregating IT assets and migrating data in regulated industries such as life sciences and financial services – for example, managing live clinical trial data during pharmaceutical M&A work.

Step 7: Be ready for the practical challenges of Brexit (2) – IT supply chain

Engage with the suppliers in your IT supply chain to understand what Brexit means for you and them. Not only will they provide insight into their response to Brexit but you will gain insight in how you can respond.  

The financial implications of currency shifts following the vote means some contracts that were profitable before may no longer be profitable, while others may now be making significantly greater returns than before. For the former situation, care should be taken to ensure suppliers continue to deliver the service you expect and you should anticipate calls from your suppliers to renegotiate contracts. For the latter, don’t wait until renewal to look again at the costs of delivery and ensure you are maximising the value of your relationship. You should also look again at your sourcing strategy: countries that were once attractive to outsource to may become less attractive. Beyond the financial implications, sourcing teams can also ensure that suppliers:

  • Have a clear understanding of the implications of Brexit for their business with you.
  • Are actively monitoring changes in trade regulations and how they will impact their commercial relationships with you.
  • Have a solid plan for managing any of their services or staff impacted by Brexit.
  • Have contingency plans for key personnel and have sought to protect them.
  • Have plans to accelerate innovations that reduce the costs of delivery (such as robotics and automation) and limit the need for travel across Europe.

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