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Brexit strategy: CIO planning for UK-EU split

For CIOs, the U.K.-EU split opens up a continent of unknowns. Also in Searchlight: Cisco locks on to security startup CloudLock; IBM woos blockchain coders; $4 smartphones hit India.

A week after the United Kingdom narrowly voted to "Brexit" the European Union, technology industry pundits have...

made myriad grim predictions: Talent will dry up; tariffs and red tape will choke trade; innovation will suffer; Google, Apple and other job creators will move their London headquarters to the continent.

At this point, though, speculation is speculation, said Nemertes Research CEO and founder Johna Till Johnson.

"Anybody who says, 'This is what will happen,' is telling tales," she said. There are too many unknowns, including how or exactly when the split will happen. "We don't even know if it's going to go through."

Indeed, with Boris Johnson, one of the most vociferous and influential of the "Leave" campaigners, saying Thursday he wouldn't run for prime minister -- a job he badly wanted -- it seemed the last shred of certainty had frayed. And uncertainty can do harm, leading to significant revenue loss, analysts said, especially to corporations with concerns in Great Britain or vendors that do business there.

But rather than wait for the shifting political and cultural winds to pass -- should they ever -- CIOs and other IT leaders need to take measured action to ensure their tech organizations are robust.

Where's the data?

They can start by thinking about their data center strategies, Johnson said.

"Whether you're using [public] cloud or private cloud, you're really going to have to think through where you want to put your data," she said, pointing to complications that can arise as a result of a U.K.-EU separation. When the U.K. leaves, compliance regulations and data sovereignty laws may change. If companies have data in Britain and Europe, they may have to deal with two different sets of laws.

"Really do some more gaming and some scenario what-ifing. Really think about where you want to put your data and think about your compliance," which may require significant changes, Johnson said.

Laura Koetzle, an analyst for Forrester Research who lives in Amsterdam, Netherlands, agreed data management strategies need to be rethought and possibly refashioned. And it's not just customer data that might need to move; it's employee data as well. And that can be costly.

"It all just depends on the volume of data. If you're talking about a few hundred employees, that's not such a big deal," Koetzle said. "If you're talking about millions upon millions of customers and hundreds of thousands of employees and other associated data, it could be quite a substantial cost."

People problems

Koetzle, who co-wrote a brief on the challenges CIOs at companies with U.K. ties may face while legislators negotiate the split, said another issue is European workers in Britain may decide to leave, rather than wait to see whether they can stay in the country legally.

"Nobody likes their immigration status to be uncertain, and so very talented people have loads of options," she said. "Some of them may say, 'You know what? I don't know what my chances of being able to stay here are, so maybe I go take one of the many awesome jobs in some startup in Barcelona or Amsterdam or wherever.'"

Johnson is more skeptical of any coming tech brain drain. How porous or closed the borders between the U.K. and Europe are going to be is an open question, she said, as is what skills are going to be available. That said, CIOs probably don't need to rethink their hiring practices yet, she said. 

"Keep hiring British programmers if you're hiring British programmers."

Some tech industry execs view the U.K.-EU split as a positive for hiring. Saalim Chowdhury is the chief strategy officer at Toptal, which uses software to match freelancers to companies that need them. Without the free flow of people across the English Channel, Chowdhury said, the U.K. may gain access to a higher caliber of talent.

"We can either have the European system, which says, 'Hey, we'll take everyone,' or we can have a system that allows highly skilled, highly talented people from all over the world to come to London," Chowdhury said in a statement.

Eyes on the road forward

Most important for CIOs to get through an uneasy period of indeterminate length, Koetzle said, is to keep budgets flowing to initiatives that will help their companies grow. Don't reroute money targeted for business growth to move data around or retain workers -- yet.

"CIOs have a whole bunch of back-office stuff that this is going to try to force them to pour more budget and time into," Koetzle said of the Brexit effect on IT chiefs: "This makes your job harder, but do not let stuff like this [force] you to underfund the things that are going to drive your company's future."

CIO news roundup for week of June 27

The U.K.-EU split stole headlines this week. Here's what else grabbed a few.

  • Tech giant Cisco announced on Tuesday it is acquiring cloud security provider CloudLock, based in Waltham, Mass., for $293 million in cash and equity. The startup, which launched in 2011, uses APIs to help clients securely use cloud-based applications. The deal, aimed at boosting Cisco's cloud security portfolio, is expected to close by November. CloudLock employees joining Cisco's networking and security business will also receive retention incentives as part of the deal.
  • Rumblings of chipmaker Intel seeking a buyer for its cybersecurity business surfaced last week. A Financial Times article reported that Intel has been engaging in discussions with bankers about the future of Intel Security, but it wasn't clear whether it would involve the sale of all of its security business or just parts of it. Intel acquired McAfee for $7.7 billion in 2011, rebranding the company as Intel Security in 2014. Earlier this year, the company announced it will be cutting 12,000 jobs by 2017 as part of a shift to making chips for cloud computing and internet-connected devices.
  • IBM is wooing blockchain coders in New York. The cloud giant announced the opening of its latest Bluemix garage at Galvanize's SoHo campus on Tuesday. Aimed at driving innovation, Bluemix tech garages provide developers with the opportunity to work with the IBM blockchain code in the cloud in a collaborative and creative environment. Other Bluemix garage locations include San Francisco, Toronto, London, Singapore, Tokyo and Nice, France.
  • The world's cheapest smartphone -- priced at roughly $4 -- is set to debut in India next week. But only a lucky few among the preregistered users will have access to it. The device, named Freedom 251, is developed by Ringing Bells, a mobile manufacturing company based in northern India. The launch of this device will bring affordable internet to the masses, the company hopes. The 3G device, which runs on Android 5.1 Lollipop, has a 4-inch display, 1 GB Ram, 8 GB storage and both front and rear-facing cameras. 

Check out our previous Searchlight roundups on Dropbox's new collaboration tools and the Microsoft-LinkedIn deal.

Assistant editor Mekhala Roy contributed to this week's news roundup.

Next Steps

Banks bank on an unpredictable future after Brexit

Opinion: Network effects will damage Britain's IT industry

The silver lining in U.K.-EU split

Dig Deeper on IT leadership and strategy

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