UK businesses confess to not considering data sovereignty

EU exit opens a Pandora’s Box of data location and compliance issues for UK small businesses, a new study reveals.

Nine in ten (87 per cent) of IT decision makers working in UK businesses have not considered data location and data sovereignty in a post Brexit world, according to new research from Loudhouse, commissioned by 4D.

With no clear path to leave the EU or set timings of when Article 50 will be evoked, especially since the High Court ruling which may or may not be overturned, 50 per cent of businesses are consciously delaying IT decisions with 75 per cent stating that Brexit is limiting their 2017 IT plans.

Jack Bedell-Pearce, managing director at 4D, says, ‘Basically, we’re in the calm before the storm. Given the uncertainties around British law when we do exit the EU, especially around data location, compliance and protection, many businesses aren’t sure what to do next when it comes to IT purchasing decisions and technology plans for the future.’

‘This has massive implications for upcoming legislation such as GDPR (General Data Protection Regulation) with businesses seemingly keen to keep the coming regulation despite its EU origins’, Bedell-Pearce continues.

Businesses remain unaware

‘For example, despite the argument being proposed that leaving the EU would reduce red tape and lessen the duty to comply with a kaleidoscope of ‘excessive’ regulations on UK businesses, our research shows that 69 per cent of businesses actually want to keep GDPR.

‘Nearly half (46 per cent) of these businesses are fully prepared to absorb additional costs incurred through direct marketing – which the Information Commissioner’s Office (ICO) estimates will come to an additional £76,000 a year. Just 23 per cent would like to scrap GDPR to avoid extra operating costs while the majority (59 per cent) think GDPR should be compulsory for all large businesses.’

Bedell-Pearce says that, worryingly, there is a legislative ticking time bomb with 31 per cent of businesses confessing that they have never heard of GDPR and 52 per cent who are aware of it believe it will only have a minor or no impact on their business. There is a lot of confusion over what will happen when we start the exit process with senior IT managers wondering what their obligations will be if their organisation’s data is stored abroad.

‘Of great concern is the fact that only 28 per cent think about data sovereignty in terms of how local laws will impact the way they store their data. Many questions remain unanswered. For instance, how do they comply with the country’s privacy regulations and keep foreign countries from being able to control their data?’

Where does your data lie?

The lack of awareness and confusion around data sovereignty is perturbing – if we lose control of data flows, businesses will need to get to grips with where their data lies, what laws their data is subject to and who owns the data centres in which their data resides. The situation is serious and could lead to a data exodus, to the detriment of the UK economy in a few short years.

Despite this, the research does reveal a silver lining. Following Brexit, one fifth of businesses currently using an international public cloud provider for client data will migrate to UK providers in two years’ time and almost one third of companies currently using an international public cloud provider for company data sovereignty will migrate to UK providers in the same timeframe.

Positively, following Brexit, the proportion of companies currently using a UK public cloud for company data will increase by almost a third. But how is this a good thing for UK businesses and the UK data centre sector?

‘It means that jurisdictional security is becoming a bigger priority to businesses,’ adds Bedell-Pearce.

‘It seems for many that it makes sense for companies to use a UK owned data centre if their customers are based in the UK or that’s where they host the majority of their data. In the digital era, data is a company’s crown jewels and the way businesses treat and protect their data will govern their reputations.

‘Having a plan to adapt to the changing landscape therefore will go a long way. Over the next few years, we expect to see a big increase in the demand of UK hosting services, which can only be a good thing for the UK data centre industry.’

Further reading on cloud storage

Owen Gough, SmallBusiness UK

Freddie Halvorson

Owen was a reporter for Bonhill Group plc writing across the and titles before moving on to be a Digital Technology reporter for the

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