Article Synopsis :
Increasing obstructions to the flows of data, IT products, IT services and IT talent are jeopardizing the journey toward global digital business models. Accenture calls this process ‘digital fragmentation’ and this slide-share examines and quantifies key issues and challenges.
Trade restrictions and data privacy laws are slowing the advance of digital global business models
Changing opinions on globalization, nationalism and multinationals, are shaping a newly fragmented business world in which it’s increasingly difficult to move people, products, services, and data across borders. Protectionist policies have soared, with G20 members adopting more than 1,200 trade-restrictive measures since 2008. Foreign direct investment has also lost momentum, with capital inflows below their 2007 pre-crisis peak.
Regulations controlling data continue to rise, with the number of countries with data privacy laws more than tripling over the last two decades. Media sentiment towards multinationals is worse than during the financial crisis. Add it up and 74% of companies say they will either exit a market, or delay or abandon market-entry plans, due to increasing barriers to globalization.
In this new era of fragmentation, four main business implications arise:
- Rising IT costs: 91% of surveyed executives think rising barriers to globalization will increase IT costs over the next three years
- Increased operational complexity, including:
- Greater security risks
- Cross-border communication compliance
- More integration work
- Finding more talent in more places
- More red tape
- Compromised digital growth plans, impacting:
- Cloud services
- Cross-border analytics
- Operations across national IT standards
- Revised strategic and operational plans, focusing on:
- Global IT architectures
- Physical IT location strategy
- Cybersecurity strategy & capabilities
New and emerging technologies bring complexity – and opportunity. Companies prepared for this more fragmented reality can rotate to the new, leveraging big data and analytics, cloud, IoT, AI, blockchain, and 3D printing.
Global business models, especially digitally-focused ones, must flex and rotate if they are to succeed in today’s new, more fragmented reality. The report recommends these four steps for recalibrating digital direction:
Add a new lens to strategic planning: Boards must acknowledge the impact of an increasingly fragmented world by discussing implications across the business.
Build local advantage: Adopt IT strategies, processes and infrastructure enabling the organization to be ‘truly local’ in all markets.
De-risk data: Protect and reassess key information flows to optimize decision making and prevent disruption.
Embrace technology: Fully explore and exploit new technologies to navigate complex and evolving regulatory rules and legislation in relevant markets.
Digital Insurer's Comments
With a looming ‘trade war’ between the US and, well, everybody, this report is timely and highly relevant. There’s also the not-so-subtle backlash against big data platforms including Facebook for privacy concerns and Google for antitrust in the EU.At the early stage of large-scale enterprise migration to public clouds, we see the fragmentation as described in this report accelerating the process. Public clouds not only offer elasticity of compute resources, they also offer flexibility of location. They get you everywhere you want to be, and out of everywhere you don’t, faster, for less.
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About the Author
Tom Bobrowski
Head of North AmericaTom is responsible for developing the Digital Insurer in North America. Tom has over 20 years consulting experience, the last 10 focused on insurance, as a C-level strategist and problem solver in the areas of globalization of operations, technology transformation and change management. Tom is also the editor of the Digital Insurance Library section of the Digital Insurer.
