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How Brexit Affects Cloud-based EDI Solutions Vendors

 

The Brexit, an abbreviation for British Exit, refers to Britain’s withdrawal from the European Union. A referendum – a vote in which citizens take part – was held on June 23, 2016 to decide whether UK should leave the European Union. The European Union or EU is a political and economic partnership of 28 European countries. It began after the WWII to foster economic cooperation and avoid getting into another war with one another. The leave won by 52% against the remain at 48%. 

What happens now?
For the UK to leave EU, Article 50 of the Lisbon Treaty must be invoked. The current Prime Minister or his successor needs to decide when to invoke this. Cameron, who is stepping down as PM on October, will go to the European Council to explain the decision of the British people. At the moment, the EU law still stands in the country until it ceases as a member – and that process could take some time.

After exit, a lot depends on the kind of deal the UK agrees to. If it remains within the single market, UK citizens can still work in the EU and vice versa. However, the UKIP wants the government to impose work permit restrictions. This means other countries could reciprocate and the Britons would have to apply for visas to work in the EU. Many big businesses voted to stay in the EU because it makes it easier for them to move products, money and people around the world.  

How will cloud-based EDI solutions vendors be affected?
The Brexit can cause some turbulence and uncertainty to the cloud ecosystem. The fallout is just beginning, but enterprises were planning based on their exposure to the United Kingdom. The currency alone is going to hit technology companies and their revenues. Here’s how the Brexit will impact cloud-based EDI solutions providers:

  • It is highly likely that UK data centers of cloud-based EDI solutions providers may go on hold. Now that the UK decided to leave the EU, new laws and regulations will be in place which add costs. UK’s IT standards will predictably deviate from whatever the digital single market turns out to be.
  • The spending that would have gone to the UK will likely go to Ireland. Ireland will become the cloud lifeboat since the Brexit will make it a better country to carry out technology and financial services. It could also become the hub for Western European cloud operations.
  • It is less likely but the Brexit could cause a mass exodus. Other countries might leave and the cloud landscapes could become much more complicated. When this happens, the Euro will be substituted with local currencies. While it is early to predict the dissolution of the EU, its implications for cloud-based EDI solutions providers could be huge.
  • If the EU does dissolve, every country would have their own regulations and they would be judged based on importance and market size. It would also be unclear how data will flow across these countries.

  • It is also possible that cloud advances will be cut off in the EU as cloud-based EDI solutions providers may look at growth elsewhere. The cloud infrastructure built out in EU could go to Asia and the EU could fall years behind in the shift to the cloud.   
  • It’s not all bad for the cloud. Overtime, it is also possible for the UK’s cloud industry to fare well. Assuming the country does not split with Scotland and Northern Island, more data centers could be built which will make it more technology and business-friendly.

The cloud aims to be transnational. But with the Brexit underway, once an open border now closes and sets up a new boundary with a new set of regulations. Thus, it will greatly affect how cloud-based EDI solutions providers operate in the UK. UK’s withdrawal process from the European Union could take two years. And, two years is a long time in the cloud.    

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Charlie Alsmiller

Throughout his career, Charlie Alsmiller has focused on customer problems in difficult industries such as Energy and Telecommunications. Prior to starting Appterra in 2005, Alsmiller was VP of Global Operations for Allegro Development, a leading provider of software for the energy sector. He has also served as president of OmniSpace Technologies, a leading SaaS provider that he founded in 1999. He spent over 10 years in the consulting world with Price Waterhouse and Deloitte Consulting, where he participated in a wide variety of projects for very high profile clients. Mr. Alsmiller holds a BBA from Baylor University in Management and Information Systems and a MBA from the University of Dallas in International Business. Specialties: Technology ventures, Enterprise Software, Contract Negotiation, International Operations, Private Equity, Product Management, Strategic Alliances, Software Implementation, Software Development

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