Political Turmoil

04 July 2017

I haven’t written a blog for a month or so, basically, I’ve been a bit distracted by the amazing twists and turns of our current political system. Clearly, it's risky stating your political allegiances on a social media platform such as LinkedIn and I will avoid this, but no matter which way you vote, it’s difficult to not agree that the last few weeks and months have been utterly bonkers.

It’s quite interesting mapping the last few weeks onto the IT and Technology Supplier world. Lessons learned would be:

  • Having a simple marketing strap-line has a value, but just repeating it like a robot to your audience, just makes them annoyed
  • Social Media marketing works, especially when your target buyer is “young”
  • Stating your business is going to do something, then changing your mind a few days later is bad for business
  • Never slate your competition for specific traits when you may need to buddy up to people with similar traits to continue your business
  • Democracy is a wonderful thing when it works. It may look a bit broken now but that is it working, because the country is divided and therefore no consensus will ever be found.

I could go on. It’s fascinating. And potentially inflammatory! So, I won’t.

But in all this turmoil, what should your average IT and Technology buyer be thinking? What does this ever shifting political (geo and domestic) landscape mean to your day to day job? Are there risks at the macro level that are lurking which have yet to rattle through to the individual tasks that you are responsible for? I am no macro geopolitical expert, but thought I should brainstorm a few things that maybe should be on your list:

Brexit

  •  Currency fluctuation as a result of nervous markets will affect the relationship between the US dollar and GB Pound. This could go either way, but understanding the basis on which your technology quotes (most of which hinge on US companies) are made is worthwhile, and getting quote validity for as long as you can (90 days) will avoid embarrassing budget miss if the price goes up whilst you are getting approvals.
  • The labour market is going to go through significant change as EU membership impacts the guarantees for individuals. This has been happening for a while, but clearly if your business is dependent on non-UK labour, or if your suppliers are based on non-UK labour forces, it might be worth considering the impact of staff churn or supplier failure on your business.
  • Trade tariffs, and membership of the EU, is clearly going to change. Any business with significant dependency on international trade is likely to be affected (good or bad) and this could cause impact on trading performance either as a client (budget changes because of impacted revenues) or supplier (cash flow / revenues as a result of international markets exposure).

Financial Markets

  • The consumer debt burden is growing and this is likely to impact the BoE’s view of interest rates in the coming months. Whereas that might be a good thing for the economy, it could be significantly complex for some IT suppliers where they have major leveraged debt and struggle to make payments / raise new funds.
  • Because of changing market conditions, and general timing after the heady 1980’s IT start-up mode, a lot of people are cashing out of their businesses to secure cash for retirement. IT companies are going through substantial mergers and acquisition activity, and this will intensify over the coming years.

Domestic policy

  • The rise in terrorism and cyber-crime is clearly going to dictate policy regarding data privacy and protection, and state access to data. The so called “Snoopers Charter” is probably just the start of it, a clear view and understanding on Data Protection (way beyond the GDPR hype), with clear roles assigned within business, is probably a sensible investment.
  • Cyber-security, especially with all the recent ransomware attacks, is going to be forefront of most policy maker minds, which will drive substantial premium for security products that work best. Understanding your businesses requirement for protection from cyber attach and selecting the right solution for you, not just the latest and greatest (and most expensive) is key.
  • Assessing the previous two points in the context of IT and Telecoms suppliers is key. Knowing where your data is, how well it is protected, what your contingencies are, and liabilities with the supplier, needs careful assessment.

If I were a UK IT and Telecoms buyer, I would probably be thinking about reviewing my supplier base to verify their ability to weather financial and political storms, and lock in some long term non-indexed service contracts to protect the predictability of my IT and Telecoms spend over the coming turbulent months and years. As part of this review, I would check the debt profile of the supplier, and verify the sovereignty of their workforce, and likely impact of international clients / contracts / suppliers. For hosted / cloud services, I would understand the relationship I have with the provider regarding data protection and resilience, and make any necessary adjustments to contracts and solutions to protect myself from risk.

Any technology capital spend I was likely to make in the coming 12 months I would try and lock-in quotes for as long as possible and build in contingency for currency fluctuation based change.

"Winter is Coming"....

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