With the rapid rise in the number of businesses transforming themselves to digital environments, the obstructions to the flows of data, IT products, IT services, and IT talent across countries, are becoming barriers to global growth of the businesses, inhibiting growth and innovation, forming a digital fragmentation.
According to a recent report “Digital Fragmentation: Adapt to Succeed in a Fragmented World” from Accenture, over 74% of CIOs and CTOs are expecting to either leave a geographic market, or delay/abandon the market-entry plans in next 3 years, because of barriers to globalization.
The reason behind barriers to digital globalization are the national protectionist policies which are created for improved cybersecurity and data privacy but end up causing the digital fragmentation. The number of restrictive trade measures adopted by G20 countries have reached from 324 in 2010 to 1263 in 2016, and number of data privacy laws have reached from 34 in 1995 to over 100 in 2015.
“Moves against globalization are forcing companies to make fundamental changes to key strategic and operational plans across global IT architectures, the recruitment of IT talent, the physical location of IT and cybersecurity,” said Omar Abbosh, Accenture’s chief strategy officer. “Regulation can provide critical safeguards in the digital economy. But it should be designed to stimulate, rather than inhibit, growth and innovation. Stronger dialogue between business and government is required.”
54% of business leaders believed that digital fragmentation will negatively affect their ability to either use or provide cloud services, versus 14% others.
58% of them believed that it will affect their operational efficiency across national IT standard, versus 18% others. While 54% of respondents thought that they’ll have to compromise their ability to use or provide data and analytics services.
91% respondents expected digital fragmentation to raise their IT costs over next three years.
According to the report, “More than half of business leaders surveyed believe that these increasing barriers to globalization will force their companies to rethink their: global IT architectures (cited by 60 percent of respondents); physical IT location strategy (52 percent); cybersecurity strategy and capabilities (51 percent); relationship with local and global IT suppliers (50 percent); and geographic strategy for IT talent (50 percent).”
The report also revealed that 80% of the companies were already fighting these obstacles with strategic planning, and 51% said that they were reorganizing their IT architectures and governance structures, while 67% planned to invest in automation as a response to digital fragmentation.
Accenture report suggested business leaders to dedicate greater resources to review the business impact, protect flows of information which is critical to management decisions and business operations.
The report also recommended enterprises to start using technologies like 3D printing, artificial intelligence, IoT, big data and blockchain, in response to digital fragmentation.
Accenture said that it collaborated with Roubini ThoughtLab to survey over 400 CIOs and CTOs in Brazil, China, Germany, Japan, India, South Korea, the United Kingdom and the United States.