Increasingly businesses have been happy to use SaaS based solutions – software as a service, so what you get is a service and the rights to that service, which is a specific instance of the supplier’s software hosted on the supplier’s servers. The supplier bears the capital infrastructure costs, and gets paid on a subscription basis.
Generally the suppliers themselves outsource the hosting, and there are many well-known hosting companies, with tremendous systems – because their whole business depends on the security and solidity of their systems.
For those of us who deal with American companies, we’ve been a bit sniffy about their security and their approach to the privacy of data, because the philosophy underlying US commerce is different to the privacy-driven approach from Europe. The UK was a great place to host your data; but is it still?
Within the European Economic Area - the EU plus Iceland, Liechtenstein and Norway – data can be transferred across boundaries, because all the member states are required to comply with the 1985 Data Protection Directive (and in 2018, with this year’s General Data Protection Regulations). Certain other countries – including Canada, Israel and Argentina – have been approved as having strong enough data protection processes to allow data to be transferred to them too.
If/when the UK exits, we will no longer necessarily be an approved country to which data can be transferred. One of our clients has already had a customer specify that their data will be held outside the UK on Brexit. Unless at the point of Brexit the UK is compliant with EEA requirements (and the EU have never been thrilled with how the UK addressed the 1985 Directive, and it will lose its incentive to be flexible) we can see UK hosting companies and UK software companies who host in the UK facing new challenges and substantial new costs. From a business planning viewpoint, customers won’t regard this as a risk they have to take – it will be something they will require their suppliers to cover them against.
It seems to us that this is likely to be really damaging, unless government addresses the potential damage very early – amongst all the other issues it is going to have to face; or unless, of course, Brexit doesn’t happen.
Written by Paul Berwin of Berwins Solicitors.