Current issues facing technology companies

SUITS THE C-SUITE By Manolito R. Elle

Business World (04/18/2016 – p.S1/2)

The pace of change within the technology sector is rapidly accelerating. Even within an industry that is accustomed to rapid waves of change, C-level executives and boards now find themselves navigating an unprecedented period of disruption and innovation. The era of cloud computing and smart mobility is bringing about change faster, more continuously and from different directions, allowing more fluid access and/or transfer of data. As a result, executives and top management are also becoming increasingly concerned about intellectual property (IP) protection and information security. This transformational force is global and highly complex, encompassing new business models, new entrants and new markets — and always with the looming prospect of next-wave technology disruptors.

Clearly, today’s multiple waves of disruption (and their magnitude) are defining a historic transformation for the technology sector. To deal with the changing times, technology executives need to understand what the technology risks are and the related strategies, as well as transformation initiatives, to address these risks in today’s environment.

Here are some of these potential technology risks:

Social media and networking

By now, everyone knows that social media technology has become a force that businesses must reckon with at breathtaking speed. Its effects are cutting across the entire spectrum of business activities — from product development to marketing and sales to customer support.

This leads to a conundrum where most organizations find themselves needing a strategy to engage social media. However, the change social media has wrought is happening so fast and at so large a scale that the “why’s” and “how’s” of such a strategy — and the risks involved — are not yet fully understood.

As urgent as the need is to establish a social media strategy, businesses should do so with full awareness of the potential risks, such as: employees inadvertently leaking sensitive company information; criminal hackers “re-engineering” confidential data; employees misusing social applications while at work; and damage to the brand or company reputation due to negative employee or customer posts.

Despite these risks, leading companies recognize the potential value they can derive from social media. They are creating and communicating social media strategy, objectives and measurement plans, as well as developing enterprise-wide social media policies to guide employee usage. They are taking steps to proactively educate and train their staff to operate safely and effectively in social media.

Use of cloud computing

Cloud computing is a new paradigm where resources are available to enterprises and users on-demand and on a pay-per-use basis. It uses the Internet to access someone else’s software running on someone else’s hardware in someone else’s data center.

The cloud has evolved from a buzzword into a topic of conversation among Chief Information Officers and Boards of Directors. Companies of all sizes are venturing into the cloud to address a variety of business needs. However, as with any major technology shift, the principal challenges are on how to adopt and transform the existing landscape while building a secure, trusted and audit-ready environment.

The use of cloud computing could pose different risks such as: unauthorized administrative access, inadequate data management (i.e., in terms of location, compliance, recovery and security), and the unexpected unavailability of the cloud provider or a stable Internet connection.

To have a more effective cloud adoption strategy, companies should consider the three core elements in the cloud transformation journey — adopt, transform and trust. “Adopt” means creating a strategy and vision for implementing cloud technology. “Transform” means changing the way companies use the cloud to achieve business objectives. “Trust,” on the other hand, means providing a secure, trusted and audit-ready cloud environment.

IP protection and information security

Many companies often experience active and constant threats from outsiders to steal IP data. IP theft is a global concern and significant risk to businesses. In some countries, IP theft is common and becomes part of a company’s business growth strategy to keep up with its more innovative competitors.

One of the issues with technology and security compromises is that many companies do not know when files and data are migrating from their enterprise. For example, there is a limited ability to secure data when employees save work files to external devices. E-mail systems can also be the gateway for intruders to enter a company’s network and compromise data.

IP protection is such an important issue that it prompted Europe’s highest court to strike down on Oct. 6, 2015 an international agreement that had made it easy for companies like the global technology giants to move digital data from their millions of users in the 28-member European Union (EU) to the United States. The ruling empowers data-privacy regulators in each of the EU nations to evaluate how data are moved from their countries of origin to the United States, and it will permit national authorities to impose tougher restrictions on specific data transfers.

Consequently, protecting IP against increasing cyber threats has become a primary business concern for technology companies, where IP is often their most valued asset. Companies should consider leveraging on the leading practices to protect their IP, such as increasing executive commitment, regular inventory of IP assets and review of access rights, implementing enhanced controls and enhancing IP governance. Integrating these efforts into the overall enterprise risk program is crucial to a well-managed information security program.

While these are but some of the risks and challenges facing technology companies, it is clear that enterprises need to implement defensive programs that are relevant to the rapid technological evolution happening every day. Such moves will require both top-down executive support as well as changes in the business culture from the ground up. Only then can a successful business transformation occur.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Manolito R. Elle is a Senior Director of SGV & Co.