Cyber security driving global digital transformation

Cyber security is now the main driving force for digital transformation globally, with mining and storage also among the list of priorities. This is according to Baker McKenzie’s latest Digital Transformation and Cloud Survey, which suggests shows that cost savings and greater efficiencies are being realised amid a new, pandemic-led 'business as usual'.

The top three areas of digital investment by companies globally currently are related to storing, mining/monetising and securing data – cloud computing (85%), AI and machine learning (80%) and cyber security (71%). In addition to the major focus on cyber security, the importance of AI to companies has also jumped in the past year. In 2020, only 14% of survey respondents were heavily investing in AI. Today, nearly half of leaders surveyed believe AI is core to their digital transformation efforts.

Reflecting on the trends, Adam Aft, global co-lead, technology transactions (Chicago), said: "In 2020, 58% of digital leaders said that COVID-19 had accelerated their plans for DT and cloud – with particular investments in cyber security, talent and customer insight. One year on… the latest data shows DT has evolved from an urgent effort to a permanent part of the enterprise – with organisations launching and scaling DT activities and tackling cyber security as a priority"

Isabella Liu, Asia-Pacific head of intellectual property and technology (Hong Kong), added:
"The speed of technology advancement has largely outpaced legal developments. The EU is generally seen as leading in legal framework developments that regulate the digital economy arising from digital transformation. For example, the proposed Digital Services Act and Digital Markets Act by the European Commission seek to increase the transparency of large online platforms and to enhance the EU’s regulatory environment for digital technologies. Other legislation includes the Digitalisation Act in Germany, which seeks to create a new antitrust framework for the digital economy.

"In Mainland China, with the shift to e-commerce in recent years and the unprecedented growth of digital technology companies, the government’s focus has similarly been to limit the power of digital technology companies, to improve cyber security and data security, as well as to enhance personal information protection with the recent introduction of the Personal Information Protection Law.

"Businesses are advised to align internal workflow (which can be multi-jurisdictional) and undertake thorough risk and impact assessments of the adoption of any new digital technology to work through the relevant legal and regulatory issues.”

Key report findings (Source: Digital Transformation and Cloud Survey, Baker McKenzie)

In terms of specific technology driving digital transformation, the migration to the cloud remains at the forefront, with cost reduction continue to provide a strong impetus to continue, However, there remain lingering concerns around data privacy and cyber security, with a focus on cloud contracts that allow organisations seeking to create value from cloud data to bake in appropriate protections up front.

Organisations are reasonably evenly split on the buy or build question, with 28% opting for on-boarding off-the-shelf tech solutions, 29% building their own, and 43% adopting a mix of both.

According to the report, legal and regulatory frameworks governing the digital transformation space continue to evolve, but the pace of technological adaptation will only accelerate as organisations follow through on their plans to implement more sophisticated technology as part of their digital transformation journey (blockchain, predictive analytics and AI.).

Organisations that have found the most success in navigating the overlap of emerging tech and evolving legal frameworks are those with strong collaboration between the commercial and legal teams across functions within the enterprise. It has proved crucial to stay up to date with the latest legal and regulatory developments in a variety of jurisdictions.

Looking further forward, the report finds organisations gearing up for a continued evolution in their digitalisation efforts. Future priorities reflect various aspects of enterprise strategy, from security and efficiency to new revenue streams and customer and employee experience. Future investment priorities center on communication (5G), customer engagement (e-commerce) and remote work.

According the report, while leaders understand that the next evolution of digital transformation is not without legal and commercial risk, progress will depend on how successfully organisations are able to:

• balance value creation and risk mitigation;
• evolve governance to manage new technology; and
• address an evolving legal and regulatory landscape.

The 2021/22 Digital Transformation and Cloud Survey was conducted in the latter part of 2021, and all 500 respondents were either a buyer, user or supplier of cloud or digital services from their company, across a range of sectors. Thirty percent of respondents were from the US, another 30% from the UK, France and Germany, with the remainder divided between Australia, Brazil, China and Singapore.

Image courtesy: Goran Nastic

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