Predictions 2011 – Second Course

December 9, 2010

{b}From Beverley Flynn, Partner in the IT and Regulatory team at Stevens & Bolton LLP{/b}

Cookies, cookies cookies! Could there be the possibility of the law catching up with technology? In order to respond to technological changes, the European Commission has published a communication to revise the legal framework applicable to personal data. One of the main thrusts of the changes will be aimed at Internet businesses, and in particular behavioural advertising, with the imposition of stricter controls on what amounts to consent. In addition, the Department for Business, Innovation and Skills has issued a consultation on the implementation of the EU communications framework (more law!), including the suggestion of a specific opt-in requirement for selective preference cookies. Given the increased powers to impose fines, the ICO has seen larger fines imposed and higher profile prosecutions (as I predicted last year). This, coupled with the new legislation on the horizon, can only serve to put businesses on the alert and then consider their policies and review the use of harvesting technology. This change in the wings is presumably aimed at protecting the Internet and e- commerce consumer against the perceived Internet barons. But the prediction is that, notwithstanding the consultation and implementation of new laws, technology and innovation will still outpace the law and carry on notwithstanding it !

{b}From Chris Reed, Professor of Electronic Commerce Law, Centre for Commercial Law Studies, Queen Mary University of London School of Law{/b}

The Cloud will of course be big, but what will be the most pressing legal issue? I think the answer is, perhaps surprisingly, governance. Although major customers will still want to negotiate detailed contracts, the complex network of cloud providers’ own services, working together with those parts they outsource and the interactions with customer and third-party services, means that it will be difficult (and very expensive) to capture everything which is going on in a contract. For consumer/SME cloud use, contracts will be able to do little more than describe what service (if any) is to be provided and limit provider liability.
To resolve these issues the major cloud providers will need to develop a governance model, which sets out self-imposed obligations in respect of such matters as privacy, data ownership, security, interactions with law enforcement, etc. This process will not be completed in 2010, but will need to start and make real progress during the year.
Facebook will be the other big topic of discussion if it is successful in attracting a wide range of activities away from the open access Internet into its walled garden. Brush up on your anti-trust/competition law now.

{b}From Susan Atkinson, Legal Director, gallenalliance Solicitors{/b}

A paradigm shift is currently taking place in the way that organisations manage projects for the development of new/innovative products (such as software) and services (such as the transformational element of business process outsourcing). Today we are experiencing unprecedented levels of change, and organisations across all sectors are increasingly turning to the principles of agile and lean to accommodate change. As Damon Darlin famously said ‘innovate or die’.
Initially agile and lean practices were considered to be relevant to IT projects only. But it is no longer possible to ring-fence many projects as ‘IT specific’. It is only when an organisation exploits its IT capabilities to the full that it gains a competitive edge, so it is essential that such projects receive the full attention of the business.
The adoption of agile and lean requires a change in approach across the whole of an organisation. It impacts on the business practices, management structure and corporate culture. But, notwithstanding these challenges, many organisations, regardless of their size, are embracing this new way of working.
This in turn is feeding through to how organisations contract with their suppliers and customers. Contracts should accurately reflect the underlying business practices, and therefore need to reflect the agile and lean practices. Traditional contract models are brittle, do not readily embrace change and are unsuited for agile and lean practices. Instead a new contract model, based on the supply of capacity is required.
I anticipate that over the next couple of years there will be a large shake-up in the way that contracts for the development of new products and services are procured, drafted and negotiated, to reflect this new way of working.

{b}From Toby Crick, Partner at Bristows:{/b}

The move by cloud vendors to compete in the enterprise market will continue. This will have a number of impacts on pricing and risk allocation across the technology supply industry as established market participants try and develop cloud or SaaS offerings and suppliers across the board use the switch by customers toward more ‘off the shelf’ and cloud-based solutions to resist the trend of the last few years of customers seeking to push almost all contractual risks (eg due diligence, TUPE risk, customer dependencies etc) onto vendors.

{b}From Carrie Reevy, Managing Editor at{/b}

I predict that 2011 will be the year when firms that use technology effectively (ie making effective use of the plethora of excellent low-cost – often cloud based – software and outsourcing non-core functions) to drive out costs become the norm, rather than the exception, for new firm formation. More significantly, these firms will really start to hurt the core businesses of medium-sized firms in particular. This is clearly a growing trend. A third of the new clients for our system are new firms working in a very low-cost environment, whose business model is to offer superior service with a stripped-down cost base.

Whether this will bring about the revolution (and that word is carefully chosen) in thinking required by many firms to survive is debatable, but the prognosis is dire in the long term for those who do not change. Capitalism works by applying natural selection to the inefficient. Until there is far greater understanding of the internal cost mechanics of the profession, .many firms will adapt too slowly to survive. This has nothing whatsoever to do with Tescloaw. It is in many cases about the dynamism and outlook of those forming new firms, who see (correctly) in technology the ability to reduce process cost, market effectively at low cost and create and maintain solid client relationships.