Predictions 2006: More Technology, More Protection

January 1, 2006

I see two main aspects to developments affecting IT lawyers in 2006.

Increased reliance by business on technology, and IT lawyers
Businesses in several diverse sectors will depend even more upon technology and their IT lawyers during 2006. Two such sectors will be online gaming and financial services.

Internet Gaming
Internet gaming depends upon the speed, features, reliability, integrity and overall efficiency of the technology used. This is all aimed at the player having a good user experience. Together with branding, this will be essential to Internet gaming companies enlarging their customer base. If the player experience is poor then players will have other similar Internet gaming sites to choose from.

Although gaming companies may outsource their requirements for this technology and buy-in white branded technology at present, as they get bigger they may begin to develop their own technology in-house so that they are less dependent on third-party software because their software will be one of their key assets. Additional features and novel mechanisms on gaming sites will all go towards retaining customers and attracting new customers. For example, poker that is flash based will attract players since they do not need to download software and this allows them to play quickly and securely. Sophisticated back-office software that deals with payment processing and compliance issues will also be essential to enable sites to run smoothly. This technology may also be developed and extended so that this service is delivered via mobile phones and tv.

Because Internet gaming companies that fail to invest in their technology are likely to fall behind their competitors, work for technology companies and IT lawyers involved in the gaming industry is likely to increase as more money is invested in companies developing their offering.

Financial Services
Financial services organisations will be using technology even more during 2006 to save costs and to help with compliance issues. More outsourcing of fairly basic services will continue and, although outsourcing to India has been incredibly popular, outsourcing to other countries (probably to countries which are closer to the UK) is likely to increase.

However, there may be a shift in outsourcing such that more complicated business functions are kept in-house. Further, organisations have already started to in-source complicated business functions which were previously outsourced, particularly where predicted service improvements and/or cost savings have not materialised. I think that this trend of in-sourcing complicated business functions is likely to continue.

Protection for databases and IT security
Many sectors will have similar IT legal concerns but major issues will be the protection afforded to databases and IT security.

Organisations making heavy use of databases will be examining the rights they have regarding these databases carefully in light of recent case law. Organisations will be looking at how they can protect their rights in databases and also examining ways to reduce their costs in this area.

IT security will become a real feature of 2006. Security of IT systems will be crucial across many sectors and particularly in the online gaming industry and the financial services industry where customers will need the utmost confidence in the IT systems that they are using. Organisations may also start to look inwards and focus more on their own staff (from whom unauthorised use and security breaches frequently arise) and increase staff training in this area. This is likely to be done in conjunction with organisations using more sophisticated security technology.

Jimmy Desai is a Partner at Tarlo Lyons.