It’s been almost two years since the shock result of the EU referendum in Britain, with the UK heading for Brexit in March 2019. We at diginomica/government have been covering the implications of the exit from the EU trading bloc for months now. However, one group that has remained notably quiet – or at the very least, diplomatic – are the software vendors.
It’s easy to understand why. They’re global businesses with interests in the UK and Europe. And they don’t know what it will mean for their business – heck, some may even benefit from a sales boost as a result of the British public’s decision.
However, I had a refreshing conversation this week with Cormac Watters, EVP and GM at Infor, about the the topic, where he shed some light on the discussions he’s been having with customers about Brexit. And also what it’s likely to mean for Infor in practical terms.
For those unaware, Watters joined Infor three months ago from SAP, where he had been Chief Operating Officer. We sat down at the national EEF manufacturing conference in London this week, where leading politicians took to the stage to discuss the impact of Brexit on British manufacturing, business and skills.
Much of the Brexit debate at the moment is centred around whether or not the UK will stay within the EU single market and customs union. The government has said it will be leaving both, but it’s hard to deny that doing so creates a myriad of technical, economic and political problems. According to Watters, Infor customers have made it clear that they would like to remain in both. He said:
It’s not an exhaustive study, but from the conversations I’ve been having, yeah they would like to stay in the single market and customs union. No question about it.
And the incentive to do so is largely being driven by the skills shortage here in the UK. Watters said that if access to EU workers is restricted, companies may be forced to look to technology to reduce the need for a larger workforce. He added:
And the bigger issue is that they’re absolutely worried about the scarcity of resources – people. So how do you deal with that? That’s also what’s driving a conversation from our perspective. Because you’re having to ‘do more with less’. You won’t have as many people, because they aren’t there.
So you have to do more from a technology perspective to counteract the shortage of manpower. And, how do you make your business more attractive to the scarce recruits out there? How do you make it that they want to come and join you?
There are also concerns about increased costs as it relates to Brexit. Watters said:
And then the fear about what regulation and what paperwork is going to be imposed post-Brexit. Again it’s driving a little bit of a move towards, can we get to the latest versions of the software so that these regulatory changes are in that version?
When I asked if Watters has had conversations with customers about relocating to EU markets from the UK, as a result of Brexit, he said:
Yeah. We absolutely have. That’s definitely happening.
However, Watters added that he doesn’t think the EU has yet fully recognised the impact that increased trading friction between the UK will have on European countries locally. He implied that once this starts to happen, more progress will be made. Watters said:
Another perspective is, and I happen to look after Infor across Europe – it’s not such a big conversation outside of the UK. And that’s also going to be an issue. In France or in Germany they’re going to want to trade with the UK. How are they going to do that? That penny hasn’t necessarily dropped.
Here we are now getting it, because it’s imminent and it’s in our heads every day. When they realise it’s more complicated to deal with the UK, that will have an impact on the UK. We need to make sure that’s the common conversation.
Close regulatory alignment is what is being demanded by Infor customers and Watters said that “hopefully sane heads prevail and that becomes the case”. And in terms of the impact on Infor, he admitted that it will have work to do in terms of building in new regulatory requirements into its software offerings. He added:
I think any change like this is going to have an implication for statutory requirements. And our software should meet and deliver those statutory requirements. So there’s going to be an increased requirement from a functionality perspective. And we need to make sure that we are gearing up to do that. The sooner we know the better though. We have had a period of stability where that hasn’t been an issue.
A refreshing conversation with Watters, who also spoke a great deal about the impact of digital on the manufacturing industry as a whole (which I will follow up with in a separate piece). But Brexit was the theme of the day at the conference and it was good to hear a leading software vendor give a practical, honest impression of the impact it’s having on the ground. However, the message seems to be – more clarity is needed.
Image credit - Via pixabay
Disclosure - Infor is a diginomica premier partner at time of writing.