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November 03, 2017
Dos and Don’ts for Thriving in a Digitally Fragmented World
By: Armen Ovanessoff

First, the path to globalisation became bumpy. Now, digital progress is also facing a rough ride.

Witness the current debate over China’s new Cybersecurity Law, introduced on 1 June 2017. To many foreign firms, the law represents an additional barrier to trade, as business information and data on Chinese citizens must be kept on domestic servers, requiring permission from Chinese authorities to be sent abroad. Yet, the Chinese government would see it otherwise. To them, this is about safeguarding IT systems and the privacy of citizen data, in an era marked by the WannaCry Ransomware crisis, the Snowden revelations, and general acceptance of the hacking risk to individuals, companies and governments. And—some might even argue—if these rules should also end up nurturing the growth and innovation of domestic Chinese players to take on massive global rivals, perhaps that’s not a bad thing for global competition.

Converging trends

This new Chinese law is just the latest example of a trend that has been building for several years. The number of countries with data privacy laws has more than tripled in the last two decades. It’s one of many trends that indicate an increasingly fragmented world. For example, since 2010 the G20 nations have almost quadrupled the number of policy measures that restrict trade. Add to that the increasing pressure in many countries to strengthen immigration laws. The convergence of these trends points to higher global barriers to the free flow of data, of IT talent, of IT products and services. This is a fragmentation of the global digital landscape; what we call digital fragmentation.

The business press has largely missed the implications of this trend. What does this mean for global companies? How are they preparing to thrive in this environment? We dug deeper to find out more.

C-level alarm

To answer these challenging questions, we surveyed more than 400 chief information officers and chief technology officers. Here’s what we discovered:

  • Nine out of 10 see increasing barriers to globalisation as a problem for their firms over the next three years.
  • Three-fourths expect to exit a market or to abandon or delay market entry because of this trend.
  • Half of them are already reorganising their global IT architectures in response.

We’re talking about major strategic and operational changes. Changes to geographic footprints. Changes to entire IT architectures.

Cost, complexity and compromise

Executives’ concerns are wide-ranging.

Take the issue of cost, for example. Again, nine out of 10 believe that increasing barriers will push up IT costs over the next three years. In fact, two-thirds are already feeling those increases. Think of the requirements to build new data centres in more locations and the need to find scarce (often expensive) IT talent to staff them.

Another concern is security. Firms that currently “shard” their data (split it up and store it in different jurisdictions) fear that being forced to keep their data in one country will make it more vulnerable to hackers.

But most concerning is the broader risk to global digital progress. Think of it like this: global analytics systems, cloud structures and the Internet of Things all rely on rapid, unobstructed flows of data between people, devices and objects. If digital fragmentation slows these developments, companies and entire economies are likely to feel the effect.

Our research delves into detail on the implications and strategic considerations, but for now, here are some simple Dos and Don’ts:

Infrastructure footprint


Build data management capabilities and redundancy in multiple locations.


Depend on centralised and rigid data structures.

Government Relations


Partner with policymakers and regulators to help shape the rules.


Assume that business priorities will override national concerns.



Invest in a genuine local presence wherever you are.


Rely solely on your global reputation.

Operating model


Prepare for new and changing regulations by designing agility into your operations.


Encumber yourself with technology, processes and cultures that hinder change.

Digital vision


Understand digital growth as a complex journey.


See digital growth as a simple inevitability.

Digital fragmentation is part of our new reality. We can choose to ignore it, to complain about it, or to actively address it. Smart leaders will choose the latter.

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