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Tech trends in 2017: A legal view

Data regulations, blockchain and the popularity of Agile will have a significant impact on organizations' technology partnerships and contracting, according to law firm Mayer Brown.

The coming year has a lot of change in store for IT organizations looking to sign contracts for data services,...

said partners at international law firm Mayer Brown. Attorneys in the firm's technology transactions practice foresee a flurry of tech trends in 2017 -- from international data regulations to a surge in Agile software development -- driving changes to technology relationships and contracting. They gave a rundown of the trends in a recent teleconference.

Data regulations. Organizations will have to re-assess the technology providers they have contracts with to ensure that security and standard clauses are in sync with several big changes to international data regulations, said Mayer Brown partner Rebecca Eisner. One is Privacy Shield, the new pact that governs the way U.S. companies handle and can transfer Europeans' personal data. It replaces Safe Harbor, which was invalidated by the European high court in 2015 and had companies scrambling for alternative ways to send data across borders. Now the replacement faces legal challenges in Europe.

The General Data Protection Regulation is "an even greater looming watershed change," Eisner said. It replaces the current EU directive on data protection, coming into force in May 2018. Important differences between the two may require organizations to make "some technical and operational changes, so the time to assess the impact and to prepare for these changes is now."

Rebecca Eisner, partner, Mayer BrownRebecca Eisner

New data regulations are in effect elsewhere in the world, Eisner said. Russia is now verifying compliance with its new data laws, which require that Russians' personal data be stored in data centers in Russia. And China's cybersecurity law will take effect in June and "applies to network operators and operators of critical information infrastructures with heightened requirements such as data localization and restrictions such as cross-border data transfers."

Meanwhile, U.S. regulators will be subject to the direction of the new Trump administration, and states' attorneys general will continue to enforce new laws regarding information about health, finance and children -- and also big data, the internet of things and connected cars.

"Regulators will be watching companies to determine if they are appropriately evaluating the risks posed by vendors and other third parties and incorporating those considerations into their selection, contracting and ongoing monitoring of those third parties," Eisner said.

Data analytics. Another tech trend in 2017 centers on an enduring art and science -- data analytics. Contracting for data analytics will surge in the coming year, said Mayer Brown partner Brad Peterson. As data volumes at organizations grow at an exponential rate, the firm believes that "the biggest opportunities for the future and the biggest margins today are in data analytics," Peterson said.

Brad Peterson, partner, Mayer BrownBrad Peterson

Organizations will look to not only technology providers that specialize in analytics but also to "integrated technology stacks" like Microsoft Azure and IBM Watson, Peterson said.

"We expect that data analytics will be a standard part of numerous contracts," he said, should a provider have access to certain types of data. "You should thus be building data analytics provisions into all of your contracting."

Blockchain. Regulators are trying to figure out how to keep technologies based on blockchain -- a digital ledger that keeps public record of transactions -- in check, said Paul Roy, another Mayer Brown attorney. They don't want to stifle or stunt the evolution of this emerging technology, but "they also recognize that regulatory uncertainty is itself presenting a challenge for those companies that are developing or seeking to utilize these applications."

Paul Roy, attorney, Mayer BrownPaul Roy

International and U.S. regulators will come up with a regulatory framework for blockchain, Roy said. Some will test regulations in "regulatory sandboxes," though U.S. regulators probably won't go that way.

"In any event, expect to see major announcements from the securities and financial regulators throughout the year," Roy said.

Agile software development. Agile is not new, noted Mayer Brown attorney Dan Masur -- and indeed the collaborative software development principles were set down in the Agile Manifesto in 2001 -- but it's rapidly gaining popularity. That's because software developers believe the Agile method "yields more effective code faster and more efficiently, which may be vital in moving at digital speed."

Dan Masur, attorney, Mayer BrownDan Masur

Many legal teams don't like dealing with Agile when drafting contracts because it lacks upfront specifications, relying more on collaboration between the developer and client, Masur said. They're more comfortable with contracts centered on the traditional Waterfall approach -- which many developers find slow and inefficient -- because "it is very linear." So it's easy to lay out in contractual terms.

"Despite the contracting challenges, we expect the move to Agile will accelerate," Masur said. "And there are contractual mechanisms that clients can implement to reduce the uncertainty while still reaping the benefits of this collaborative methodology."

For Mayer Brown's predictions about cloud computing, read this SearchCIO news story.

 

Next Steps

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