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Business Transformation: Legal Issues and Perspectives

key legal issues and vulnerabilities of digital transformation

What is the true meaning of innovation?

Innovation may not necessarily refer to the invention of something new; it may refer to the enhancement of customer experiences through different ways of providing existing products or services with greater value.

Understanding the basic premise of digital business transformation:

Business transformation is a cumulative process consisting of multiple actionable aspects with their own unique facets depending on the nature of the business and its parent industry.

The 21st century has witnessed the growth of business transformation via digitization. No industry is an exception to this. The rapid growth of technology and its affordability has played a pivotal role in the development of a hyper digital era. In addition, 2020 has brought a compelling factor for digitization of every industry. This compelling factor pressurizes those who are not yet able to be digital service providers to be so and those who were not actively digital to be aggressively digital. The unfortunate occurrence and strong catalyst is none other than Covid-19.

Changes fueled by changing times and new challenges:

Social scientists expect numerous changes in the post corona period; it shall effect all aspects of human life. How and what extent it will change these aspects is subjective and beyond prediction, however it is certain that post corona life will not be the same as we are experiencing today. The restrictions imposed across the globe has effected businesses at large. Social distancing has become the norm. Virtual meetings have reached mass adoption- relying on technology is the mandate now. Modes and nature of the business is changing, new businesses are emerging, converting everything as a service through the support of technology has become the market requirement. Virtual leasing is increasing, business cooperation is a necessity. Ultimately, there is a lot of data sharing in the market. In-fact, the processes have become easier and more transparent.

However, this is not all sunshine and rainbows. A closer look show that, there are a lot of risks and vulnerabilities arising from a compliance and protection point of view. Almost all companies across the globe are undergoing business transformation one way or the other way. Digital transformation occupies the major focus in the transformation practice in this pandemic or the post corona business environment.

Key Legal Issues and Vulnerabilities of Digital Transformation:

(1) Data Protection Issues

Data privacy is a crucial issue in the business environment due to the rise of data economies across the globe. Many jurisdictions consider data protection in reference to the right to privacy. General Data Protection Regulations (GDPR) and similar regulations are in place for assuring the appropriate collection and use of data for legitimate purposes after obtaining consent. The regulations also mandate transparent procedures for the safe custody and protection of data. In addition there is stagnant legislation in place against the unauthorized use and misuse of data by the concerned parties.

An area such as receiving and transmission of data, lose of control over the data, use of data by third party, liabilities of data users to the data owners, risk of principal data receiver, data Loss, data piracy, data sharing with stake holders, risk of misuse by other service providers, etc. do not receive enough cautionary attention and most SME's wrongly neglect their severity.

(2) Confidentiality issues

Business Transformation is taking, otherwise plan to take new shape in Post-Covid. Among the many other changes, work at home stand first as it is the mandate of the out break. It is predicted that the remote work shall integrate with the work culture of every industry. This magnificent trend of transformation carries certain high risks. If not handled carefully, it may result in irreparable damage to the employers and employees alike. Any leakage of confidential information of clients can be alleged against the employer. Several questions may arise here- to what extent can that liability be shifted to the employee? Will the employee be able to defend? Can the employer take a plea of subrogation?

Ultimately the question of liability to be ascertained is whether the employer records the terms of work at home especially the terms with reference to circumvention, competition, confidentiality, etc?

(3) Intellectual Property issues

Intellectual assets are a crucial aspect for any industry. It can take multiple forms including trademarks, copyrights, patents, designs, geographical indications, know-how, etc. Any potential threat to it should be handled carefully to avoid unexpected losses.

Platform capitalism plays a pivotal role in today’s Economy where cross fertilization of multiple intellectual assets are confronted. Even the business transformation strategy and methodology itself could be a potential IP asset.

(4) Liability issues

Determination of liability and the extent of liability are crucial questions in the commercial world. The Who Does What formula is not easy to calculate if the approach is not appropriate. Unstructured administrative mechanisms can spoil the potential growth of any organization. No area should be left without the liability assignment. Areas like, authority matrix, organizational structure, dos and don't s, information sharing, strategy management, project handling, target achievement, credit recovery, client management, etc should be managed with a liability structured approach.

(5) Compliance issues

Compliance is an essential component of growth for ensuring greater effectiveness, agility and resiliency. Market ups and downs force the organization to cut costs as a survival strategy. Companies should devote sufficient attention for compliance activities that will affect the risk coverage, embed compliance enterprise wide and support business goals and objectives.

In effect, business transformation is a revolutionary process which requires a green signal from the areas such as legacy systems, business continuity, complex information handling, regulatory monitoring, staff servicing, etc.

(6) Legal Feasibility

Initiating an action is not a tough task, but processing a constructive action requires a legally feasible action plan. Institutions often falter in formulating adequate legal strategies. Fighting a legal dispute is not a beginning or end, it is a process- there is a lot to be done before and after it. Legal compliance is not something to be sought after you are trapped, it should start before and should go hand in hand with business transformation. As may other aspects of life, prevention is the best cure.

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