The benefits of the EU data protection reform (GDPR) for businesses
20. November 2017 | Drooms Global
The EU is embarking on an update to its data protection rules. We’ve previously outlined the schedule of the changes, but now it is time to consider the benefits of the reform. Individuals will naturally benefit a great deal by taking back control of their personal data. The reform will also provide huge benefits to businesses, yet there are some elements which must be paid attention to.
Under the current system, there is no single EU-wide data protection law. Instead, each of the 28 member states have their own variation – this can hinder a business’ ability to conduct trade or operate in new markets. The reform establishes a single data protection law, which will provide the following major benefits.
Failure to comply with the GDPR will be expensive to businesses on both sides of the Atlantic. Therefore, better to be ready for the new legislation!
Cutting the cost of conducting business
For most businesses, the reform’s biggest benefit is its ability to cut costs. The total savings are thought to amount to around €2.3 billion per year, and they are driven by the establishment of a single, pan-European law.
Currently, companies would have to deal with country-specific data protection laws – this could mean having to work with 28 local authorities and regulatory experts at any given time. This reform will eliminate the need to increase budgets in order to comply with different regulations.
Furthermore, the simplification of the regulatory environment will benefit SMEs. Under the current system, the appointment of a Data Protection Officer was often necessary for operating in the member states. The reform only requires certain activities with specific risks to be covered by the officer. This can help SMEs use ad-hoc consultants, subsequently reducing staffing costs.
Non-EU clouds don’t automatically comply with the new reforms, which could incur higher costs for businesses. They might need to appoint data protection specialists as support of the path towards better compliance, since fines for non-compliant companies could be as high as 4% of the global yearly revenue of a business.
At Drooms, the strictest compliance with the European data protection regulations has always been at the heart of the business. This is true also with the GDPR, in the frame of which we’ll continue to ensure the highest protection standards for the confidential business information of our customers. As a European virtual data room business with servers located exclusively in the EU and Switzerland, we ensure full GDPR compliance.
EU data processors still ensuring better security
The reform is also going to boost business expansion in a number of ways, particularly in terms of creating a framework for a safe international exchange. Let’s examine these in detail:
The right of data portability. The new system has the potential to increase competition and allow SMEs to compete with bigger and more established companies. This is down to the right of data portability, which allows potential customers to transfer personal data between service providers. This will make attracting new clients much easier.
The reduction of cross-border trade barriers. With the new system, businesses will find fewer cross-border trade barriers in their way. The single regulatory framework makes expansion to another member state easier and more cost-effective. Companies don’t have to deal with another regulator when expanding trade. However, non-EU companies targeting European customers will have to become compliant with the GDPR and ensure transparency of their practices – a process that cannot be taken for granted, given that EU data protection standards are known to be among the world’s highest.
EU versus non-EU companies. The establishment of a single European law for data protection will level the playing field by creating a consistent framework that applies in all member states. Non-EU companies that process personal data of European citizens will have to adhere to the regulation and demonstrate that they are compliant. Yet, referring to EU-based data processors will still offer better data protection compliance to companies.
Finally, the reform will boost innovation by allowing more flexibility without jeopardising the protection of individual data rights. As data protection will become an essential principle for businesses, it will encourage them to innovate ideas and technologies that boost the protection of personal data. It opens up doors for start-ups that are able to make it easier for people and businesses to anonymize and protect personal data.
As this happens, the use of big data will be encouraged. The benefits of big data for business are enormous. According to BARC research, big data can help increase revenues by around 8% and reduce costs by 10%. By enhancing understanding of customer behaviour through big data, businesses will be better able to continue providing a meaningful and valuable service.
Boosting trust between companies and customers
Perhaps one of the least obvious benefits of the reform will be enhanced trust between customers and companies. Individuals’ trust in companies’ ability to protect personal data is at an all-time low. In a 2015 Eurobarometer, eight out of ten respondents felt they don’t have control over their data. By establishing a framework that puts protection of personal data at the heart of the business and protects the individual’s ability to control this data, companies will be able to regain customer trust. In terms of attracting new customers and maintaining existing ones, this can be an important benefit for numerous companies.
Compliance with the EU’s data protection laws, customer and data security is enhanced and improved. This adds an extra layer of security to the business operations and can act as a powerful leverage against companies that aren’t part of the system.
Therefore, choosing Drooms as opposed to non-EU complying cloud services is beneficial for businesses looking for a safer data protection partner. It ensures data protection to the highest level and helps data transfer and storage remain compliant – and therefore cost-effective.
The reform’s regulations will apply from May 2018. Businesses can learn more about the changes from the official website of the European Commission.