Use data privacy to gain a competitive advantage

Updated on 11 November 2014

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Use data privacy to gain a competitive advantage


POPI compliance can be leveraged as a differentiator by SMEs, writes guest contributor, Professor David Taylor

The recently enacted Protection of Personal Information (PoPI) Act, which sets conditions for how organisations can process information, has caused significant upheaval in the South African business environment.

Companies are either panicking about how to comply, or conversely opting to pay the fines for non-compliance as they see this as a less onerous option. However, privacy of information is not a new issue, either locally or internationally. In Europe, information privacy has been a concern since the 1970s, and many countries have stringent laws in place. In South Africa, Section 14 of the Constitution protects the right of privacy of citizens, which PoPI enforces, and the law itself has been in the making for almost a decade.

While PoPI compliance is typically seen as a grudge task, it can in fact be regarded as more than good governance, particularly for cloud service providers. Privacy of personal information can be used as a driver of competitive advantage in an environment where differentiation is difficult, positioning businesses favourably to retain and secure new clients.

PoPI and cloud

Cloud services have seen a rapid uptake in the local market in recent years, driven by increased availability and affordability of bandwidth. However, in light of the introduction of PoPIorganisations need to take additional cognisance of the abilities of their service providers. Even if an organisation adheres to legislation with the highest standards, policies and procedures in place, relationships with service providers can introduce an element of risk.

The onus is on the company itself to ensure that their data and their customers’ information is protected, regardless of the outsourcing of services, as they will be held liable should information be breached.

“Trust is the basis of loyalty, which is essential for retaining and attracting customers”

In essence, PoPI is a set of conditions regarding how organisations process and store the personal information of their clients, customers and employees. These conditions include what information may be processed, under what circumstances it can be processed, for how long it may be stored, how information must be maintained, how and when it must be defensibly deleted and who is allowed to have access to it. This includes all information that resides with an outside service provider, such as is the case with the cloud. Ensuring cloud service providers adhere to PoPI as well as international privacy legislation is therefore essential.

  • See also: What SMEs need to know about the POPI Act

Competitive advantageFor cloud service providers, the ability to guarantee privacy and compliance with such legalities can be leveraged as a differentiator and a driver of competitive advantage. Personal information is highly valued by customers, and organisations that can assure customers that their information is protected will attract more customers. This trend has already emerged in Europe, and multinational enterprises with a local presence, as well as South African financial institutions are leading the way locally.

PoPI compliance requires organisations to put into place certain legal, organisational and technical measures. However, every organisation is unique, and ensuring PoPI compliance is not a ‘one size fits all’ process. Enterprises must analyse their industry and application laws and regulations governing them in order to identify these requirements on a more granular level. Technology particularly depends entirely on the size and nature of the business, however this aspect is essential as Sections 17 to 22 of the PoPI Act require appropriate security measures to be implemented.

The issue of trust

Leveraging privacy and PoPI compliance as a driver of competitive advantage requires that all loopholes be closed, and that service providers take into account international legislation as well as local laws. In order to achieve this, they must first be identified, which requires evaluation across three categories. Firstly, legal matters must be examined – contracts, employee data, supplier data and customer data must all be revised in line with relevant legislation, and a privacy policy needs to be put into place to govern all of these parties.

Organisational matters such as the ability to respond to a breach and adequately trained support staff must then be addressed. In addition, physical security is essential in all aspects, from data security to shredding paper-based documents.

Once these areas have been addressed, customer trust can be developed and nurtured. Trust is the basis of loyalty, which is essential for retaining and attracting customers. Compliance with PoPI is not necessarily the onerous and costly task it at first seems to be. While it may require a certain amount of effort, the benefits have the potential to outweigh this. In a sector like cloud computing, where the technology and service offerings are highly uniform, trust becomes the ultimate differentiator and point of competitive advantage.

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