21 Aug, 2017

Are Non-Compete Agreements The Answer For Data Security?


In recent news, IBM has sued its former CIO of cloud computing, Jeff S. Smith for starting a new job at Amazon Web Services, breaching his non-compete agreement.

According to his contract, Jeff had to wait 12 months before joining a competitor. IBM and AWS both compete when it comes to cloud computing services.

“Amazon and IBM are both major players in the cloud computing industry, with the latter having beaten the former in annual revenue for the first time between June 2016 and June 2017, reaching $15bn over AWS’ $14.5bn.” Datacenterdynamics

As the story goes, Smith informed IBM that he will be taking a new position, but the company objected and referenced the non-compete agreement, which forced him to wait 12 months before joining a competitor.

Despite IBM’s efforts, Smith planned to work for AWS in August. IBM then fired back with a lawsuit that claimed the former CIO worked behind the scenes and disclosed confidential information about the company, and wiped his tablet and laptop clean of any evidence.

Now, both parties are fighting back and forth, with the non-compete agreement working alongside IBM’s efforts to win the lawsuit.

This latest scandal brings up many concerns in the IT world, in particular, how safe companies are while trusting internal sources.

“The complaint says Smith is one of “only a dozen” executives involved in top-level decision-making about IBM’s next-generation cloud platform, has insider knowledge of IBMs security posture and was involved at the very highest level of internal discussions on IBM’s transformation plan. If AWS can pick Smith’s brains on any of those matters, IBM worries the cloud colossus will get an unfair advantage.”  The register states. 

Both IBM and AWS hire quality IT departments to create a strong enterprise. A strong enterprise needs strong protection, which can be made possible under non-compete agreements.

Why Do IT Departments Use Non-compete Agreements?

First, let’s start with the basics.

Non-compete agreements forbid employees to work for a competitor after quitting or termination. These agreements protect companies from having secrets leak to competitors, that could potentially hinder business.

“About 1 in 5 Americans are currently working under a non-compete – an agreement between an employer and an employee that, once the employee leaves, will restrict the type of employment they can accept afterward.” Aflcionc reports. 

As a business leader and CIO professional, it is crucial to understand what this agreement means, and how they can affect business operations.

According to experts, the way businesses interact with non-compete agreements have changed when resources like mobile, social, cloud and big data were introduced into markets.

When it comes to organizations that deal with these tools, top-notch security is needed internally in order to protect secure company information, and non-compete agreements work in that favor.

Are Non-compete Agreements The Answer?

A lot of debate has serviced in the IT industry, regarding whether or not non-compete agreements should be put into action or not. The fear about non-compete agreements surrounds the fact that they may take away

As seen in the IBM and AWS case, companies worry that secured data is at risk, whereas employees fear that their talents will be hindered by being limited to one company.

“The risk around these touch points is best mitigated when you understand five key areas of contract negotiation. CIOs, CISOs, CTOs, and other risk and security professionals should familiarize themselves – or refresh their recollections – around Price and Payment, Proprietary & Confidential Info, Changes in Scope and Deliverables, Termination and Remedies, Disclaimers and Indemnifications.” CIO reports.

As the world integrates digital transformation into business operations, non-compete agreements can be a security tool used by business leaders to protect assets and data from leaking.

To learn more about the risk that internal employees cause, check out Digital Diary’s post on the risk financial services face with internal threats.


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