What is sovereign cloud: Definition, benefits, examples

When it emerged in the mid-2000s, cloud computing was hailed a convenient way for companies to centralize data and make it openly available to any authorized user – anytime and anywhere.

But over time, rising concerns about cybersecurity, national sovereignty, and regulatory compliance made it clear that more sensitive data might be better off in a different kind of cloud. A type where local governments and organizations could control critical information and keep it away from foreign powers.

Enter sovereign cloud, which is designed to keep critical data safe, nearby, and compliant with the privacy laws of various nations and regions.

What is sovereign cloud?

Sovereign cloud refers to secure cloud computing environments that are specifically designed to store and process sensitive data within national borders in compliance with domestic or regional privacy and cybersecurity laws.

These laws include Europe’s General Data Protection Regulation (GDPR), China’s Cybersecurity Law, Australia’s Privacy Act, India’s Personal Data Protection Bill, and Brazil’s General Data Protection Law. Others include Europe’s Network and Information Security Directive (NIS2) and Australia’s Security of Critical Infrastructure Act (SOCI Act).

Sovereign clouds can be owned by local governments or by groups of private and public organizations.

The concept of data sovereignty has been around for several years, but recently gained traction as privacy conscious nations have stepped up efforts to control critical personal, corporate, and governmental data within their borders.

In fact, seven in 10 countries now have regulations concerning data privacy or digital sovereignty, according to Accenture.

These regulations can be complex, confusing, and costly for multi-national organizations because they vary from country to country. What’s more, like the threat landscape itself, privacy regulations are always changing.

That’s where sovereign cloud comes into play.

Sovereign cloud infrastructure can incorporate a range of technologies, including:

• Encryption for safe and secure storage and sharing of data
• Identity and access to control who or what can access data within a country’s borders
• Monitoring and auditing software to detect cybersecurity threats and ensure organizations are compliant with privacy regulations
• Physical security to protect data centers
• Certification such as government accreditation to provide assurances that processes and security are implemented and requirements and legal obligations for national security are met

Certification is a key element of this type of cloud; they must provide assurance that security processes are implemented and legal obligations for national security are met.

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Regulatory compliance drives demand

Numerous cloud providers and tech vendors, including SAP, offer packaged sovereign cloud capabilities to help companies in different industries and countries comply with related privacy regulations.

Most organizations now see these services as vitally important, according to a Capgemini survey, which found:

• 71% expect to adopt cloud sovereignty to ensure regulatory compliance
• 67% plan to use it for more data control and transparency
• 65% want to prevent “extra-territorial data access”
• Nearly half (48%) of public-sector organizations are either already considering cloud sovereignty or plan to

Infographic: How SAP’s sovereign cloud capabilities work

It's better in the cloud

Learn how sovereign cloud capabilities can help businesses transitioning to the cloud HERE.

Around the world: Sovereign cloud examples

Examples of sovereign cloud deployments abound, including:

• Australia: Toll Group, one of 20 prime contractors to the country’s defense force, partnered with SAP and IBM Consulting on a two-pronged strategy to modernize and fortify its operations, with sovereign cloud capabilities at the core.
• Germany: Google Cloud and T-Systems are providing scalable sovereign cloud capabilities to healthcare and public sector organizations.
• Monaco: The principality claims to be managing and securing Europe’s first state sovereign cloud with help from Amazon Web Services (AWS).
• France: Dassault Systèmes and Dassault Aviation used the Paris Air Show this year to announce a collaboration to develop next-generation combat air systems within the secure confines of an emerging European sovereign cloud.

Benefits of sovereign cloud

In the end, aside from keeping sensitive data within arm’s reach where it can be watched, managed, and secured, organizations hope to achieve business advantages while in the cloud.

Sovereign cloud benefits include:

1. Data localization: Storing data within a country’s borders in data centers run by local operators enables organizations to minimize risk associated with sharing information beyond borders, more directly secure it against foreign entities, and demonstrate compliance with privacy laws.
2. More adaptability: Because it’s locally owned and operated, domestic cloud infrastructure also provides more resilience against the constantly evolving threat landscape and international tensions. In fact, sovereign cloud can ensure essential services remain available during a crisis, such as wars, pandemics, and weather emergencies.
3. Economic development: While yet to be proven, some believe that sovereign cloud also can stimulate domestic technology sectors, creating jobs and fostering innovation, much like what we’re seeing with artificial intelligence in various parts of the world.
4. Improve reputation: Done right, this type of cloud can also boost trust with local populations since, after all, secure cloud infrastructure is being hosted in their backyards instead of by some foreign commercial cloud giants on the other side of the planet.
5. Supplier integration: Accenture notes that most large enterprises work with many suppliers across business functions, making data integration painfully difficult. The firm’s research shows companies expect sovereign cloud to help solve this complexity by providing a common data layer to enable a single source of truth across the enterprise.

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Investing in a secure digital future 

While sovereign cloud deployments are in early stages of adoption, they’re becoming pervasive in private and public sector cloud strategies.

Gartner predicts that by 2026, cloud service providers (CSPs) in more than 50 countries will be involved in domestic sovereign cloud initiatives, a significant increase from 2022.

According to IDC, 40% of major enterprises will mandate data sovereignty controls from their CSPs to adhere to data protection and privacy regulatory requirements by the end of 2025.

In the next few years, organizations will have plenty of options for rolling out their own sovereign cloud infrastructure in partnership with major tech vendors. Additionally, tech consulting firms, cybersecurity specialists, and CSPs with experience in national projects can assist with the design and implementation of tailored cloud solutions.

Whichever way they choose to go, organizations that invest in sovereign cloud technology sooner than later could get ahead of looming regulations and prepare for a more secure digital future.