Sovereign Cloud: What it Is and Why Your Business Needs it

Never before has the world been more globalized, and never before have businesses operated on such a global scale. One need only consider the shirt on one’s back to appreciate this. What was designed in the US was sourced in India, manufactured in China, and sold via online retailers throughout the world.

This is true of our goods and services, and it’s reflected in the global nature and flow of data in enterprises today. Yet increasingly, regional laws seek to regulate how data is managed based on location.

For this reason, as cloud technology continues to evolve, businesses are increasingly seeking solutions that not only enhance operational efficiency but also comply with stringent regulatory requirements. Enter the sovereign cloud—a paradigm that addresses these needs by providing a secure, compliant, and localized cloud environment.

This blog explains what a sovereign cloud is, the importance of data sovereignty, the value it brings to businesses, practical tips for leveraging it, and how the Cloud Data Management Capabilities (CDMC) framework, developed by the EDM council, seeks to deliver the control leaders need to comply with new regulations.

Data sovereignty defined

Data sovereignty refers to the concept that digital information is subject to the laws and governance structures within the nation it is collected or stored. It is a crucial aspect of data governance, ensuring that organizations comply with local data protection regulations and maintain control over their data.

Importance of data sovereignty

Regulatory compliance: Ensures adherence to national and international data protection laws, such as GDPR in Europe or CCPA in California.

Data control: Provides organizations with greater control over their data, reducing the risk of unauthorized access and breaches.

Trust and Transparency: Enhances trust among customers and stakeholders by demonstrating a commitment to data privacy and security.

Enterprises that violate regional regulations risk reputational damage and hefty fines. In the Spring of 2023, Meta was fined a record-setting $1.3B USD and “ordered to stop transferring data collected from Facebook users in Europe to the United States, in a major ruling against the social media company for violating European Union data protection rules,” per the New York Times. Such landmark legislation clarifies the steps organizations must take to handle PII across regions.

What is a sovereign cloud?

A sovereign cloud is a specialized cloud infrastructure designed to meet the regulatory and compliance requirements of a specific country or region. Unlike traditional cloud solutions that may store data across various global locations, sovereign clouds ensure that data remains within the jurisdictional boundaries of a particular nation. This approach provides a higher level of data control and security, catering to organizations operating in regulated industries such as finance, healthcare, and government.

Key characteristics of a sovereign cloud

You’d be hard-pressed to find a modern enterprise that operates strictly within the confines of a single country. For this reason, enterprises are increasingly exploring how to leverage sovereign clouds in the regions where they operate. These are the key traits of a sovereign cloud:

Local data residency: Ensures data is stored and processed within the country’s borders.
Compliance with local regulations: Adheres to national data protection laws and regulations.
Enhanced security measures: Implements robust security protocols to protect sensitive data from unauthorized access and breaches.
Government and industry collaboration: Often developed in partnership with local governments and industry bodies to align with specific regulatory requirements.

When implementing your sovereign cloud, it’s a best practice to work with your local legal team to ensure that legal opinion aligns with the actual cross-border data movement policies recommended by your risk management and data governance teams. The data policies should reflect the legal controls, standards, and procedures needed in that jurisdiction – and be well documented, should the company need to defend its practices in court.

The value of the sovereign cloud

Integrating a sovereign cloud into your business strategy can offer several significant advantages, especially for organizations dealing with sensitive or regulated data across countries with unique compliance demands.

Enhanced security and compliance

Sovereign clouds are designed with stringent security measures and compliance frameworks to protect sensitive data. They provide a robust infrastructure that meets local regulatory requirements, reducing the risk of non-compliance penalties.

Improved data control and privacy

By keeping data within national borders, businesses can exercise greater control over their data. This minimizes the risks associated with cross-border data transfers and ensures that data handling aligns with local privacy laws.

Increased trust and credibility

Using a sovereign cloud demonstrates a commitment to data security and privacy, which can enhance your organization’s reputation and build trust with customers, partners, and regulators.

Strategic flexibility

Sovereign clouds offer the flexibility to adapt to changing regulatory landscapes. As data protection laws evolve, a sovereign cloud can be more easily adjusted to meet new requirements, ensuring ongoing compliance and operational efficiency.

Economic and political considerations

For countries with strict data residency laws, a sovereign cloud can also serve economic and political interests by fostering local data centers and infrastructure, creating jobs, and boosting the local technology sector. The Australian state of New South Wales, for example, has strong local residency laws restricting the disclosure of health records outside its territory unless certain criteria are met.

How to leverage a sovereign cloud: 7 Tips

Successfully integrating a sovereign cloud into your business strategy requires careful planning and execution. Here are seven tips to help you leverage the benefits of a sovereign cloud effectively.

1. Assess regulatory requirements

Start by thoroughly understanding the regulatory requirements relevant to your industry and region. Identify specific data protection laws and compliance standards that your organization must adhere to, and ensure that your sovereign cloud solution meets these requirements.

2. Choose the right provider

Select a cloud service provider that offers sovereign cloud solutions tailored to your regulatory landscape. Look for providers with a strong track record of compliance, security certifications, and local expertise.

The Snowflake Data Cloud has risen to become a top choice for many companies. The cloud data warehousing provider has a clear sovereignty roadmap in Europe for companies that operate in the EU. AWS is another popular option and reportedly plans to invest €7.8B into the AWS European Sovereign Cloud, with plans to launch by the end of 2025.

3. Implement robust security measures

Ensure that your sovereign cloud infrastructure is equipped with advanced security measures, such as encryption, multi-factor authentication, and intrusion detection systems. Regularly update and test your security protocols to stay ahead of emerging threats.

4. Establish clear data governance policies

Develop comprehensive data governance policies that outline how data is collected, stored, accessed, and processed. Ensure that these policies align with local regulations and are communicated clearly to all employees and stakeholders.

5. Invest in compliance management tools

Leverage compliance management tools to automate monitoring and reporting processes. These tools can help you track compliance status, identify potential issues, and generate audit-ready reports to demonstrate adherence to regulatory requirements.

6. Train your team

Educate your employees on the importance of data sovereignty and the specific compliance requirements relevant to their roles. Regular training sessions can help ensure that everyone understands their responsibilities and adheres to best practices for data handling.

7. Monitor and review regularly

Continuously monitor your sovereign cloud environment to ensure ongoing compliance and security. Conduct regular reviews and audits to identify areas for improvement and stay up-to-date with changes in the regulatory landscape.

The Cloud Data Management Capabilities Framework

The overwhelmed data leader may ask, “How do I get started?” The Cloud Data Management Capabilities (CDMC) framework provides a structured approach to managing data in the cloud, ensuring that it is secure, compliant, and optimized for business value. Developed by the EDM Council, the CDMC framework outlines best practices and guidelines for effective cloud data management. It offers a practical approach for data leaders to respond to complex regulatory requirements, including data sovereignty and cross-border data movement.

The 6 Key components of the CDMC framework

Leaders who leverage the CMDC framework will be guided to clarify data management practices in 6 key areas:

Data Governance and Accountability. Define roles and responsibilities for data management. Establish data governance policies and procedures.
Data Protection and Privacy. Implement measures to protect data from unauthorized access and breaches. Ensure compliance with data protection regulations and privacy laws.
Data Quality and Integrity. Maintain high standards of data quality and accuracy. Implement processes to validate and cleanse data regularly.
Data Lifecycle Management. Manage data throughout its lifecycle, from creation to deletion. Ensure proper data archiving, retention, and disposal practices.
Data Access and Usage. Define access controls and usage policies for data. Monitor and audit data access to prevent misuse and ensure compliance.
Data Integration and Interoperability. Ensure seamless integration and interoperability of data across different systems and platforms. Use standardized data formats and protocols to facilitate data exchange.

Benefits of the CDMC framework

By adopting the CDMC framework, organizations can achieve a more structured and efficient approach to cloud data management. This framework helps ensure that data is handled securely and compliantly, enhancing overall data governance and operational efficiency.

How to ensure cloud compliance across countries

Ensuring cloud compliance across countries is a multifaceted challenge that requires a strategic approach. The EDM Council’s CDMC framework introduces key controls focusing on data sovereignty and cross-border movement, emphasizing the need for businesses to comply with local laws and regulations regarding sensitive data handling within specific jurisdictions. Here's how to navigate this complex landscape:

Understanding data sensitivity

First, it's essential to identify what constitutes sensitive data. Sensitive data elements often exist alongside non-sensitive data within files and tables, necessitating clear differentiation and appropriate controls. Separate CDMC controls address these elements, ensuring that they are properly managed, protected, and classified.

Navigating jurisdictional overlaps

Data compliance involves understanding and mapping overlapping and sometimes conflicting jurisdictions. Countries, states, and industry bodies continuously develop new regulations that must be cross-referenced with risk-related controls and procedures. This means mapping capabilities to various laws across different regions, ensuring that data can move seamlessly between jurisdictions while remaining compliant.

Monitoring intended data use

It is not enough to simply map regulations; understanding and approving the intended use of specific sensitive data is also critical. This involves ensuring data owners and consumers agree on how data is used, respecting data owners' rights, and maintaining compliance. Policies must be established to govern behavior, and contractual agreements, such as Data Sharing Agreements, must formalize these policies. These agreements specify terms, scope, use, responsibilities, and recourse, all backed by a strong legal framework.

Consolidating risk initiatives

Data should be treated as a corporate asset, requiring protection and risk mitigation integrated with other enterprise risk management processes. Data governance is crucial in achieving this, aligning corporate governance, enterprise risk management (ERM), and information security risk. Sharing a common set of risks, controls, standards, processes, and evidence requirements across these risk functions is essential.

Engaging legal expertise

Given the complexity of regulations, legal interpretation is necessary. Legal teams must work closely with data governance teams to ensure policies align with legal opinions and are defensible in court. This collaboration helps create a robust framework for data sovereignty and cross-border data movement policies.

Automation for compliance

Managing cloud compliance manually is impractical at scale; automation is key. Start by cataloging all enterprise assets, using a data intelligence platform to monitor changes, auto-discover, and classify sensitive data. Automation streamlines the lifecycle of data-sharing agreements, from requests to approvals and entitlements, ensuring compliance and reducing manual labor.

Examples of automation

Consider an example where a user requests data access based on metadata in the catalog. The system evaluates the requester's role, location, and the data's sensitivity and policies. If the request aligns with policies, an automated data-sharing agreement is generated and sent for an electronic signature, triggering an IT service request for access. This automated process ensures compliance with minimal human intervention.

Ensuring cloud compliance across countries requires a comprehensive approach, involving clear identification of sensitive data, understanding jurisdictional overlaps, monitoring intended data use, consolidating risk initiatives, engaging legal expertise, and leveraging automation. By implementing these strategies, businesses can navigate the complex regulatory landscape and maintain compliance across borders, ensuring the security and integrity of their data in the cloud.

Conclusion

The sovereign cloud represents a significant advancement in cloud technology, providing businesses with a secure, compliant, and localized cloud environment. By understanding the principles of data sovereignty and leveraging the benefits of a sovereign cloud, organizations can enhance their data security, compliance, and operational efficiency.

Implementing a sovereign cloud requires careful planning and execution, guided by best practices as outlined by the CMDC. By following these guidelines and investing in the right tools and expertise, your business can navigate the complex regulatory landscape and thrive in a data-driven world.

Embrace the potential of the sovereign cloud to empower your organization, safeguard your data, and drive sustainable growth. Book a demo with us today to learn more.