How Sovereign Cloud Capabilities Can Bridge and Secure a More Fragmented World for Global Businesses

It’s been almost twenty years since Thomas Friedman described globalization and the role that technology plays to make the world flat, creating opportunities for companies to engage customers and talent globally. Cloud technologies and services have been an integral part in connecting the global marketplace and helping companies to grow across country borders and political divides. And that, even in challenging times, such as the recent pandemic.

Globalization continues to evolve. World trade reached 10% above pre-pandemic level in mid-2022, according to the annual DHL Global Connectedness Index. The index was developed by the NYU Stern Center for the Future of Management and measures globalization based on the international flows in trade,?capital,?information, and?people. Of note, along with the growth in global trade, worldwide spending on cloud infrastructure-as-a-service resources grew 29.7% in 2022 as companies modernized their IT infrastructure and added applications in the cloud to transform their businesses in a changing world, according to Gartner data.

At the same time, rising geopolitical tensions has made our world more fragile and fragmented, increasing the need for stronger cybersecurity protection and risk management. Governments around the world have increased data privacy and security laws and introduced additional regulations on how sensitive data should be stored and handled.

The increase of country-specific data makes it more challenging for international organizations to operate across borders, especially for companies from regulated industries, including banking, defence, healthcare, pharmaceuticals, insurance, telecom, and utilities.

Globalization in 2023 means we are operating in a flat, yet fragmented global world.

This also has changed the role of technology to drive innovation for businesses and our global society. Technology innovation is becoming a bridge to keep global business operations connected in fragmented world, more securely and sustainably. This is possible in the cloud, more specifically with sovereign cloud capabilities.

In general, sovereign cloud capabilities are shaped by two needs: data sovereignty and data residency. Data sovereignty describes the notion that data is subject to the exclusive legal protections and jurisdiction of a nation. It includes where data should be physically located, also known as data residency. The physical location of the data and metadata should be within the geographical boundaries as defined by local laws and regulations. In other words, data residency is an integral element to ensure data sovereignty, but there are more factors that determine data sovereignty, and all factors are unique to each jurisdiction. The standards for sovereign clouds vary depending on where the cloud servers and data are located.

In its simplest form, a sovereign cloud is a cloud computing architecture designed to regulate data access in strict compliance with a country’s laws and regulations.

In a more complex form, it adds management of that cloud computing and operations infrastructure be done by security cleared country nationals in certified security facilities, utilizing a local control plane and local automation, which will allow the nation to invoke autarky and still be able to consume the data in the cloud.

Gartner predicts that by 2026, cloud service providers in more than 50 countries will be involved in domestic sovereign cloud initiatives, a significant increase compared to 2022. In a recent InfoWorld article, David Linthicum attributes this rising demand based on the key benefits that the sovereign cloud offers, including increased control and ownership of data, enhanced security measures, higher service availability and reliability levels, and the ability to customize to the specific needs of a country or organization.

SAP was among the first companies to offer sovereign cloud capabilities more than 15 years ago with SAP National Security Services (SAP NS2) in USA.

Based on that experience, here are three ways sovereign cloud capabilities can help global businesses thrive in a connected, yet fragmented world, more securely and sustainably.

1.???Access to talent with country-specific expertise and technology expertise.?People together with technology drive innovation. The skills and insights that the team brings to the table are key differentiators. Running sovereign cloud operations echoes the idea of ‘think global, act local’. To manage sovereign clouds, companies need to build or tap into teams with country-specific compliance and security expertise and global technology excellence.

2.???Incorporating High Data Security and Compliance Controls Into Daily Operations Customer and operational data are the crown jewels of every organization, enabling them to make strategic decisions quickly in a fast-changing business environment. Sovereign cloud capabilities provide robust security controls to protect business critical and personal data from unauthorized access and cyber threats. They also include stricter access controls, encryption mechanisms, and intrusion detection to ensure compliance with relevant regulations are part of daily operations.

3.???Ensuring Seamless Integration and Compatibility with a Cloud Centric Mindset Adhering to compliance in a fragmented regulatory landscape brings higher complexity. This can be a challenge for seamless integration with existing systems and applications. What we’ve learned over the years is that developing a cloud centric mindset and best practices helps achieve a seamless cloud experience in a complex regulatory environment.

Companies can integrate sovereign cloud capabilities as part of multi-cloud deployments which heightened security and compliance requirements to achieve the same level of flexibility, scalability, and speed that companies have come to expect from the cloud.?

To address the needs and demands of our customers, SAP has started expanding its’ sovereign cloud capabilities to more countries. To give you an example, take a look at how we provide customers in Australia and New Zealand with sovereign cloud capabilities here. [https://www.sap.com/australia/services-support/service-offerings/sovereign-cloud.html]