What is sovereign cloud?

As more enterprises look to hybrid cloud solutions to help them achieve their digital transformation initiatives, cloud environments (and specifically how users access, store and use data in them) are becoming more important. With cloud computing continuing its spread around the globe, traditional geographic boundaries like borders are no longer sufficient to protect sensitive data.

Enter sovereign cloud, a solution that helps ensure data sovereignty, itself a key component of broader digital sovereignty. Sovereign cloud helps enterprises build customer trust and grow their businesses while complying with the laws and regulations in the regions where they operate.

A sovereign cloud mainly protects consumer and organizational data. While many regulations primarily focus on protecting personally identifiable information, or PII, depending on the industry, region or business use case, they can also protect intellectual property (IP), software, trade secrets, financial information and more. Because regulations around data privacy in the cloud vary between specific countries and regions, there is no single, accepted definition of what a sovereign cloud can protect. Approaches tend to vary by industry, location and business need.

Some sovereign cloud frameworks deal with data residency, where data is subject to the laws and regulations of the specific country where it’s being stored. Others deal with data sovereignty, where the data being stored is subject to the laws of the country where it was collected. In the end, sovereign cloud approaches not only help enterprises comply with laws surrounding their most sensitive data, but also helps them stay resilient.

As enterprises move more of their applications to the cloud, the cloud itself is fast becoming critical infrastructure.

A company’s cloud environment is now considered as important to its health as a factory, office building or valuable piece of IP. What’s more, as highly regulated industries in both the private and public sectors move their core services to the cloud, the need to keep data safe is becoming critical.

In addition, the rise of data-intense technologies like artificial intelligence (AI) and machine learning (ML) that depend on swift, secure data access is forcing enterprises to make more strategic decisions around cloud technology. AI and specifically generative AI, have the potential to fuel valuable business innovations, but without a sound, sovereign cloud ecosystem they can’t get off the ground.

Enterprises in highly regulated industries like healthcare and financial services face strong headwinds. In the European Union, the General Data Protection Regulation (GDPR) already sets strict rules on how personal data is collected, stored and moved across borders. Also in Europe, there is a proposal called the European Cybersecurity CertificationScheme for Cloud Services (EUCS) which aims to establish common cybersecurity requirements and certification standards for cloud services across the bloc. The Digital Operational Resilience Act (DORA) took effect in January 2025 and sets rules on ICT risk-management, incident reporting, operational resilience testing and ICT third-party risk monitoring. Strong sovereign cloud solutions help enterprises stay up to date with regulatory bodies and new legislation, as well as make more strategic decisions around risk, data and an evolving threat landscape. Let’s look at some of the most important benefits of enterprise sovereign cloud.

Enterprises that are willing to invest in a strong sovereign cloud framework as part of a larger digital transformation journey typically realize several important benefits. From greater control over their data, to improved connectivity, data resiliency and app performance, here are the top five reasons businesses take a sovereign cloud approach.

It is worth zooming out to consider the broader picture of what sovereign cloud aims to achieve. In a mature organization, a sovereign cloud is simply one component in a broader “digital sovereignty” framework. Digital sovereignty comprises four interrelated concepts: Operational sovereignty, technological sovereignty, AI sovereignty and data sovereignty. Sovereign cloud is one approach to the last of these four, data sovereignty. For the bigger picture, though, it’s worth looking at each concept turn.

Operational sovereignty is the control over how environments are operated.

Operational sovereignty helps ensure that critical infrastructure associated with data-rich applications is always-on and accessible. In addition, operational sovereignty helps enterprises maintain control over their operational processes and spot inefficiencies. With a sound approach to operational sovereignty, even if a particular region is affected by a disaster an enterprise can ensure their critical infrastructure is resilient through a business continuity disaster recovery (BCDR) or Disaster-Recovery-as-a-Service (DRaaS) plan. Finally, operational sovereignty helps enterprises comply with local regulations governing the infrastructure needed to support cloud environments in a particular region.

Technology sovereignty is about open, modular architecture that avoids vendor lock-in.

Technology sovereignty can also assist governance and transparency: Enterprises leveraging access control over their digital assets need to set rules around who has permissions. These sovereign controls need to be set up in a way in which they are easily enforceable, such as policy-as-code, a process that enables organizations to manage their infrastructure and procedures in a repeatable manner.

Transparency, another important aspect of digital sovereignty, refers to an organization’s ability to audit its processes and outcomes. Transparency ensures that organizations can see into their most important operational workflows so they can see what is working and what needs to be changed.

AI sovereignty refers to control over where models run and how inference is governed. The most sovereign forms of AI would have governed AI execution, with models, inference and agent operations running inside of defined sovereign boundaries. The topic is surging in interest; a recent McKinsey survey showed that of 300 respondents, 71% called sovereign AI either a “strategic imperative” or, more severely, an “existential concern.”

Data sovereignty refers to control over data at rest, in use and in motion. And it is here—more than in the other components of digital sovereignty—where sovereign cloud comes into play.

Complying with data sovereignty—the idea that data is subject to the laws of the country or region where it was generated—is a foundational requirement of most sovereign cloud solutions. Strong data sovereignty helps companies protect their customer data from cyberattacks and other threats while also ensuring no unauthorized individuals have access to it. For example, under most data sovereignty requirements, CSPs don’t have access to customer data even when it’s in a cloud data center they operate.

Another important aspect of data sovereignty is the concept of data residency, the notion that data is subject to the laws and regulations of the region or country where it is being is stored. In addition to complying with data privacy, sovereign cloud solutions need to comply with all applicable data residency laws and regulations as well.

More than anything, a sovereign cloud is an approach to the “data sovereignty” piece of the broader digital sovereignty puzzle. But it should be noted that data sovereignty, strictly speaking, can be achieved without use of a cloud at all; some organizations, for instance, choose to keep data on premises to ensure sovereignty. For this reason, IBM’s approach to sovereignty is with a solution called Sovereign Core, which remains agnostic over whether data sovereignty is achieved in a sovereign cloud solution or via on-prem or hybrid solutions.

When it comes to sovereign cloud, there is no such thing as a one-size-fits-all solution. Enterprises might want the same outcome from their hybrid cloud approach—digital transformation, for example—but how they go about achieving it varies depending on size, location, industry and business requirement. This is where the advantages of a risk-based approach become apparent.

A strong, risk-based approach to sovereign cloud balances growth—for example, the potential of an exciting new technology like generative AI—with risk, such as reputational damage due to a data breach. As enterprises extend these safeguards to their AI models and training data, the same principles give rise to sovereign AI. For critical applications and highly sensitive data, enterprises might want to exercise a higher level of control than with other, less critical applications. Precision regulation, coupled with a standards-based approach to governance rules and standards, helps ensure rules that are put in place can also be technologically managed.

Depending on an organization’s risk versus growth requirements, the kind of data they are storing and where that data is located, there are two options for deploying and enforcing sovereign cloud policies: Public or distributed cloud. In most countries, public cloud and multicloud deployments help organizations deploy their cloud workloads while still maintaining control over their data in a specific region. A typical public cloud architecture includes a platform cloud layer, like a hybrid cloud platform, that provides a stable, consistent cloud deployment.

The second option is the distributed cloud deployment model, such as a local infrastructure provider or on-premises data center. These are attractive for enterprises that require more control over their infrastructure and operations. They can also help enterprises avoid vendor lock-in by preserving interoperability across providers. Essentially, a distributed cloud deployment model gives you the ability to deploy workloads and platforms into any infrastructure of your choice. For the most sensitive workloads, this can include air-gapped environments that are physically isolated from the public internet.

As data, operational and digital sovereignty concerns continue to be raised by governments and citizens around the globe, sovereign cloud is helping enterprises ensure the integrity of their data no matter where they do business.

In the coming years, how businesses gather, secure, store and control access to their data—especially if they are looking to tap new, data-rich technologies like AI and ML—have enormous implications for their success. When choosing a CSP to help them create their sovereign cloud environment, its paramount enterprises understand how a CSP is going to store and process their sensitive data.

In addition, they need to know how a CSP supports resiliency and plans to mitigate outages from cyberattacks, natural disasters and other threats. Lastly, businesses looking to leverage a sovereign cloud framework must ensure their chosen CSP’s overall cloud strategy aligns with the laws of the countries or regions they operate in or they could face damaging fines or punishment.

Here are some important considerations to keep in mind when choosing a CSP for a sovereign cloud architecture:

Data governance: A CSP’s approach to data governance is crucial. It shows that they have the right policies and procedures in place to successfully handle your data (and its metadata) and apply the necessary restrictions around it. They should also be able to provide regular audits proving the guidelines they’ve put in place are being followed.

Service level agreements (SLAs): A service level agreement (SLA) with a CSP outlining a sovereign cloud environment shouldn’t differ greatly from one outlining a public or private cloud environment. Like public and private clouds, the three most important areas to examine are control (cloud management), availability, scalability and performance.

Compliance: CSPs deploying sovereign cloud frameworks need to have a high level of expertise in data laws in the regions where they operate and a deep understanding of the ever-changing data sovereignty and compliance landscape. Vendors and customers share responsibility for staying up to date with new regulations and developing strategies to deal with them.

Data encryption: When it comes to data sovereignty and privacy, it’s important to achieve data confidentiality. CSPs must provide mechanisms for organizations to encrypt their data and manage it using cryptographic keys, often safeguarded in a hardware security module (HSM). Essentially, this means altering data into an encryption content that can be decrypted by someone with the right permissions and key. Ensuring exclusive access to those encryption keys gives enterprises complete technical assurance and control over who can access their data at any time.

Resiliency: Lastly, when something goes wrong, you need to have a plan in place to help you recover quickly. Only consider CSPs with track records of helping clients with resiliency and recovery efforts in relevant countries or regions. All sovereign cloud deployments need to have built-in recovery and fail-over capabilities tailored to each, specific compliance area where data is being stored.

Approaches to sovereignty also differ by provider. Some, such as Microsoft with its Microsoft Sovereign Cloud, build sovereignty into their hyperscale platforms; others, including IBM, take a software-based approach with IBM Sovereign Core, designed as a foundation for sovereign cloud and sovereign AI that can run across multiple cloud environments.