Digital sovereignty: What it is — and why it matters to your business

Beyond national borders: the new digital frontier

When the European Court of Justice invalidated the EU-US Privacy Shield in 2020, thousands of businesses had to scramble to make sure their data transfers were compliant. It was a big deal and it highlighted an even bigger question: who truly controls an organization's digital assets?

That incident crystallized why the concept of digital sovereignty is so important in today’s data-driven world and how the issue has escalated from a task on IT departments to an item on the Boardroom agenda.

So, what exactly is digital sovereignty—and why should it matter to your organization?

Three pillars of digital independence

Digital sovereignty is a multifaceted concept that covers a nation's or organization's ability to maintain control over its digital assets, infrastructure, and data. It goes beyond mere ownership, extending to the capacity to govern and manage digital resources independently. This includes having full authority over everything from where and how data is stored and processed, to fostering independence in technological development, and enforcing local laws and regulations within the digital space.

The big picture here is that digital sovereignty empowers entities to make autonomous decisions about their digital presence and operations, free from external pressures or dependencies.

For ease of reference, I’ve created a table breaking the concept down into three key components:

Understanding these components is crucial for organizations that need to navigate the complex landscape of digital sovereignty. Each of them plays a vital role in ensuring comprehensive control over an entity's digital assets and operations — which means every one of them needs to be addressed and actioned in order to secure your digital sovereignty.

Why digital sovereignty matters

Of course, I understand that the last thing you need is another item on your digital “To Do” list.

But there are compelling reasons why you really should “do” digital sovereignty — sooner, rather than later.

Here are three of them:

1. Security and compliance

Cyber threats are on the increase, as well as the stringent data protection regulations that try to protect businesses and consumers. Digital sovereignty is part of the strategy to safeguard an organization's digital assets. By maintaining control over data processing and storing data within their geographic neighborhood, companies can reduce the risk of unauthorized access to sensitive information. This control also enables organizations to more effectively comply with local data protection laws. As we all know, data breaches can result in severe financial penalties and reputational damage, so the security benefits of digital sovereignty cannot be overstated.

2. Operational resilience

Digital sovereignty enhances an organization's ability to weather global disruptions and technological challenges. By reducing dependence on imported technologies and services throughout their supply chains, companies can maintain critical operations even when international supply chains or services are compromised. This resilience was particularly evident during the COVID-19 pandemic, where organizations with greater digital sovereignty were often better positioned to adapt to rapid changes in the global business environment. Furthermore, having control over digital infrastructure allows for quicker response times to operational issues, reducing downtime and maintaining business continuity.

3. Innovation and competitiveness

Digital sovereignty acts as a catalyst for innovation and regional economic growth. By fostering local tech industries, it creates a fertile ground for the development of cutting-edge technologies tailored to local needs and regulations. This not only creates jobs in the technology sector but also drives broader economic growth as these innovations are applied across various industries. Moreover, organizations with strong digital sovereignty are better positioned to compete in the global marketplace, as they can more rapidly develop and deploy unique digital solutions without being hindered by dependencies on imported technologies or foreign regulations.

Challenges and opportunities

Achieving digital sovereignty presents organizations with three significant challenges.

First, there's the technical hurdle of building and maintaining independent digital infrastructure while ensuring robust cybersecurity against ever-evolving threats. This requires considerable expertise and ongoing investment.

Secondly, organizations face economic challenges, including the high costs of developing domestic technologies and potential loss of economies of scale when moving away from global providers.

The third and perhaps most complex challenge involves navigating regulatory and governance issues. Organizations must comply with evolving, and sometimes conflicting, regulatory frameworks while still fostering innovation.

This regulatory landscape is particularly intricate in regions like the European Union, where digital sovereignty has become a key focus. Despite these obstacles, many organizations, particularly those in certain verticals, find that the benefits of digital sovereignty - increased control, security, and independence - outweigh the difficulties. Success often comes through innovative problem-solving and strategic partnerships that help address these complex challenges.

By embracing digital sovereignty, organizations can not only protect themselves from various risks but also position themselves at the forefront of innovation and competitive advantage in the digital age.

At-a-glance action plan

I hope this brief overview of some key elements of the digital sovereignty topic has provided food for thought, but I don’t want it to be purely academic. The topic is far too important for that.

Plainly and simply, every organization with any appreciable amount of skin in this game (i.e. virtually any organization that holds data) needs to evaluate the impact on their organization and build a digital sovereignty action plan. Organizations in practically every vertical can be affected—which is why at SoftwareOne we’ve included digital sovereignty provisions in our agreements with clients in the public sector, financial services, health and many other sectors too.

With that in mind, here's an at-a-glance guide to the key steps your organization should consider to promote and protect its digital sovereignty, organized by core areas of focus.

It won’t provide all the answers you need — but it might suggest some of the questions you should be asking.

How SoftwareOne can help

Of course, having an action plan is one thing. Putting the plan into action is another!

If you’d like help with that, one part of the solution is to entrust some of the heavy lifting to your cloud provider. They take care of the security OF the cloud — but remember you are still responsible for security IN the cloud.

Look for cloud providers that are keen to help clients meet digital sovereignty requirements. For instance, beyond the controls already built into their market-leading platform, AWS has announced their EU Sovereign Cloud, offering advanced sovereignty controls and features that allow organizations to benefit from cloud technology while ensuring data residency and compliance with local regulations.

You could also choose a partner that offers global presence AND local expertise—for example, those with widely-experienced consultants who understand the nuances of your particular market.