Why IT Sovereignty Is a Strategic Imperative for Global Enterprises

For many international enterprises, the conversation about IT sovereignty often begins in the compliance department. However, sovereignty has outgrown its regulatory origins; it has become a question of business survival. When critical data, applications, and systems are governed by laws or authorities outside your control, the resilience of the entire organization is at stake.

This first part of the series examines the layers of IT sovereignty and provides practical guidance for global enterprises. In upcoming posts, we will explore physical infrastructure and data center strategy, cloud deployment models, AI governance, cybersecurity, network dependencies, regulatory frameworks, and the strategic decisions enterprises must make about acceptable foreign dependencies.

What IT Sovereignty Really Means

IT sovereignty is about more than meeting privacy rules. It is the assurance that digital assets - whether data, infrastructure, or processes – are governed under jurisdictions and protections you choose, rather than those imposed externally. This involves knowing not only where information is stored, but also who operates the infrastructure, which legal frameworks apply to vendors, and whether operations can withstand sudden political or legal disruption.

Put simply, sovereignty is not isolation. It is the freedom to decide how much reliance on third parties is acceptable, and where control must remain firmly in your own hands. In EU terms, this is framed as digital sovereignty or technological sovereignty - concepts broader than simple data localization.

The Geopolitical Dimension

Global businesses depend heavily on US-based cloud providers, foreign-built hardware, and multinational telecom networks. This interconnectedness enables efficiency, but it also introduces vulnerabilities.

Take the US CLOUD Act as an example. It requires American providers to comply with valid legal orders even if the data is stored abroad. While providers can challenge requests that conflict with foreign laws, the jurisdiction of the vendor ultimately matters more than the physical location of the servers.

Beyond the CLOUD Act, enterprises must also consider FISA §702 (reauthorized in April 2024 and extended until April 20, 2026) and the UK Investigatory Powers (Amendment) Act 2024. The latter expands on provisions from the 2016 Act, allowing for the extraterritorial application of Technical Capability Notices.

On the European side, the EU–US Data Privacy Framework (DPF) has been in force since July 10, 2023. While it facilitates data transfers for certified US companies, it faces ongoing legal scrutiny. The EU General Court upheld the framework on September 3, 2025, but appeals to the Court of Justice of the European Union remain possible. For all other cases, Standard Contractual Clauses (2021/914) must be paired with Transfer Impact Assessments and supplementary measures.

The EU’s NIS2 Directive is also reshaping cybersecurity requirements. It introduces strict incident-reporting deadlines: a 24-hour early warning, a 72-hour notification, and a final report within one month. Since October 17, 2024, transposition deadline, Member States have been implementing these rules with varying speed and scope, adding complexity to multinational compliance. Article 21 further highlights supply-chain and third-party risk management.

Together, these developments underscore a simple truth: if you cannot clearly map the jurisdictional control of your digital assets, you may not actually be in control at all.

What Is at Stake

Without a sovereignty strategy, enterprises face tangible risks. Regulatory penalties loom over organizations handling sensitive data. Operational continuity can be disrupted if a foreign provider restricts access under government order or sanctions. Security concerns - such as surveillance or back doors – become harder to mitigate. Once critical workloads are locked into vendors outside your influence, strategic flexibility disappears.

For sectors such as finance, healthcare, defense, and government, these risks are not abstract. They are already shaping procurement requirements, driving localization initiatives, and fueling demand for sovereign cloud solutions.

In finance, DORA became effective on January 17, 2025, requiring ICT third-party registers, harmonized incident reporting aligned with NIS2, and standardized third-party risk management across financial entities and critical ICT providers. These measures significantly raise the bar for resilience in critical financial services.

Finding the Balance

A sovereign IT strategy does not require abandoning foreign technologies. No enterprise can realistically rebuild everything locally. The challenge is balance: identifying which systems and data sets require maximum protection, and where calculated third-party reliance remains acceptable.

For most organizations, the result is a hybrid approach. Sovereign control is applied where it matters most, while international technologies and partners are leveraged where they add value without compromising resilience. In critical infrastructure, isolation may be justified. In other industries, a blended model often strikes the right compromise.

Sovereignty is also about architecture and controls: planning for exit/portability (ISO/IEC 19941, SWIPO Codes), adopting bring-your-own-key (BYOK) and hold-your-own-key (HYOK) with EU key trustees, and deploying confidential computing to safeguard data in use.

Looking ahead

The rules around IT are changing fast, and enterprises need to keep an eye on three key areas:

AI Act: Europe’s new law on artificial intelligence is being phased in. From February 2025, some AI systems were banned, and companies must provide basic AI training to staff. Since August 2025, makers of general-purpose AI models have been required to explain more about how their systems work. Stricter requirements for high-risk AI (e.g., in healthcare or finance) will follow.

Cybersecurity certifications: The EU now has official security labels. One scheme for IT products (EUCC) is already live. Another for cloud services (EUCS) is still being finalized. Some countries add their own rules on top - for example, France’s SecNumCloud.

Standards: International guidelines are increasingly used as benchmarks in contracts and audits. Two examples: ISO/IEC 27018 (protecting personal data in the cloud) and ISO/IEC 42001 (managing AI responsibly).

In short: AI rules are tightening, security certifications are expanding, and international standards are becoming the benchmark for trust and compliance.

The Essential Question

As regulatory pressure intensifies and digital infrastructure grows more politically sensitive, enterprises face a defining question: Who really controls our IT? The answer will shape not just compliance outcomes, but the long-term independence and resilience of the business itself.

What comes next?

Stay tuned for the next part of the series, where we deepen the layers of IT sovereignty.