'When global politics has some intervention on the core software one uses, and if you are cut off from your own data in critical workflows, sovereignty is no longer optional. It becomes a necessity.'
Geopolitical uncertainty and the rapid evolution of artificial intelligence (AI) are making concerns about data sovereignty increasingly urgent.
Analysts and industry experts say the risk of not being able to access your own data is prompting businesses to re-evaluate their information technology architecture.
Nayara Energy, the Russian-backed Indian refiner, sued Microsoft in July after it abruptly suspended critical software services.
Last month, the refiner moved court against SAP for suspending software services. SAP India told the court that it cannot provide the services without its parent firm's support.
Cloud question
Nayara's experience adds to the debate about data, sovereignty and security. According to analysts, around 55 to 60 per cent of world enterprise data is on Cloud services largely owned by American technology firms.
"Data sovereignty is fast emerging as a major theme. In many customer conversations, the most frequent question is about data residency -- where the data actually sits," said D D Mishra, vice-president analyst at Gartner.
"In today's VUCA (volatile, uncertain, complex, ambiguous) world, shifting geopolitics and rapid change are driving uncertainty," Mishra added.
"Concerns over national security, threat perception, and latency are forcing leaders to rethink their data strategies. Added to this are the imperatives of privacy, citizen rights, compliance with global standards, resilience, and strategic autonomy," Mishra pointed out.
It's no surprise that after Microsoft's action, Nayara moved some of its services to Rediff, an Indian company that provides email service and other business tools.
"For any entity, business continuity is important. If you are operating in India, under local laws, you should not face any disruption or shutdown because a foreign vendor pulled the plug due to compliance in a foreign territory," said Vishal Mehta, chairman and managing director, Infibeam Avenues and Rediff.
"That is specifically [critical] for sectors like energy, banking, telecom and defence," Mehta added.
Mehta did not comment on Rediff's agreement with Nayara. Rediff Email Pro has more than 20,000 clients and in the past eight weeks it has added around 2,000 to 3,000 new enterprises.
Mehta attributed the additions to new features the email service has rolled out and geopolitical issues.
Data sovereignty, Mehta stated, is as critical as national defence.
"When global politics has some intervention on the core software one uses, and if you are cut off from your own data in critical workflows, sovereignty is no longer optional. It becomes a necessity. One has to position sovereign software and frameworks as alternatives to (incumbent) vendors in some ways."
Enterprises can't quickly move their data to their territories, so they face a tough question: What happens if an undersea cable is cut by threat actors? Disaster recovery plans can mitigate risk but they are costly.
A more sustainable solution is keeping data within their regions.
"Data sovereignty is certainly emerging as an important concern but not yet impacting decisions," said a senior analyst on condition of anonymity.
Relocating data
According to a recent survey by Pure Storage and University of Technology Sydney, 100 per cent of organisations said data sovereignty risks, such as potential service disruption and geopolitical shifts, are forcing them to reconsider where their data is located.
Mishra said data can't be moved instantly. If clients suddenly demand that years of infrastructure be shifted onshore in six months, it's simply not feasible.
"Some customers are already repatriating data, others are weighing their options, and many are still at the discussion stage."
The sovereignty debate becomes complicated in the age of AI, which needs Cloud to distribute, leverage, and protect data.
Cloud providers often store enterprise data in so-called data lakes. This creates a problem of tracking specific data and its physical location, said the senior analyst.
Businesses will have to clearly know where their data is stored on the Cloud.
"The entire thing with AI is that it is not just your own data but combines it with other data from the market and so on. If I have to do AI on sales, I may have my own CRM (customer relationship management) data on Salesforce, but then I am combining that with buyer behaviour [data], which may not be on my own server," said another AI analyst.
Demand for data sovereignty has prompted international companies to launch domestic offerings for India, while several home-grown players emerge as options.
Sharad Sanghi, cofounder and chief executive officer of Neysa, an AI Cloud services provider, was recently empanelled by the government under the IndiaAI Mission.
"We are seeing explosive growth, especially since we have been shortlisted by the government for the IndiaAI mission. Additionally, we are seeing growth not only from India but international markets such as the GCC (Gulf Cooperation Council) nations and the other Asian countries," Sanghi told Business Standard earlier.
Hans Dekkers, general manager of IBM Asia Pacific, said in a recent interview the demand for data localisation is growing.
"At the government, enterprise, academia anywhere where IP (intellectual property) has a value in data, I see this demand. Where does your data reside is now a fundamental question. What I am seeing with all the discussions we are having, is that to a large extent (more than 50 per cent), we see data in positions where it should not be, or where clients don't want it to be," he said.
As AI adoption accelerates and geopolitical uncertainties continue, data sovereignty is no longer an academic topic. For enterprises, the choice is no longer about the cheapest solutions but continuity in the face of uncertainty.
Feature Presentation: Aslam Hunani/Rediff
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