Thinking Local Is Key for EU’s Cloud Service Providers
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Insights
The strategic alliances between European cloud service providers and global hyperscalers are a significant development in the technology sector, particularly in the context of the European Union's stringent data sovereignty and security regulations. These partnerships are a direct response to the dual challenge of adhering to regulatory compliance while providing scalable technological solutions to customers.
From a market perspective, the growth of such alliances indicates a shift towards localized services that align with the EU's Gaia-X framework. This shift is likely to influence the competitive landscape, as providers that can effectively integrate global technological capabilities with regional compliance requirements may gain a competitive advantage. The emphasis on data residency and localized service provision could lead to a more fragmented market, with specialized regional players emerging alongside established global providers.
For stakeholders, the evolution of sovereign cloud services within the EU presents both opportunities and challenges. On one hand, European businesses and governmental entities can benefit from cloud services that are tailored to meet specific regulatory standards, potentially enhancing data security and compliance. On the other hand, the need to balance sovereignty with scalability may lead to increased complexity in cloud service procurement and integration, potentially affecting operational efficiency and cost.
The integration of stringent security and encryption protocols, as outlined in the Gaia-X framework, is crucial for the protection of sensitive data within the EU. The focus on sovereign cloud services reflects a broader trend towards enhancing cybersecurity measures in response to increasing cyber threats and the need for regulatory compliance.
For organizations operating in the EU, the adoption of sovereign cloud services designed to comply with European standards presents a significant step towards mitigating risks associated with data breaches and unauthorized access. The requirement for personnel handling sovereign data to be EU citizens or based in the EU further strengthens the security posture by ensuring that data governance is subject to EU jurisdiction.
However, the reliance on sovereign cloud services may also introduce new cybersecurity challenges. The complexity of managing data across multiple jurisdictions and the potential for interoperability issues between different providers' platforms could create vulnerabilities. Providers and customers alike must be vigilant in maintaining robust security practices while navigating the evolving landscape of sovereign cloud services.
The legal implications of the Gaia-X initiative and the partnerships between European cloud service providers and hyperscalers are profound. Compliance with EU data protection laws, such as the General Data Protection Regulation (GDPR), is a non-negotiable aspect of operating within the EU's digital market. The Gaia-X framework's focus on data sovereignty and European ownership control is a legal response to these requirements, aiming to ensure that data is governed according to EU standards.
For EU organizations, the legal benefits of engaging with providers that adhere to the Gaia-X framework include reduced risk of non-compliance penalties and greater control over data. However, legal complexities may arise as these organizations navigate the intersection of local and global cloud service provisions. The challenge lies in contracting with providers that can ensure continuous service flow while remaining compliant with the EU's legal framework.
Furthermore, the legal landscape may continue to evolve as the Gaia-X initiative expands and as new regulations emerge. Providers and their customers must stay informed and adaptable to maintain compliance and leverage the legal protections offered by sovereign cloud services.
European providers are balancing data sovereignty with cloud scalability in an environment marked by increased regulations, ISG Provider Lens™ report says
The 2023 ISG Provider Lens™ Multi Public Cloud Services report for the EU finds a growing number of partnerships between local providers and global hyperscalers aimed at preserving data sovereignty while meeting the technological demands of customers. Although European cloud service providers may not be able to compete with hyperscalers when it comes to their data center ecosystem and technological capabilities, they make up for it with an established local presence, the ISG report says.
“Localized data residency is a key priority for sovereign cloud services providers,” said Dr. Matthias Paletta, director, technology modernization, for ISG. “Providers with extensive regional coverage have a competitive edge.”
The merging of local and global in the European cloud market is due in great part to the Gaia-X initiative, a comprehensive framework designed to govern the data sovereignty of information deemed confidential by EU member states, the ISG report says. Since its launch in 2019, Gaia-X has grown from 22 European stakeholders to more than 340 organizations as of 2023, the report says. Stringent security and encryption are integral to the Gaia-X framework, the report says.
Gaia-X’s goal of European ownership control of providers of sovereign cloud services has created obstacles for EU organizations, both governmental and commercial, in maintaining a continuous service flow from their chosen providers, ISG says. That’s because these organizations still depend on the scalability and comprehensive technology stack that the global hyperscalers offer, the report says.
Cloud service providers are surmounting this obstacle by working extensively with key stakeholders to develop a seamless process that adopts a highly scalable cloud ecosystem built upon sophisticated technology and leveraging an open-source platform that ensures interoperability while maintaining a strong emphasis on European standards, the ISG report says.
“Enhancing sovereign data security is key for European enterprises,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “This means the personnel who handle sovereign data should be EU citizens or at least based in the EU.”
The report also examines how cloud service providers can add more innovative and agile cloud-native technologies to their sovereign cloud requirements.
The 2023 ISG Provider Lens™ Multi Public Cloud Services report for the EU evaluates the capabilities of 16 providers across one quadrant: Sovereign Cloud Infrastructure Services.
The report names AWS, Google, Microsoft, Orange Business, OVHCloud and T-Systems as Leaders in one quadrant each.
Customized versions of the report are available from AWS and T-Systems.
The 2023 ISG Provider Lens™ Multi Public Cloud Services report for the EU is available to subscribers or for one-time purchase on this webpage.
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across
A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240108200000/en/
Will Thoretz, ISG
+1 203 517 3119
will.thoretz@isg-one.com
Kate Hartley, Carrot Communications for ISG
+44 (0)20 3457 6403
kate.hartley@carrotcomms.co.uk
Source: Information Services Group, Inc.
FAQ
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