Digital sovereignty vs. data sovereignty: Key differences

What are data residency, data sovereignty and digital sovereignty?

Data residency, data sovereignty and digital sovereignty differ in some key ways.

Data residency. Data residency addresses the location where data is physically stored or processed. It covers where the data must be stored or processed, but does not determine who has legal authority over the data or who controls the underlying technology.

Data sovereignty. Data sovereignty determines which laws and jurisdictions govern data based on where the data is stored, processed or transferred. Some factors that determine data sovereignty include regulatory obligations, cross-border transfers, government or third-party access and data governance.

Digital sovereignty. Digital sovereignty is the ability to retain meaningful control over the technologies, infrastructure, services and operations that support critical digital capabilities.

Each concept involves a different level of control by companies. For example, data residency primarily involves the location of data, while data sovereignty focuses on legal jurisdiction. Both only involve data, while digital sovereignty addresses technology, infrastructure and operational control.

Digital sovereignty also includes the question of whether a company depends on external providers, as well as who owns technologies, hardware and software, APIs and expertise. Another key digital sovereignty concept is whether a company can operate, migrate and take care of potential problems independently.

Why all three concepts matter for enterprise strategy  

CIOs can use these three concepts to guide organizations toward better compliance and security. These concepts can form the foundation for three questions that companies should ask:

1. Where is our data?
2. Which laws govern our data?
3. How much control do we currently retain over the digital capabilities that depend on the data?

An important consideration for the three questions is that storing data in a particular country does not automatically establish data or digital sovereignty.

A company may not always need to eliminate external dependencies. Necessary elements for assuming more control, such as local hosting, contractual safeguards and redundant architectures, can all increase total cost and operational complexity. Deciding on a level of control should depend on factors such as workload criticality, data sensitivity and potential regulatory problems.

However, CIOs should understand how a lack of control can lead to regulatory, security and operational risk. Determining the appropriate level of sovereignty for each workload is crucial.

IT leaders must also understand who has legal authority over their enterprise data, who controls the technology that processes it and whether the organization can continue operating if external conditions change.

These concepts can affect cloud adoption, cybersecurity and organizational resilience.

Cloud adoption 

Geographic requirements can limit which cloud services, replication models, analytics platforms and disaster recovery configurations an enterprise can use.

In addition, a workload may reside in a country required by regulations but depend on a provider, proprietary control plane, external support team or technology that creates jurisdictional or dependency concerns.

IT leaders should assess whether workloads, data, configurations and any other operational capabilities can realistically move between providers. Factors such as mechanical complexity, proprietary services, existing contracts and employee skills may make switching difficult.

Cybersecurity and compliance 

Tools such as encryption, identity verification, key management, monitoring, backup and incident response may rely on infrastructure or services outside the enterprise's direct control.

In addition, data sovereignty determines which regulatory bodies' transfer restrictions and disclosure obligations apply to a company's information. Keeping data inside national borders does not necessarily prevent issues arising from foreign ownership, remote administration, external support, software dependencies or cross-border data flows.

Operational resilience

Relying on another company also brings operational risks. Can the organization maintain or adapt critical services if a provider suffers an outage, restricts access or becomes unavailable because of geopolitical disruption?

Data portability helps ensure resilience, but only if it functions seamlessly. Contractual exit rights don't guarantee that workloads can be migrated within an acceptable recovery window.

Testing independence rather than assuming it is critical. Recovery exercises can help reveal whether an enterprise truly controls its data, configurations, credentials and operational knowledge.   

How to evaluate sovereignty risks  

This five-part risk assessment can help determine areas over which an enterprise has control and where it lacks control. 

1. Data residency and legal jurisdiction 

CIOs must establish where their company's sensitive data resides and who has authority over it and access to it. IT leaders need to look beyond primary storage locations to processing environments, replicas, backups and disaster recovery systems.

Companies must be able to demonstrate they meet any applicable data location requirements and determine whether any cross-border access, transfers or retention could lead to regulatory or legal exposure.

Here are some questions to ask:

• Where is sensitive data stored and processed?
• Which laws govern access, transfer and retention?
• Does IT know where data is stored across the technology stack?

2. Infrastructure and provider control 

CIOs should determine how much the enterprise depends on external providers for critical digital capabilities. They must examine ownership, operational control, contractual constraints, technical lock-in and migration complexity.

Moving workloads may be prohibitively expensive, technically difficult or take too long during an emergency.

Here are some questions to ask:

• Who owns and operates critical infrastructure?
• How difficult and expensive would migration be?
• What alternatives exist if the provider becomes unavailable?

3. Technology stack independence 

Proprietary platforms, foreign technologies, specialized hardware, software dependencies, APIs and technical expertise from outside the company can all become external dependencies.

CIOs should look into which of their company's critical components depend on proprietary or foreign technologies and whether interoperable alternatives are available.

4. Operational autonomy

A company's level of operational autonomy indicates whether it can continue to manage critical capabilities on its own. These capabilities could include maintaining infrastructure, carrying out security updates, managing configurations, responding to incidents and recovering systems.

Here are some questions to ask:

• Can critical systems operate without vendor support?
• Do internal employees possess sufficient expertise?
• Who controls updates, patches and recovery processes?

5. Governance and decision rights

Governance determines who ultimately controls access policies and decisions that affect critical digital capabilities.

CIOs should look into who controls access and decision rights and whether external parties can override enterprise policies.

The bottom line

Understanding the differences between data residency, data sovereignty and digital sovereignty is critical. Data residency focuses on where data is, while data sovereignty examines the laws and jurisdictions to which data is subject. Digital sovereignty is the level of control organizations have over their technology and other aspects of their operations.

Organizations may find some dependencies acceptable, but CIOs should identify critical workloads and capabilities where a lack of control would be unacceptable.

Damon Garn owns Cogspinner Coaction and provides freelance IT writing and editing services. He has written multiple CompTIA study guides, including the Linux+, Cloud Essentials+ and Server+ guides, and contributes extensively to Informa TechTarget, The New Stack and CompTIA Blogs.