Over the past few years, the data centre industry has undergone a profound digital transformation as organisations across various sectors continue to aggressively collect, store and analyse vast volumes of data, now called data modeling.
As enterprises strive to become increasingly data-driven in their decision-making, strategy development, and operational processes, the value of trusted data is growing exponentially.
Advancements in Graphics Processing Unit (GPU) technology are unlocking the full potential of Artificial Intelligence (AI), the key enabler that allows businesses to rapidly extract actionable insights from massive, complex datasets that would be impossible to process manually.
Today, AI applications are being used to build predictive and comparative models, conduct scenario planning and simulations, monitor operations and optimise efficiency, and drive strategic implementation and innovation.
However, as reliance on data grows, so does the risk. When sensitive data is exposed, whether in the public or private sector, the consequences can be severe.
This risk is amplified by the shift from on-premise infrastructure to cloud-based data storage and processing.
Up against global players
Most major cloud providers operate globally to achieve scale, but this raises a critical question: Does that model still serve local business interests?
Take South Africa, for example. Local companies are no longer competing solely within national borders; they are up against global players.
Many South African businesses depend on cloud-based Enterprise Resource Planning (ERP) and Customer Relationship Management, (CRM) Software-as-a-Service (SaaS) and Digital Platform offerings that are, in many cases, hosted on global cloud providers’ platforms.
With Digital Platforms it is not always clear to the customer where the data is being stored in a global cloud.
Most businesses store some form of intellectual property within their datasets that could be exploited should a competitor gain unauthorised access to it. It would be naïve to not consider this a serious threat.
For governments and other highly regulated industries, the risks are even more pronounced. With increasing geopolitical tensions and sanctions, judicial and operational control over cloud infrastructure becomes a strategic vulnerability.
As an example, if a cloud is hosted in the United States (US), and diplomatic relations sour, access to that data could be cut off. Suddenly, a government may find itself locked out of its own digital assets.
This is why data localisation and sovereignty have become urgent priorities. Governments are enacting compliance laws that require certain categories of data to remain within national borders.
In South Africa, such regulations issued by the Financial Services Conduct Authority (FSCA) have been in place since May last year, mandating that sensitive data be stored locally.
Closing the loopholes
Until recently, regulations like the Protection of Personal Information Act (POPIA) lacked accountability, and many companies exploited loopholes such as offshoring workloads to Europe, where cloud services are scaled on a more economic business model, including more availability for scaling.
But this is changing with the introduction of additional regulations and compliance. For example, new financial sector regulations, such as the Financial Sector Regulation Act (FSRA), now mandate how data must be processed and stored by companies in that sector.
This move towards global financial-grade standards has triggered tighter controls with legal and regulatory consequences.
CIOs are becoming more aware and intentional regarding the requirements for rigorous auditing; transparency in tracking exactly where their data resides, how it moves and transforms, ensuring full visibility and compliance across testing, production and backup environments.
These developments are reshaping the cloud and digital platform landscape. Traditional public clouds, designed to leverage economies of scale by serving multiple sovereign markets from a single or regionally positioned location, are no longer viable for certain use cases.
Instead, we are seeing a shift in demand toward local provider-managed clouds that are tailored for specific workloads, industries and geographic locations, that are configured to meet sovereignty standards, or customer-managed clouds within their own data centre.
For individual enterprises, building and maintaining a sovereign cloud deployed in-country to meet local compliance and ownership requirements is often not their core business and is a complex endeavour.
Cost and complexity challenges
Global providers often struggle with this model due to the cost and complexity of deploying infrastructure in every market and region.
This opens the door for smaller, agile cloud providers who specialise in local sovereign deployments. They build infrastructure locally, tailored to the regulatory and operational requirements of each market.
This approach allows the end customer to retain some of the benefits of the cloud by avoiding operational infrastructure complexity and leveraging economies of scale of shared services to a point.
But they also gain the benefit of compliance, risk mitigation and trust through the commitment of a local sovereign cloud provider who demonstrates their commitment to data sovereignty and local jurisdiction.
CIOs and CEOs must now take a hands-on approach in specifying and auditing cloud solutions. It is not enough for a provider to claim local presence.
A service may appear local, but its backend might run from Europe or the US. Without transparency, sensitive data can quietly drift offshore.
Ultimately, this shift demands a steep learning curve, not just for leadership, but for networking teams and compliance officers. It is no longer just about POPIA but about full-spectrum data sovereignty.
