Digital sovereignty is about outcomes, not theoretical ideals

BUSINESS NEWS - The conversation around digital sovereignty is gaining momentum worldwide.

In today’s climate of geopolitical uncertainty and technological competition, it is both natural and necessary for nations to seek greater control over their digital futures. The real issue is not whether countries should pursue sovereignty in critical sectors, but how best to achieve it.

Many nations are responding to the new global environment by investing heavily in data centers, operating under the assumption that owning the physical infrastructure for cloud, data and AI guarantees independence.

However, equating servers and processors with sovereignty overlooks the reality of global technological interdependence and may in fact distract from a country’s own digital strengths.

Even when a data center is run by a local provider on national soil, its key components—processors, networking equipment, the AI models running there —are almost always designed or manufactured abroad.

Achieving complete technological self-sufficiency would mean excluding all foreign hardware and, by extension, the foreign software that is deeply embedded in both business and public administration.

Such a strategy is neither practical nor economically viable, as it would isolate any nation choosing it from the constant stream of innovation coming from other parts of the world.

Rather than driving self-sufficiency to a counterproductive maximum, countries should invest strategically and put in place pragmatic regulations that focus on outcomes rather than theoretical ideals.

True digital sovereignty is about maintaining control over critical data and assets while leveraging the best technologies out there in line with national interests.

Building on this insight, several priorities become clear.

First, governments should invest their limited resources where they will have the greatest impact. The real race is not about who owns the most servers. It’s about who develops and controls the software and AI applications powering the future of industry.

This is the arena where sovereignty and long-term competitiveness are truly decided and where public investments will yield the greatest returns. Governments that foster software and AI adoption in industry and the public sector also drive natural demand for data centers and chips – achieving both goals at once.

Second, not all data requires the same level of digital sovereignty – and higher sovereignty levels naturally involve higher costs in terms of time and money. For maximum effect, nations should match protection levels with the criticality of the respective data.

Information essential to national security or public safety, for example, calls for the highest levels of control, with operations managed under national authority, by security-cleared personnel, and within governed environments.

In other cases, an approach upholding sovereignty through data localization may be appropriate - for example in regulated industries such as the healthcare sector.

Finally, less sensitive data and standard business applications can be run safely and cost-efficiently in trusted cloud environments, provided they comply with recognized cybersecurity standards. SAP, for instance, already offers clients this range of choices.

Third, governments should adopt international sovereignty standards (such as ISO, IEC, etc.) instead of developing their own separate rules. Shared standards allow more providers to enter the market and achieve economies of scale.

They also make it possible for governments and businesses to use sovereign solutions hosted in neighboring nations observing the same rules. This will result in an expanded offering of sovereign cloud solutions at lower costs and faster implementation across the public and private sectors.

Fourth, it is wise for nations to invest in domestic education, training, and research in the fields of cloud, data, and applied AI.

By doing so, they can systematically equip their people with the capabilities, expertise, and skills to take their nation’s digital destiny into their own hands. In this regard, too, sovereignty is about so much more than buying and owning hardware.

In the end, it is all about a common understanding that a nation’s digital future won’t be determined in server rooms. It will be shaped by its businesses and public institutions making smart, pragmatic decisions about their digital sovereignty and competitiveness – focusing on outcomes rather than theoretical ideals, and applying the best available technologies to create lasting value.

Christian Klein, CEO of SAP SE