Gartner predicts that by 2029, more than 50% of enterprises will adopt digital sovereign strategies, high-level plans to ensure national control over data and critical systems. That’s a significant increase from fewer than 10% today. Sovereign clouds will play a critical role in these strategies, enabling companies to “cloudify” their systems and data while ensuring compliance with sovereignty requirements.
Unlike public clouds, sovereign clouds let enterprises maintain control over their assets without exposing them to a public cloud environment. This helps insulate enterprise IT assets from the broader world, reducing geopolitical and other threats to data and systems.
The move to more private and sovereign clouds seems to fly in the face of the aggressive adoption of public clouds over the past decade — so why are companies changing their minds?
In October, 80% of organizations surveyed reported experiencing a cloud security breach, according to Data Stack Hub. Of these, more than half (52%) of the breaches occurred in public clouds. While a significant number of security breaches also occur in private clouds, there’s no avoiding the fact that public clouds are prime targets for geopolitically inspired and just plain bad-actor attacks. This is a major motivator for enterprises to reconsider hosting their IT resources on public clouds.
How companies are privatizing cloud
Enterprises are using several cloud privatization models.
Private clouds: Organizations using private clouds directly deploy and control their own, exclusive IT infrastructures, data and resources on the private clouds hosted in their own data centers, although they can also use a third party’s servers for hosting.
The goals are to achieve robust security and to insulate enterprise IT assets from outside access. In a private cloud, IT is responsible for maintaining the cloud, whether it is hosted internally or in a third-party data center. IT must also ensure that governance, security and compliance requirements are met.
A sovereign cloud is a cloud that is entirely contained within the physical state/province, or national jurisdiction in which a company operates. By using a cloud that is fully compliant with local standards for governance, security and compliance, the company is assured that its regulatory measures conform to local requirements.
Sovereign clouds are also deployed for specific industry verticals with demanding and unique regulatory requirements (e.g., healthcare, finance). The management of cloud resources in a sovereign cloud environment is flexible. It can range from a company controlling its own cloud assets and activities to an arrangement where a cloud provider manages all aspects, based on industry standards and business rules that enterprise customers set.
On-premises data centers: There are also enterprises that opt to maintain control of all their IT assets and ensure that all of the IT is safely secured in their own physical data centers. This is the most secure form of computing, security and governance, because IT is presiding over it all without outside help.
Determining a cloud privatization strategy
Four factors typically drive companies to consider cloud privatization:
-
Alignment of the cloud strategy with enterprise business goals.
-
IT’s ability to run the cloud.
Aligning cloud and business strategies is unique for each company. If the enterprise is in a business where privacy, security and governance are paramount, there will be interest in keeping data and systems private — and if it can be done in a private cloud environment, all the better.
For companies less worried about compliance, security and privacy, getting into the business of managing a private cloud isn’t that attractive. Public clouds can also be a better fit for multinational companies that rely on cloud services with around-the-globe data centers for improved performance and failover.
IT must also have the bandwidth and know-how to implement and manage a private cloud. Many smaller companies don’t have this on-board expertise, so using a public cloud managed by a reputable vendor is a more viable option.
Cost. Subscribing to public cloud services is a pay-per-use model, and in most cases, it is less expensive than on-premises or private cloud computing. Companies must calculate if the improvements in security, governance, privacy and control in on-premises or private cloud computing are worth the extra cost.
Performance. If a company is in a transaction-intensive industry, such as gaming, online reservation booking or brokering, the investment in on-premises or private cloud processing pays off in superior performance that yields more transactions per minute booked (and profits made), as well as in the number of customers served. Companies in transaction-intensive industries are not likely to rely on public cloud services that they must share with others.
Cloud 2026: Balancing sovereignty and performance
Companies must decide which cloud approach is best suited to their business needs. What we do know is that most are opting for a hybrid computing architecture that uses on-premises, public cloud and private cloud computing — and this flexible approach is likely to continue.
That being said, there has been a noticeable migration to cloud privatization, with some companies even moving some of their cloud-hosted IT back into their in-house data centers. Most of these migrations have been spirited by concerns about security and performance, and this movement is expected to gain momentum in 2026.
