A mind-boggling volume of data is created and stored every year, and it’s growing all the time. The large-scale adoption of SaaS (Software as a Service) and cloud storage services brought major compliance challenges for users and providers. The terms “data sovereignty,” “data residency,” and “data localization” are often a source of confusion for businesses managing data across borders, especially on cloud infrastructure. Understanding the concept of data sovereignty could be essential for your business and a key factor when choosing the right cloud solution.
Definition of data sovereignty
By 2022, Internet traffic is expected to reach speeds of 150,000 GB per second, a 1,000-fold increase from 156 GB in 2002, according to the World Bank. And some of that data will be governed by region-specific rules. Any organization using data that crosses borders has a responsibility to comply with regional regulations. Your company needs to ensure and demonstrate that it complies with the rules of each market in which it operates. Failure to do so can result in substantial fines or more severe consequences. In short, this is the definition of data sovereignty.
Data sovereignty generally refers to government efforts to prevent citizens’ data from getting into the wrong hands through measures that restrict how companies can transfer personal information across borders. These measures can be rules — such as the General Data Protection Regulation (GDPR) in the European Union (EU), which regulates data privacy in the EU and the European Economic Area and the transfer of personal data from those regions, or the California Consumer Privacy Act (CCPA), which gives citizens the right to know what personal information companies collect about them and how it is used and sent.
Data sovereignty with Software as a Service
The spread of cloud computing has brought data sovereignty into the spotlight. With the exponential growth of data crossing borders and public cloud services, over 100 countries have imposed rules on where data is stored and how it is transferred. In particular, personal information (PII) is increasingly regulated by laws and administrative structures. Data transfers to other countries are usually restricted or allowed depending on two conditions: whether the country in question offers similar levels of data protection and cooperates in forensic expertise.
As a business owner, you need to know exactly where your data is stored and then take the necessary steps to ensure that you comply with the laws in force within your region. You also need to make sure that your cloud service provider offers you a high level of security and has strong protocols in place for when data security is breached or when you need to destroy data.
In this case, choosing the right technology and cloud service provider can make all the difference to your business and your data.
What is data residency?
Often confused with data sovereignty, data residency refers to where your data is stored geographically, for regulatory or political reasons. For maximum flexibility, choose a cloud service provider that defines a set of mutually exclusive data center regions globally — and in some cases, even sub-regions. Your Software as a Service (SaaS) subscription contracts should guarantee that your data stays in the data center in the selected region or sub-region. This includes your primary database and any backups or replicated data in a disaster recovery facility unless otherwise specified.
Data processing
Most data is processed in several ways, by transmitting it either from the storage location, from a sensor or external source to Random Access Memory (RAM), and to the mainframe of a workstation or server. The result of the CPU processing is then written to the data storage memory. For this reason, choose a cloud service provider that will respect the residency of the data in your region and ensure that all processing locations are within the region and that data transmission methods do not cross-region boundaries. For example, if you upload a file to your service system, where will the virus scan take place? It should not take place in your main data center, but it should be performed in your region.
Access to data
Regardless of where your data is located and processed, you may be wondering which members of the cloud service provider’s staff can access your data and from where they can do so. The standard in this area has long been the principle of legitimate need and the principle of least privilege. Another standard should also be granted temporary access using expiration policies for each right to prevent hackers from exploiting stale and unused credentials. Nationality and location-based access controls are becoming increasingly common, with location-based access controls encompassing both your working location (where you do business) and your geographical location (the physical location where you are at the time of login). Choose a cloud service provider that can offer you controls commensurate with the sensitivity of your data and the laws and regulatory requirements you need to comply with.
Software as a Service (SaaS) and cloud storage services have dramatically increased in popularity in recent years. In many cases, the cloud solution adoption results in major compliance challenges for users and providers. Understanding the key differences between data sovereignty, data residency, and data localization could be essential for your business and a key factor when choosing the right cloud service provider.
