Businesses exploit data for value, and that value comes when data can flow freely across borders, making it quick and easy for stakeholders in the ecosystem in different regions to work together. Yet many countries have put barriers in place to make this difficult, such as data residency requirements that ring fence data within their own borders. This is affecting enterprises looking to expand their operations using cloud services.
Take China, for example. With over 800 million Internet users, China represents a huge opportunity for businesses. However, access to online services provided from outside the country is restricted. Data centers are not connected at an international level, and there is a very close integration between China’s cloud suppliers and the government.
Under China’s current rules, foreign companies can’t directly provide cloud computing services in China, which means enterprises can’t simply extend their cloud provisioning there. Instead, their cloud providers must partner with Chinese companies for cloud services, who control the relationship between the organization and its cloud supplier. In addition, Chinese citizen data must stay in the country, and other local laws around access to that data must be obeyed.
This type of country-specific complexity can deter enterprises from entering new markets where there may be huge, untapped potential.
The thorny subject of data sovereignty
Data sovereignty is also becoming a major challenge for international organizations. Regulations that demand that citizens’ data is stored in local data centers together with restrictions on movement of that data outside the country’s borders are increasing.
GDPR, designed to protect and empower EU citizens on the issue of data privacy, is an example. The EU regulation requires that all data on citizens must be stored in the EU, so that it is subject to European privacy laws, or within a jurisdiction that has the same levels of data protection. Brazil was quick to copy GDPR with the Lei Geral de Protecao de Dados (LGPD) legislation. Chile, Argentina and Mexico are also assessing their data privacy laws.
China ranks 46 in the World Bank ease of doing business report, despite being the world’s second largest economy. It has a cybersecurity law in place that demands that all cloud computing and customer data be hosted on servers based in China. This led to Apple migrating iCloud user data to servers run by a local company to satisfy government demands for Chinese citizens. The tech giant is now building its first data center in China together with its local cloud partner Guizhou-Cloud Big Data Company. Russia also requires foreign businesses to store data on Russian citizens on servers located in Russia.
Other countries, such as India, are actively looking at adopting data sovereignty to stay in control of local data. While privacy and security are given as key reasons for the move, it also bolsters local economies by ensuring that cloud providers and foreign businesses must buy locally.
The problem, according to Deloitte, is that these complex regulations are making enterprises realize that “they don’t know – much less have control – over what data exists within the enterprise, where it sits and how it is being used across business units, geographies or with third parties.”
Alan Rodger, a senior industry analyst at Ovum, believes that while the cost of such regulatory compliance is often significant, non-compliance can end up costing more in terms of fines, for example.
Efficiency with flexibility and transparency
For enterprises doing business internationally, using cloud is a no-brainer. It offers efficiency, improved productivity and cost reductions alongside enhanced security and compliance. And cloud-based collaboration means faster access and insights for smarter decision making.
Despite these benefits, enterprises have been put off entering new markets due to the cost of local regulations that add another layer of cloud complexity for them to navigate.
The ability for enterprises to open new markets and consolidate regional on-premises projects in the cloud quickly and easily by circumnavigating regulatory barriers is paramount to expanding into otherwise hard-to-reach markets. To remove complexity and speed up time to new markets, enterprises will need to re-think their data management strategies in the cloud and partner with global experts who understand regions’ idiosyncrasies.
Orange Business Services has been central in setting up the Open Cloud Alliance to address complex regulatory issues in hard-to-reach markets with worldwide public cloud access that is locally compliant. To find out more, download our guide.
As Product Owner of Flexible Engine, I manage the Orange Business Services cloud infrastructure solution designed in partnership with Huawei.
Passionate about digital transformation and Open Innovation, with rich experience in its fields, I lead French and Chinese multidisciplinary teams to accelerate innovation and the launch of infrastructure solutions on the corporate market by pooling R&D (Research & Development) and technologies. One of my challenges: to deepen my knowledge of Chinese culture.