Asia Pacific is experiencing a sovereign cloud boom

In July 2024, the Australian government announced an investment of A$2 billion (US$1.3 billion) to establish a strategic partnership between the Australian Signals Directorate and AWS in Australia to build a “top secret cloud” for the government.

Sovereign Cloud Will support Australia’s defence and national intelligence agencies It will also increase the speed and scale of secure sharing and analysis of confidential data and provide an environment where agencies can leverage emerging technologies such as artificial intelligence and machine learning in their work.

This strategy reflects the growth of sovereign cloud in the Asia Pacific region, especially in the public sector. 48% of organizations in Asia Pacific plan to incorporate cloud sovereignty The company will double down on its cloud computing strategy over the next 12 months, according to vendor Capgemini.

The future is likely to witness a surge in sovereign clouds as hyperscale cloud providers invest in sovereign cloud services to meet growing demand, fueled by cybersecurity concerns and data protection regulations that encourage more careful cross-border data management.

Sovereign cloud grows rapidly in Asia Pacific

The demand for sovereign cloud solutions in the Asia-Pacific market is growing rapidly.

Research from market intelligence firm IDC shows that 17% of APAC government agencies already use sovereign cloud servicesAnother 30% plan to adopt the technology by 2025.

In 2022, Capgemini found that 73% of Australian organizations believe their company Cloud sovereignty will be adopted Ensure compliance with national, state or local government regulations and standards. Capgemini recently said its data showed 64% of Australian organizations are actively investigating sovereign cloud as part of its strategy.

look: The state of edge computing in Australia

In Singapore, the public sector is adopting sovereign cloud technology:

What’s the reason for the boom in sovereign clouds?

The rise of sovereign cloud solutions in the Asia Pacific region is driven by a number of factors, including:

• Geopolitical Tensions: Heightened geopolitical chaos and uncertainty, including assertive behavior by some countries, including China, have raised questions about risks and foreign surveillance.
• Infrastructure Control: Governments and businesses want more autonomy and certainty over the infrastructure they use, and the security of in-country data centers can help.
• Cybersecurity issues: Threat actors are targeting entities in the Asia-Pacific region and around the world, leading public and private sector organizations to want more control over their data security.
• Data Protection Policy: The International Association of Privacy Professionals said 137 countries now have data protection and sovereignty lawsThese include many Asia-Pacific countries, creating a complex web of cross-border data compliance requirements.
• Economic benefits: Investments in sovereign clouds by hyperscalers and governments often promote digital economies and industry development within their local jurisdictions, as they typically rely on some local suppliers and personnel.
• Low latency processing: Efficient storage and processing of data is a key consideration, increasing the need for localized data processing.

Hyperscale cloud providers are investing in sovereign clouds

Hyperscalers are investing in various sovereign cloud services in the region. These include AWS, Google Cloud and Microsoft Azure, as well as cloud service providers IBM, Oracle Sovereign Cloud, VMware Broadcom Sovereign Cloud and NxtGen Sovereign Cloud.

IDC says these products fall into two categories: those designed specifically for the sovereign cloud market and branded as such, and those that are designed from the outset to deploy “sovereign-by-design” infrastructure with sovereign controls built in.

For example:

“Many organizations have expressed concerns about notable challenges such as limited choice of sovereign cloud partners and a lack of necessary cloud capabilities,” the IDC report said. “This perception is expected to shift by 2024 as vendors in the region work to establish their presence in the sovereign market over the past few years.”

Is the future of cloud computing sovereign?

The surge in data management regulations in the Asia Pacific region means that sovereign cloud solutions will become an important part of the future. Driven by the growing demand for data sovereignty and compliance, the sovereign cloud market in the Asia Pacific region is expected to grow rapidly.

Hyperscale cloud providers are likely to play a leading role in building these solutions for the Asia Pacific region by adapting or increasing their customer-facing service propositions, and may build these solutions jointly with local government agencies and technology ecosystems.