Thinking Local Is Key for EU’s Cloud Service Providers

European service providers are forging alliances with hyperscalers to offer hyperscale-grade sovereign cloud services that comply with EU security and data ownership regulations, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens™ Multi Public Cloud Services report for the EU finds a growing number of partnerships between local providers and global hyperscalers aimed at preserving data sovereignty while meeting the technological demands of customers. Although European cloud service providers may not be able to compete with hyperscalers when it comes to their data center ecosystem and technological capabilities, they make up for it with an established local presence, the ISG report says.

“Localized data residency is a key priority for sovereign cloud services providers,” said Dr. Matthias Paletta, director, technology modernization, for ISG. “Providers with extensive regional coverage have a competitive edge.”

The merging of local and global in the European cloud market is due in great part to the Gaia-X initiative, a comprehensive framework designed to govern the data sovereignty of information deemed confidential by EU member states, the ISG report says. Since its launch in 2019, Gaia-X has grown from 22 European stakeholders to more than 340 organizations as of 2023, the report says. Stringent security and encryption are integral to the Gaia-X framework, the report says.

Gaia-X’s goal of European ownership control of providers of sovereign cloud services has created obstacles for EU organizations, both governmental and commercial, in maintaining a continuous service flow from their chosen providers, ISG says. That’s because these organizations still depend on the scalability and comprehensive technology stack that the global hyperscalers offer, the report says.

Cloud service providers are surmounting this obstacle by working extensively with key stakeholders to develop a seamless process that adopts a highly scalable cloud ecosystem built upon sophisticated technology and leveraging an open-source platform that ensures interoperability while maintaining a strong emphasis on European standards, the ISG report says.

“Enhancing sovereign data security is key for European enterprises,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “This means the personnel who handle sovereign data should be EU citizens or at least based in the EU.”

The report also examines how cloud service providers can add more innovative and agile cloud-native technologies to their sovereign cloud requirements.

The 2023 ISG Provider Lens™ Multi Public Cloud Services report for the EU evaluates the capabilities of 16 providers across one quadrant: Sovereign Cloud Infrastructure Services.

The report names AWS, Google, Microsoft, Orange Business, OVHCloud and T-Systems as Leaders in one quadrant each.

Customized versions of the report are available from AWS and T-Systems.

The 2023 ISG Provider Lens™ Multi Public Cloud Services report for the EU is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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Contact information

Will Thoretz, ISG
+1 203 517 3119
will.thoretz@isg-one.com

Kate Hartley, Carrot Communications for ISG
+44 (0)20 3457 6403
kate.hartley@carrotcomms.co.uk