Geopolitical worries drive surge in sovereign cloud interest: Gartner
Opportunities abound for MSPs to offer services addressing sovereign cloud demand.
Interest in sovereign cloud is surging, with geopolitical uncertainty and regulatory requirements driving a five-fold increase within Gartner client conversations since early 2025.
“In terms of something that is driving market demand and curiosity, it’s one of the bigger signals I’ve seen in many years. Very few things move that fast, that much,” said Douglas Toombs, research director, Gartner.
The research firm defines sovereignty as ‘free from extra-jurisdictional interference’, which means different things in different contexts.
“It could mean: ‘Hand over the company’s data’ – and if that’s a bank, they’re rightly concerned about that. Or it might be, ‘Cut that organisation off,’ and what happens in those scenarios?,” said Toombs, speaking at this week’s Gartner IT and cloud conference in Sydney.
Organisations are looking for guidance with strategy building, industry-specific considerations for organisations in regulated markets such as healthcare or future-looking predictions — perhaps the hardest for analysts to predict in the current climate.
“This category is kind of like ‘magic eight ball’ predictions… there’s only so many future-looking things that we can kind of infer,” he said.
Challenges in cracking the cloud market
The cloud market is dominated by large, entrenched hyperscalers and competitors need the backing to build the infrastructure and platform as a service layer.
“They’re such massive capital investments, and decades of intellectual property and software engineering to build those things. It’s very challenging to build a competitive solution,” Toombs told CRN Australia.
Leaving aside sovereignty provisions, this is a very difficult market to crack for new entrants. There are many examples of businesses — non-US and US — that have faced these challenges.
HP launched HPCloud.com and then closed it down a few years later. VMware launched vCloud Air and then wound it down with some elements transitioned to French company, OVH, he explained.
“So even for US companies that have access to software engineering, capital and an established Rolodex of enterprise customers, they still couldn’t make it into the market,” he said.
Toombs pointed to five different paths open to organisations with sovereignty goals: shelter in place, geo-patriation, cloud exit strategies, distributed cloud and sovereign SaaS.
He emphasised the importance of understanding the risk landscape and the challenges of deplatforming from major cloud providers. For now, most organisations are taking a ‘wait and see’ approach.
How MSPs can meet the sovereign cloud moment
Organisations wanting to shift to a full sovereign cloud environment instead of adding more controls or using distributed cloud is going to be extremely challenging.
Sovereign cloud strategies vary by industry and could involve MSPs positioning themselves between clients and hyperscalers.
For MSPs, Toombs believes there are still opportunities to be had.
- Targeting the surge in sovereign cloud interest with clear messaging.
- Offering vertical/regulated-industry guidance such as banking and healthcare.
- Encryption‑everywhere services as a sovereignty mitigation layer.
- Operating distributed cloud hardware locally AWS outposts, Azure stack/local, Google variants.
- Partnering with SaaS vendors to deliver sovereign SaaS on local infrastructure.
Toombs said MSPs have an amazing opportunity with the current level of interest.