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Digital sovereignty and data: What are the challenges we face?

There’s a sea change underway around the world with how companies and individuals think about the collection and usage of personal information and behavioral data, writes Josh Koenig, Co-Founder, Pantheon.

“Data is the new oil” used to mean a lucrative resource for businesses and breezy convenience, via low petrol prices, for consumers. Today data is correctly understood to be as much a liability as an asset, and the same metaphor conjures the digital equivalence of toxic spills, global warming, and runaway inflation.

Governments around the world are putting frameworks in place that protect citizens’ digital rights.

According to the United Nations Conference on Trade and Development (UNCTAD) 71% of nations already have laws in place and another 9% are actively underway. These increasingly include requirements that data operations remain under their jurisdictional control, potentially even residing on sovereign soil.

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These laws have real teeth, especially in the EU where the Digital Services Act, which just entered into force in November, allows for fines up to 6% of a company’s global revenue.

In the US, individual states are taking action. Five have laws on the books, with California leading the way with the strongest protections covering the largest consumer market, and five more are actively being advanced. Scores more have bills in draft mode, but the bigger impact from this side of the Atlantic may be from tech companies trying to stay one step ahead of regulation and/or establish a competitive advantage.

For example, Apple has made much publicity (and decimated much Facebook revenue) from its privacy-forward design for the iPhone, even as they’ve quietly ramped up their own advertising operations. Similarly, Google’s Privacy Sandbox is set to roil the Martech and Adtech industries when Chrome stops honoring third-party cookies and scripts, which will likely drive more businesses to Google’s own ad networks and analytics tools.

The impact on business from website management to digital strategy

In this turbulent environment, technology leaders are presented with new risks, both from a compliance standpoint and in terms of the operational viability of mission-critical digital functions. Those who are caught by surprise and forced to move reactively may find themselves facing tough questions from regulators, or their own leadership. Any enterprise operation with significant digital surface area or data operations should have a comprehensive strategy to assess these risks and at least monitor them, if not proactively putting mitigations in place.

From a digital sovereignty standpoint, it’s vital that businesses understand their footprint.

This translates into practical questions around how much data companies gather and where they gather it. It’s also not as simple to answer as many think. How many systems do they operate? Where does the data reside? What controls and procedures exist around managing it? This might sound like table-stakes but you’d be surprised at how quickly digital sprawl gets out of control. Add in the churn of staff turnover and any merger or acquisition activity, and it’s not surprising that many companies are not completely aware of their own scope and scale when it comes to a simple problem like ‘how many websites do you have that process customer data.’

From a website perspective, running some outside-in analysis of your online portfolio using a crawler can help you triangulate on what you really have running, as you can use that data alongside a number of public data sources. In almost every enterprise portfolio I’ve looked at, we’ve uncovered websites and domains that central IT had no idea existed. The same phenomena certainly applies for inward-facing SaaS tools as well.

But it’s not just sprawl and regulation that’s a challenge. Every business today has some kind of digital customer experience, and almost all of them rely on third-party Martech and Adtech to attract visitors and move them through the funnel. Whether it’s a straightforward e-commerce click-to-buy motion, a complex multi-month B2B buyers journey, or a pure engagement and loyalty play, the data that Marketing teams rely on to do their work is both a potential legal liability, and at risk of fragmenting and falling apart as the tech environment changes.

Digital sovereignty and data protection: Getting ahead of the problem

Whether the death blow comes from stricter compliance, tighter device privacy, or changes in browser behavior, if Marketeers lose their telemetry or their ability to actively engage customers through retargeting, social media, or even good old email, they’re going to have a very hard time reaching their goals. Most digital marketing leaders are already spread thin and struggling to realize return on investment from their significant technology spend; the changes around digital sovereignty are just going to make things worse.

But every point of crisis is also an opportunity. Meeting the moment comes down to preparation and your ability to execute. Organizations that have a strong grasp on the tools they’re using will have less bloatware/shelfware, fewer skeletons in their closet, and more effective results from the budgets they do spend. In short, this gives them a better ability to get ahead of risks. Those who have agile cross-functional teams that can partner across Marketing and IT are in position to take advantage.

According to Hanover Research, more than half of respondents (59%) stated that making a simple change to their website can take more than a month, and 19% said updates take four-to-six months. For companies that want to work in real time around data, this kind of statistic should be a shock to the system. This kind of misalignment is common, especially between Marketing and IT. Siloed organizational functions stay in their comfort zones, looking after their own interests, but if regulators come knocking, or the new business pipeline dries up, it’s not a departmental problem. It hurts the business and everyone loses.

For any CIO reading this who doesn’t have an active partnership in place with Marketing, it should be a wake-up call. In a digital-first world, where most businesses will meet their customers on the web, there are tremendous opportunities that can be seized by delivering extraordinary website performance. This can only be done safely, sustainably, and at scale with a true creative alliance between business and technology functions, between Marketing and IT.

Digital sovereignty has become more important for countries and regions around the world. Governments want to feel in control of their destinies, rather than relying on the rules that Big Tech companies have set out for their own benefit. This has created a more challenging environment for businesses to operate in. This demands bold leadership and a frank assessment of opportunities and risks. However, when executives have a firm grasp on how their business works and the courage to work together as a team to make change, amazing things are possible.

See also: Microsoft vows an EU “data boundary” for customer, telemetry data