Summary:
- Data sovereignty in SaaS has become a board‑level priority as organizations seek to balance agility with the control of sensitive cloud‑based data, such as Microsoft 365 content.
- True sovereignty extends beyond data residency. It requires legal, operational, and technical ownership through encryption, immutability, and verified backup and recovery.
- A compliance‑centric approach can transform data sovereignty from a regulatory risk into a resilience strategy, helping organizations protect, govern, and recover data confidently across borders.
If there’s one digital operations theme that has received C-suite attention as much as generative and agentic AI in 2025, it is data sovereignty. This is thanks to the growing value of business-critical data, the high concentration of data that resides outside the traditional IT perimeter, and geopolitical uncertainties.
IDC Research: Rising Sovereignty Concerns for 2026
According to IDC’s Future Enterprise Resiliency and Spending Survey from June 2025, 45% of all organizations and 56% of “digital natives” cited data sovereignty and potential cloud changes as their greatest concern for 2026. IT and business leaders indicate that Microsoft 365 is a particular focus of data sovereignty concerns due to its widespread use for sensitive collaboration and communication data. IDC research highlights SaaS as an environment where business data is growing fastest or second fastest for 48% of organizations. This makes the environment vulnerable to data loss and disruption to business continuity, with over 53% of IT support teams and 42% of cybersecurity teams admitting data loss fears in the Microsoft 365 environment, according to IDC’s 2024 CloudOps Survey.
Despite this, this concern rarely translates into action.
Despite tremendous risks around compliance, business continuity, resilience, and sovereignty, many organizations have still not incorporated basic risk mitigation strategies like Microsoft 365 backup. Among the organizations it surveyed in 2025, IDC reports that 63% of respondents admitted relying on native Microsoft 365 data protection strategies.
The complexity and nuance of data sovereignty requirements can overwhelm organizations, often making it abstract or impractical to operationalize. Grounding sovereignty mandates in compliance, however, can serve as a pragmatic and actionable path to risk mitigation.
Understanding Data Sovereignty Beyond Residency
The process starts with understanding that data sovereignty is much more than data residency. Risk mitigation encompasses not just where your data lives but also how it moves, who can access it, and whether its activity is traceable. This includes how it aligns with national and regional regulations, and — most importantly — whether data owners are confident in their ability to control, recover, and use that data at all times.
Balancing Agility with Compliance and Resilience
It is possible to balance agility with compliance, ownership, and resilience by building data sovereignty in layers and hardening data environments for resilience, as digital natives demonstrate.
Digital natives aren’t exiting SaaS or cloud environments en masse. Instead, the primary response is to harden environments by investing in best-in-class data services. Nearly 9 in every 10 digital-native organizations indicate that they plan to increase their SaaS data protection budgets, with data protection and data classification strategies being ranked as “extremely important” priorities for 2025 and 2026.
Four Domains of Sovereignty Risk
A sovereignty strategy rooted in compliance helps IT leaders cut through the noise and unpack sovereignty in digestible bites, each of which are addressable through targeted investments in data protection, security, and business continuity technologies. These components generally fall into four domains:
- Data: Data residency, encryption, and access control mechanisms.
- Legal: Lock-out powers, contractual obligations, and court orders.
- Operational: Cyber-resilience, regulatory compliance, business-as-usual administration and management, support incidents, and backup and recovery.
- Technical: Air-gapped environments, business continuity, ability to access data, and the ability to migrate data and exit.
The starting point is to develop a checklist for Microsoft 365 data resilience that spans data strategy, people, and process transformation, as well as technical controls. Such a holistic approach ensures that organizations are embedding data portability and control by design.
From a technical perspective, controls should explicitly support three essential pillars of data sovereignty. This includes:
- Legal jurisdiction, to cover the governance, access controls, and key management of backup environments.
- Data residency, to cover freedom of choice and flexibility, including traceability to ensure control of your data and metadata.
- Operational autonomy, to ensure that the necessary operational mechanisms are in place for compliance and cyber resilience. This includes immutability, observability, breadth of Microsoft 365 application coverage, and audit logs.
Data sovereignty is your mandate for resilience. Address it with small, decisive operational mechanisms to build a trusted digital data foundation — or risk being outcompeted by digital natives. Watch the webinar, Beyond Borders: Navigating Data Sovereignty in the Cloud Era, for insights and practical strategies on sovereignty readiness, SaaS data resilience, regulatory compliance, and how to make all of this your competitive advantage.
