Data mining without betraying customer trust: The role of sovereign clouds | Daily News Byte

Businesses today struggle to perform a delicate dance: turning customer data into actionable insights while managing customer information. This task has never been more complex and fraught with risk.

The term “data monetization” undoubtedly has a negative connotation. Many assume that it is only about companies that sell our personal data. There is no doubt that the collection of our personal data is escalating, and it is both worrisome and terrifying. But for the vast majority of organizations I speak with, monetizing data is something else entirely: it’s about gathering valuable insights to reduce costs, increase employee productivity, and improve existing products and services. This form of data monetization has nothing to do with selling personal data and everything to do with improving business performance.

Yet almost every business leader I speak with recognizes that they must maintain a tricky balance: while they analyze customer behavior for competitive advantage, it’s critical that they carefully manage their data to protect customer privacy. This, in turn, requires them to navigate complex data sovereignty laws that vary from country to country. There are currently 137 countries that have their own laws governing how data should be treated and stored within their sovereign borders, according to the UN. This does not include economic zones such as the European Union, which apply data protection regulations across national borders. All of these data laws are rapidly evolving and constantly changing.

The growing impact of the data economy

The stakes are high on both sides of this challenge. Today, 29% of all organizations are already using data to improve their performance and increase revenue, according to new research conducted by Vanson Bourne and commissioned by VMware. Going forward, that number is expected to more than double, with 63% saying they expect to gain competitive advantage and revenue from their data within the next five years. In Europe alone, the impact of the data economy on GDP is predicted to grow from 2.6% to 4.2% by 2025, according to the European Commission. As economic uncertainty intensifies, it’s not surprising that more business leaders are turning to their data as an untapped source of revenue.

However, the downside is just as big: organizations that do not comply with data sovereignty laws often pay large fines. To date, more than 900 organizations have been fined for violating the EU’s global data protection regulation (GDPR), with the largest fine amounting to $877 million. Potentially even worse is the damage to a brand’s reputation, when customers realize their data has been misused and their privacy compromised. Among the nearly 6,000 organizations surveyed, a staggering 95% identified data sovereignty as a top business concern.

So how can organizations perform this delicate dance in a way that allows them to mine customer data without betraying their customers’ trust?

There is no data sovereignty without cloud sovereignty

The answer lies in the ability to share, monetize and protect data residing in multiple clouds. Gone are the days when customer information lived in a monolithic database located in a single cloud. Today, the average organization uses two or more public clouds, and they are tasked with managing data that is constantly in motion, moving from one application to another and across multiple clouds.

Multi-cloud strategies make it easy to manage and protect data wherever it resides. A global network of sovereign cloud providers has stepped up to ensure that data is protected, compliant and located on national territory. This gives businesses the ability to choose the right cloud for a specific data classification, with better management around data mobility.

For individual consumers, sovereign clouds provide a guarantee that their privacy will be preserved. Why? Because the sovereign cloud approach ensures that customer information is stored and secured by a specialized cloud service provider with expertise in local laws and regulations. By definition, sovereign clouds are managed by a sovereign entity, with employees who are nationals of the country holding the relevant security clearances.

The data economy: a vital national interest

Of course, the challenge is more complex and nuanced than simply keeping data within a sovereign border. While keeping data “in-house” is a key focus, it is also necessary to securely share data outside the country when warranted. For example, the EU GDPR has mechanisms to control cross-border data transfers, ensuring that data can only be moved if the destination country provides an adequate level of protection. One of the many responsibilities of a sovereign cloud service provider is to follow these complicated cross-border data transfer rules.

A growing number of government leaders around the world now see sovereign clouds as a way to expand their country’s capabilities, especially when it comes to critical national infrastructure, national resilience and public/private sector innovation. They recognize that the data economy is fast becoming a vital national interest and are looking for ways to reduce their dependence on foreign powers, in large part by reducing reliance on others to manage and secure their government data.

From cloud (and data) chaos to a smart cloud

As more organizations focus on monetizing their data to generate revenue, sovereign clouds are becoming an integral part of a “smart cloud” strategy. They enable organizations to take advantage of the unique capabilities of different cloud providers, while ensuring that they address data protection requirements within and across the national borders in which they operate.

With a cloud-smart approach, businesses are able to perform the delicate dance between data monetization and data sovereignty, so they can mine valuable data and extract revenue from it—without betraying their customers’ trust.

Raghu Raghuram is the CEO of VMware.