Cloud sovereignty sounds urgent. A regulatory requirement that demands immediate action, significant budget, and a complex migration timeline. But urgency doesn’t always equal necessity.
We’ve developed a framework to help organisations evaluate whether cloud independence is a genuine business requirement or unnecessary spending driven by misconceptions about European data regulations. Here’s how we approach these decisions with clients.
Data sovereignty vs data residency: understanding what you actually need
Before evaluating any migration, you need to understand what you’re actually solving for.
- Data sovereignty means your data is subject to the laws and governance of the country where it’s stored or processed.
- Data residency simply refers to the physical location where your data lives.
The confusion between these concepts leads many companies to over-engineer solutions when simpler approaches would meet their compliance needs.
The distinction matters because the solutions, and their costs, are vastly different. Sovereignty involves legal jurisdiction and control, whilst residency is purely about geography. You might need data residency to improve performance or meet basic compliance requirements, but true sovereignty introduces additional layers of legal complexity.
| Aspect | Data Sovereignty | Data residency |
| Focus | Legal jurisdiction and control | Physical storage location |
| Scope | Applies based on data subject nationality | Applies based on server location |
| Compliance | Requires adherence to specific national laws | May satisfy location-based requirements |
| Flexibility | Often requires local providers or specific architectures | Can use any provider with regional data centres |
Understanding this difference helps you avoid the most common mistake: assuming that storing data in the EU automatically satisfies all regulatory requirements, or conversely, that you must use EU-only providers for GDPR compliance.
The real vs perceived sovereignty requirements
Here’s what surprises most organisations: GDPR doesn’t actually mandate that data must be stored exclusively within EU borders. The regulation focuses on data protection standards, not geographic location. You can store EU citizen data with US hyperscalers like AWS or Azure and remain compliant using mechanisms like Standard Contractual Clauses or adequacy decisions.
Sovereignty actually matters in specific scenarios:
Regulated sectors: Financial services under DORA, healthcare under NIS2, or organisations handling critical infrastructure must demonstrate operational resilience and data transparency within EU jurisdiction.
Government contracts: Public sector work often requires that data never leaves EU legal control, particularly for sensitive citizen information.
Industry-specific mandates: Some sectors face explicit data localisation requirements that go beyond GDPR’s baseline.
For typical B2B SaaS, e-commerce platforms, or marketing technology, the sovereignty requirements are far less stringent than companies assume. The EU Data Act and GDPR prioritise data protection practices over physical location. Many organisations discover they’re solving for perceived requirements rather than actual regulatory mandates.
Our cost-benefit analysis methodology
When a client asks about sovereignty migration, we walk them through a structured four-step evaluation:
Step 1: Map your actual regulatory requirements
Don’t work from assumptions. Document which regulations apply to your organisation, what they specifically mandate about data location and control, and whether alternative compliance mechanisms satisfy those requirements. We’ve found that 60-70% of companies overestimate their sovereignty requirements at this stage.
Step 2: Calculate total migration cost
A 2024 KPMG survey revealed that 79% of cloud initiatives exceed their expected budgets, primarily because organisations underestimate migration complexity. The full cost includes:
- Team training on new platforms (€8,000-€25,000)
- Discovery and assessment (€5,000-€20,000)
- Infrastructure setup (€10,000-€50,000)
- Data transfer and validation (€5,000-€30,000)
- Application refactoring (€20,000-€150,000+)
- Dual environment costs during migration (€10,000-€40,000)
Step 3: Assess operational impact
Cost isn’t everything. We evaluate how sovereignty migration affects daily operations: will performance degrade for certain regions? Does the EU provider offer the managed services your team relies on? What’s the support quality difference? How mature is their monitoring and security tooling?
Step 4: Quantify ongoing operational costs
Calculate the monthly cost difference between your current setup and EU-sovereign alternatives. EU providers like OVHcloud, Scaleway, and IONOS often run 20-40% cheaper than AWS or Azure for basic infrastructure, but that gap narrows when you factor in managed services, support tiers, and feature gaps.
EU cloud provider landscape: performance, pricing, support reality
The European cloud ecosystem has matured significantly. Leading EU providers like OVHcloud, Scaleway, IONOS, and Hetzner now offer robust infrastructure that matches hyperscalers for standard workloads. But the reality isn’t as simple as “cheaper and compliant.”
Performance: For compute, storage, and networking, leading EU providers deliver comparable performance to AWS or Azure. We’ve deployed applications on Scaleway and OVHcloud that meet the same SLAs our clients had on hyperscalers.
Pricing: The cost advantage is real. Infrastructure typically runs 20-40% cheaper, and you avoid the complexity of hyperscaler pricing models. However, once you need advanced services like managed Kubernetes at scale, AI/ML platforms, or global CDN with dozens of edge locations, the pricing gap narrows or disappears.
Support: This is where the gaps become evident. EU providers excel at infrastructure but struggle with ecosystem breadth. Their support teams are smaller, documentation less comprehensive, and third-party integrations fewer. If your team is comfortable with more hands-on management, this isn’t necessarily a problem. But enterprises expecting AWS-level managed services and 24/7 premium support will notice the difference.
| Provider | Pricing tier | EU data centres | Key strengths | Considerations |
| OVHcloud | Budget to mid-tier | France, Germany, Poland, UK | Broad service range, sustainable infrastructure | Smaller global presence |
| Scaleway | Competitive | France, Netherlands, Poland | Modern API-driven, ARM instances | Limited managed services |
| IONOS | Budget-friendly | Germany, UK, Spain, US | SME-focused, developer programs | Fewer enterprise features |
| Hetzner | Very competitive | Germany, Finland | Excellent value, reliable | Basic management panel |
The European cloud landscape also includes emerging sovereignty initiatives like EuroStack, which aims to provide genuinely European alternatives to US-dominated infrastructure, though these remain in development stages.
Migration complexity and timeline estimates
When sovereignty migration makes business sense, understanding the realistic timeline and complexity helps set proper expectations. We use three standard approaches:
Lift-and-shift (rehost): Moving applications with minimal changes. This is the fastest but doesn’t optimise for the new environment, potentially leaving money on the table through inefficient resource allocation.
- Timeline: 2-4 weeks
- Cost: €10,000-€50,000
Replatform: Moderate application changes to leverage EU provider’s managed services. This balances speed with optimisation, adapting applications to work efficiently in the new environment.
- Timeline: 1-3 months
- Cost: €50,000-€150,000.
Refactor: Significant rewrite to take full advantage of cloud-native services. Necessary when applications have deep dependencies on hyperscaler-specific services or when you’re pursuing maximum long-term efficiency.
- Timeline: 3-6+ months
- Cost: €150,000+
The hidden costs often surprise organisations. Running dual environments during migration typically adds €10,000-€40,000. Team training on new platforms and tooling costs €8,000-€25,000. Vendor lock-in risks mean you might need to rebuild integrations or replace services entirely.
A real-life example
We evaluated a potential sovereignty migration for a fintech client who initially wanted to move everything to OVHcloud within two months. Our assessment revealed they relied heavily on AWS-specific services that would require substantial refactoring. The real timeline was six months with a €200,000 budget.
When we mapped their actual compliance requirements, they didn’t face data sovereignty mandates, only standard data protection obligations. The migration would have been strategic theatre, not regulatory necessity.
Making the right decision
Data sovereignty migration should be driven by genuine business requirements, not fear or industry buzzwords. Use this framework before committing resources: understand the sovereignty vs residency distinction, map your actual regulatory obligations, calculate the true total cost, and assess whether EU providers can realistically support your operational needs.
In our experience, about 40% of companies exploring sovereignty migration discover they don’t actually need it. Compliance can be achieved through proper data protection practices with their existing providers. For the 60% who do need it, having realistic cost and timeline expectations prevents the budget overruns and operational disruptions that plague poorly planned migrations.
Need help evaluating your data sovereignty requirements? Let’s analyse your specific situation together and determine whether cloud independence is a strategic necessity or unnecessary spending.
