Fears of data hosting are on the rise among small and medium-sized businesses (SMEs) in the UK and Ireland as concerns about compliance, control and customer trust grow.
With more than six million SMEs in both countries relying on data storage, this issue has far-reaching implications for economies and deserves careful attention from business leaders.
Geopolitical tensions and changing regulations are changing the global cloud landscape. What was once a technical consideration for IT teams has now become a board-level priority. Faced with these new pressures, SMEs are increasingly asking how their data is protected, stored and made available.
Our latest research shows that 61% of UK SMEs and 45% of Irish SMEs are concerned about where their data is stored.
An evolving data landscape
Regulatory changes and geopolitical unrest have given the issue of data sovereignty new urgency. In Britain, post-Brexit discord has put sovereignty at the top of the national agenda.
The Data (Use and Access) Act 2025, together with the Government’s decision in 2024 to classify data centers as critical national infrastructure, indicates that sovereignty will be embedded in the UK’s digital DNA.
Meanwhile, Ireland continues to comply with EU data laws, underscoring the bloc’s intention to foster a resilient and self-sustaining digital economy.
Globally, price changes and the effects of the US cloud law have created uncertainty in data sharing relationships. With this in mind, SMEs in the UK and Ireland have every reason to take action now to protect their digital infrastructure.
The challenge is clear: SMBs want better security for their data, but remain closely connected to global providers.
Despite growing concerns about data sovereignty, no concrete measures are yet in sight. In the UK and Ireland, 42% and 39% respectively of SMEs have no intention of switching suppliers.
Why are SMEs hesitant to take action?
An important factor is the lack of visibility. Most SMEs are unsure whether their data exists within EU borders. Without this knowledge, companies cannot assess their exposure or take corrective action.
Apart from awareness, the lack of guidance and support also exacerbates the problem. Unlike large companies, SMEs often lack the resources to map their data flows or meet compliance requirements.
This lack of transparency increases the risk of regulatory violations and reputational damage if, for example, a data breach occurs. Without the right guidance, SMEs may even completely ignore the importance of the topic.
SMBs are also concerned about the perceived risks of change, including fear of downtime, data loss or system incompatibility. These concerns are understandable, but with the right partner, transitions can be seamless. The right European supplier should handle the migration with minimal disruption.
Finally, the perception of cost and size remains a barrier. Many SMEs will choose global suppliers because they have historically been able to offer the same service at a fraction of the price and on a larger scale. However, as digital infrastructure becomes a continental priority for Europe, these concerns should diminish.
The advantage of sovereignty
The pressure for change increases as sovereignty evolves from a technical issue to a fundamental competitive advantage.
In today’s climate of digital uncertainty, data sovereignty has become a sign of trust and long-term stability for customers. Leaders are increasingly aware of this shift: our research shows that 14% of UK CEOs and 16% of Irish CEOs are leading sovereignty initiatives within their organisation.
Customers are also increasing pressure and demanding more transparency about where their data is stored.
This shift in perception is understandable, as data sovereignty offers clear benefits to SMEs, ranging from better protection against foreign interference to greater control over sensitive information. Local associations typically offer greater transparency, supported by common regulations and compliance standards.
By reducing their dependence on international suppliers, SMEs can limit the risk of volatility in global markets. In addition, storing data in Europe helps to promote local innovation, economic growth and the development of digital talent.
We see sovereignty not as a limitation, but as an opportunity to build a stronger and more sustainable digital infrastructure. Those who integrate sovereignty into their digital strategy will be best placed to lead Europe’s next digital chapter.
Plan your trip with confidence
To make this transition to sovereignty, SMEs need practical advice to move beyond short-term partnership solutions and integrate sovereignty into their long-term strategy. The first step is education. SMBs cannot make informed decisions about data sovereignty if they do not know where their data resides.
Practical support is equally important. Many SMEs need practical advice to deal with the technical and regulatory aspects of sovereignty. Service providers that offer transparency, seamless migration processes and clear communication are highlighted.
The most effective partners help companies make a smooth transition and ensure respect and continuity on the path to sovereignty.
European suppliers must continue to meet the performance and cost expectations of their global competitors. A high-performance, locally-rooted infrastructure, supported by strong service agreements and clear compliance requirements, will be key to convincing SMEs that sovereignty does not mean compromise.
The way forward is clear: sovereignty becomes both a commercial differentiator and a regulatory imperative. Right now, European SMEs have the opportunity to embrace Europe’s digital future and gain a competitive edge when deciding how to host their data.