The Importance of Data Sovereignty in the Data Centre

As more Australian firms have become concerned with the privacy and security of their company data, they’ve simultaneously been faced with the decision of where to host it. That decision is also becoming more complicated, as more and more data centre providers have crept into Australia.

Within the past year, large companies have laid out plans to make their data centre debuts in Australia. Most are making the moves to strategically globalise their brands. For Australian organisations, however, relying on foreign data centre providers brings data risks and limitations that can result in privacy breaches and data loss for businesses.

When organisations determine where to host their data, privacy, data sensitivity, marketing concerns and latency should all factor into the decision. Legal implications should also be top of mind. The issues at stake all contribute to the argument for truly local hosting in the data centre.

Sensitivity of data

In recent years, enterprises have turned to storing critical business intelligence in the data centre — data so sensitive that it would be detrimental to customers and the entire organisation if it were leaked. When PlayStation waited more than a week before notifying Australian customers that their personal and credit card information had been breached, it was clear how important data centre security is to hosting customers.

When putting data into the hands of an overseas provider, the location of your data becomes murky. For example, many providers with a local data centre presence still spread data among nodes around the globe. That leads to questions about where your data is located and what law of the land rules. It is important to do ample research on a provider’s country-specific legislation before finalising a contract, because it is the client’s responsibility to understand all of the implications. Should there be a discrepancy between your country’s data laws and a provider’s, your company will bare the brunt of any consequences.

Because the physical proximity is not as scalable offshore, organisations have raised concerns about where their data is physically located, if they can visit data centre sites, what personnel are handling the data and what type of disaster recovery plan is instated beforehand.

It’s also harder to determine if the provider implements appropriate methods for executing key principles of security:

  • Availability: With a provider oceans away, likely in a different time zone, will they be able to access your data should there be a glitch during your workday? Likewise, will your service be interrupted if anything ever goes wrong at the data centre?
  • Integrity: From a distance, there’s no way of knowing who personally is watching over your data (or how many different people) and every little malfunction that may occur throughout the centre. With so many vague factors at play, the long-term consistency and accuracy of your data becomes just as opaque.
  • Confidentiality: The same unknowable factors that shroud a company’s data integrity when hosted offshore pose similar problems in regards to data confidentiality. It can be all too easy for access to fall into the wrong hands in the data centre, exposing critical information and potentially putting other parties at risk.

Marketing concerns

When using a local data centre, it is easier for providers and clients to establish a relationship based on familiarity and trust. Hosting data continents away puts ideas and innovations at greater risk, especially given the reality that some larger providers have the right to store and share data or use it for marketing purposes. This would be similar to, for example, an email hosting service re-selling personal information for marketing by using harvested inbox data and sharing it with advertisers. By opting for a local data centre host, organisations can get a better feel for the data centre provider’s practices, including their stance on sharing data with third parties.


During a technical crisis, damage control is easier to conduct when data is hosted locally. If a natural disaster, power outage or data centre breach occurs at one of your office locations, having data hosted offshore means a less-immediate recovery process. Hosting data in different countries also subjects your information to separate foreign legal codes, which may make it more difficult for enterprises to access and analyse their data during critical times. On the contrary, data centre providers that host locally afford clients more control of their information, which leads to quicker, less complicated solutions.

A two-millisecond delay in the transfer of data may not seem like enough to fuss about, but repeated hundreds of thousands of times in a year, it can mean the loss of significant man hours.

Data centre providers that strictly adhere to local privacy laws and store data onshore can make customers feel more at ease about moving their data off-premises.

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