SMEs are worried about data sovereignty, but most don’t understand the stakes
Across the UK and Ireland, a growing number of small and mid-sized companies are concerned about where their data is hosted. That’s good news because awareness is the first step. But let’s be honest, concern without clarity leads to inaction. And that’s exactly what we’re seeing. While 61% of UK SMEs and 45% of Irish SMEs report being uneasy about data hosting locations, most don’t fully grasp what that really means for their business.
If you’re running a company, this is not just about infrastructure. It’s about risk, trust, and your ability to scale into markets that care deeply about data laws. Right now, many firms are making decisions in the dark, assuming that because their data “is in the cloud,” everything is taken care of. That’s wrong. Knowing where your data lives and under what jurisdiction it falls is essential. If you don’t have that knowledge, you’re exposed. You could be non-compliant with national or international data protection laws and not even realize it.
C-suite leaders need to do better here, not for the sake of compliance alone, but because this builds operational resilience. Thinking short-term and outsourcing the issue to IT without stepping back and asking smarter strategic questions is where firms get caught out. What happens when a customer, regulator, or board member asks, “Where is our data?” If the answer is silence or guesswork, that’s a brand problem and a legal risk, rolled into one.
The message is clear: take control or risk falling behind.
UK vs. Ireland: Two legal roads, one data challenge
What’s happening in the UK and Ireland is a perfect example of how the same problem, data sovereignty, is being shaped by very different legal systems. Post-Brexit, the UK is rewriting its data rules. The Data (Use and Access) Act 2025 isn’t just red tape, it’s a signal that the government sees data infrastructure as part of national security. Datacentres have been designated critical national infrastructure. That’s serious, and it’s reshaping boardroom priorities for UK businesses.
Now look across the Irish Sea. Ireland is preparing for the incoming EU Data Act, effective September 2025. This aligns closely with GDPR, continuing the EU’s broader strategy on digital rights and data control. Irish SMEs aren’t operating in a vacuum. They know they’re plugged into one of the world’s most combative and proactive data ecosystems, the EU. And that calls for discipline. The EU expects firms to know exactly where their data is, who has access, and under what terms.
So, while both UK and Irish firms are under pressure, the shape of that pressure is different. In the UK, sovereignty is linked to nation-first legislation. In Ireland, it’s held together by EU-wide strategy and enforcement. But here’s the common thread: both environments now demand serious intent from C-suites. You don’t get to be passive anymore. The legal structure around your data is tightening, and if leadership isn’t actively managing the response, that’s a gap your competitors, or regulators, will exploit.
Take five minutes in your next strategy meeting and ask: do we actually know where our data is, and how the local laws apply to it? If the answer isn’t clear, that’s your starting point. Fix that now.
Irish SMEs face a risk they don’t even see, data location blind spots
Let’s be direct: 68% of Irish SMEs don’t know whether their data is even stored within the EU. That’s not just a statistic, it’s a red flag. If you’re running a company and can’t pinpoint whether your data is bound by EU laws or not, you’re placing your business in legal and strategic uncertainty. This kind of gap opens the door to compliance failures, partner distrust, and customer skepticism.
Regulators aren’t waiting for you to catch up. The EU Data Act is coming into force in September 2025, and it will tighten expectations around transparency, access, and cross-border data control. If Irish firms continue to operate without this clarity, they won’t just risk fines, they’ll struggle to build the trust required to win larger deals or sustain growth in data-conscious sectors. The message from the EU is straightforward: know your data boundaries, or you don’t get to fully participate.
This issue isn’t limited to technical leads, it’s a leadership problem. If the C-suite lacks up-to-date oversight on data architecture and jurisdiction risks, operational decisions lose precision. When you deal with customer data, the stakes go up fast. It’s not just about overhead cost or convenience with your provider. It’s about what rules you’re held to and whether you’re in a position to prove compliance when challenged.
Ignorance of data location isn’t just a technical oversight, it’s a strategic vulnerability. Fixing it doesn’t require perfection. It requires executives to prioritize clarity before scale.
Trans-Atlantic data storage, 73% of SMEs are right to be concerned
Data stored in the United States worries 73% of SMEs in the UK and Ireland, and that concern is valid. The U.S. operates under very different rules when it comes to digital privacy and government access. Legislation like the Cloud Act gives U.S. authorities the right to access data held by American companies, even if that data is stored outside the U.S. This means a European company using a U.S.-based cloud provider could be forced into legal exposure they didn’t sign up for.
There’s also unresolved regulatory turbulence between the EU, UK, and U.S. on data adequacy frameworks. Data adequacy determines whether data can legally move across borders while still preserving privacy protections. If that framework breaks or changes, your data contracts could go out of compliance overnight.
This isn’t about politics, it’s about managing business risk. If your data is hosted by a provider that falls under foreign legislation you don’t control, you’re depending on a trust model you didn’t build and can’t enforce. Fingers crossed isn’t a strategy. If your customers or partners are in tightly regulated markets, they’re watching this too. If you can’t provide clarity, they’ll go to someone who can.
At the leadership level, this is where IT and risk management intersect with brand and stakeholder value. If you want to keep deals, secure data-driven growth, and maintain customer confidence, build data strategy into your risk plan. Don’t treat foreign data hosting as a back-end detail. It’s part of the front-line business now.
Data sovereignty is a board-level priority
Let’s stop pretending data storage is just a question for IT. That thinking is outdated. Right now, scrutiny is coming from the top, 14% of UK directors and 16% of Irish directors are actively questioning their companies’ data sovereignty posture. Customers are speaking up too: 12% in the UK and 14% in Ireland say it’s a concern that influences their trust. When both your leadership team and your market are asking the same question, it’s time to move.
This isn’t a compliance exercise, it’s a corporate strategy signal. The people responsible for setting direction and managing risk are demanding to know where data lives, who has access, and whether that aligns with business values and obligations. If executives can’t answer those questions confidently, it creates hesitation, internally and externally. And hesitation kills momentum.
Many SMEs still act as if poor data visibility won’t affect client relationships. That’s wrong. When you sell into markets with strict data expectations, finance, healthcare, or anything with personal data, you’re not just selling a product or service. You’re selling assurance. Part of that assurance is knowing your data architecture is defensible if challenged.
Leadership should view rising scrutiny as a necessary filter, not an inconvenience. It’s pressure that helps prioritize smart operational decisions. Clarity on data location and sovereignty isn’t just a defensive move, it opens access to customers and deals that care about governance. Ignore it, and you get boxed out. Address it early, and you build authority in your space.
Switching providers? Most SMEs are frozen by uncertainty
You’d expect that with rising concern, companies would start switching hosting providers to match. But that’s not what’s happening. In the UK, 42% of SMEs say they have no plans to move, and another 30% are undecided. In Ireland, 39% won’t switch, and 35% remain unsure. That level of indecision says a lot, not about confidence, but about confusion.
These businesses recognize the problem, they just don’t know what to do about it. They’re stuck between awareness and action. Often, they lack the internal expertise to evaluate hosting providers based on compliance, transparency, and sovereignty. And without that, change feels riskier than sticking with a legacy setup, even when that setup leaves them exposed.
The risk here isn’t just inaction, it’s paralysis during a time when the rules are shifting quickly. Waiting until post-regulatory impact to act puts executives in a reactive position, which is not how competitive firms operate. Leaders should view hosting transparency not as a technical spec, but as a strategic requirement when evaluating vendors.
Smart decisions come from solid insight. If your team doesn’t have clarity, get external help. Don’t stay undecided because you’re unsure of the next step. That’s a short-term mindset, and it prevents you from building future-proof infrastructure. You don’t need to move fast, but you do need to move informed.
Education, transparency, and guidance are now competitive advantages
Most SMEs understand that something is shifting around data sovereignty. What they don’t have is clear direction. That’s not a technology problem, it’s a leadership gap. When regulations tighten and customer expectations evolve, having the right technical standards isn’t enough. You also need the internal knowledge and external support to make confident decisions.
Executives are realizing this. Across both the UK and Ireland, the need for stronger education around data hosting and data rights is becoming clear. Firms that know how to communicate where their data is, who controls it, and why that matters, are already setting themselves apart. That level of transparency doesn’t just help with compliance, it drives trust. Trust is what turns prospects into clients, and clients into long-term accounts.
Practical guidance is key. Most SMEs don’t have large legal teams or in-house compliance officers. They need providers and partners who do more than offer infrastructure, they need experts who can walk them through regulatory expectations, help design clear data strategies, and ensure those strategies match real-world compliance standards. The providers that can deliver that kind of clarity will win. The ones that can’t are just hosting companies.
This is where competitive separation begins. In highly digital economies, being ahead of policy shifts is essential. The difference between leading and lagging won’t come down to what cloud provider you use, it’ll come down to whether your leadership understands the governance around that platform and can prove it under scrutiny.
The bottom line
Data sovereignty isn’t optional anymore, not for SMEs in the UK, not for SMEs in Ireland. It’s a strategic issue now. One that touches compliance, brand credibility, and long-term growth. If you’re at the executive level and think this is just an IT topic, you’re already behind.
The legal environment is shifting quickly on both sides of the Irish Sea. National security concerns, post-Brexit regulation, and EU policy are all tightening expectations. And yet most businesses still don’t know where their data is or what rules apply. That gap isn’t just operational, it’s a leadership failure waiting to surface.
Smart companies won’t wait for clarity to fall into their laps. They’ll demand it. That means asking better questions. It means prioritizing transparency from partners. And it means making sovereignty, location, and access part of procurement, risk, and customer strategy, not just backend infrastructure.
Market expectations are moving. Regulations are already here. The opportunity is in how you respond, because the companies that step up now will earn the trust and growth others can’t. Make that decision at the top. Everything else follows from there.
