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May 29, 2024updated 30 May 2024 8:37am

Can the sovereign cloud become Oracle’s crowning glory?

Oracle’s head of technology engineering, Jason Rees, tells Tech Monitor about how it's harnessing rising demand for the sovereign cloud.

By Greg Noone

The public cloud, we are often told, is king – but a small number of multinationals and a much larger collection of governments are still reluctant to let their back-end operations fall into the hands of your average hyperscaler. Much of that hesitancy, Jason Rees explains, can be traced back to uncertainty about where on earth that data is being processed. Banks, for example, need to know exactly when and where a transaction was processed in order to ensure basic compliance with a whole host of obscure but important regulations. Governments, too, need to be wary about which companies run their cloud – not least because other countries may be well within their legal rights to peer into servers crunching foreign data in their jurisdiction. 

The solution, says Rees, is the sovereign cloud: a space that confers all the benefits of the public cloud but gets run according to the rules of a nominated jurisdiction. Oracle has been busy in recent years building new sovereign offerings for Fujitsu in Japan, managed service providers in New Zealand and fenced-off clouds for both the EU and the UK government. But with AWS and others offering similar services, we decided to ask Rees what makes Oracle unique in this space – and the extent to which sovereign cloud options can really be differentiated from the rest of what the public cloud has to offer. 

An AI-generated image of a sovereign cloud.
The sovereign cloud is proving an increasingly interesting proposition for firms in heavily-regulated industries, argues Oracle’s Jason Rees. (Image by Shutterstock)

Tech Monitor: What does sovereign cloud offer that other clouds don’t?

Jason Rees: I always say that it’s a choice. In the past, customers were faced with binary options: keep their data and services on-premises, under their control, or else commit to the public cloud. The former usually entailed increased costs, while the latter meant sacrificing any certainty that your data is being stored, processed or used in the legal jurisdiction of your choice. 

That matters when you’re a government looking to harness cloud computing. So many public sector departments end up asking how they might get all the benefits of that medium, including the ability to scale their operations up while driving down costs, without having all their data processed in legal jurisdictions outside of their control. 

So, Oracle listened. We were the first operator in the UK to introduce a sovereign cloud, used by the UK government and operated by UK citizens under UK law. We’re doing the same for the EU and many other governments around the world. And it’s important to note, too, that this isn’t some smaller, less sophisticated version of our public cloud service that we’re offering. Rather, our sovereign cloud offers users all of the services they’ve come to expect from the public cloud, just in a way that’s guaranteed to comply and adapt to the regulations of its home country. 

Tech Monitor: How important are private sector consumers for Oracle, then, when it comes to the provision of sovereign cloud services? 

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Jason Rees: It really depends. Organisations in highly regulated industries, like the banking sector, are also very interested in using sovereign clouds. They’ve already invested a huge amount into their data centres, and they like the idea of perhaps running Oracle Cloud Services alongside that. And they’ve got legacy systems to consider, too. Look at Deutsche Bank. They continue to run a lot of their applications in a standard way, but they’ve modernised their Oracle database estate by using our Oracle Exadata Cloud@Customer offering. 

Other customers of this ilk are also perfectly comfortable with the public cloud, knowing that many of the security features are much the same in that dynamic. I can’t say that X data privacy regulation means that a customer must embrace the sovereign cloud. But what we can offer at Oracle is the choice if they feel that that’s necessary. 

An AI-generated image of the UK and the EU, used to illustrate an article about the sovereign cloud.
Oracle has already garnered interest in its sovereign cloud proposition from the EU and the UK government, claims Rees. (Image by Shutterstock)

Competing in the sovereign cloud

Tech Monitor: How does Oracle conceive of its sovereign cloud offering as a point of differentiation from its competitors like AWS or Azure? 

Jason Rees: Again, it’s about choice. With respect to AWS, they would want to tell a customer, “This is where our large data centre regions are. Therefore, you need to operate in our location.” At Oracle, we’re much more likely to tell customers that we’re willing to set up shop in whatever region where you want that shop deployed. 

Azure has a slightly different strategy. The fact is, they now work with Oracle, which is great for the customer. More and more customers are looking at multi-cloud strategies, removing the kind of walled gardens that so many users have found frustrating and limiting in the past. 

Tech Monitor: Where do you see the most intense regional interest in Oracle’s sovereign cloud capabilities? 

Jason Rees: It’s particularly strong in Western Europe. These are countries with very established policies on privacy as it relates to the cloud – Germany, in particular, comes to mind. But we’re also seeing interest now in both Eastern European countries and the Middle East region, states that are very much looking to make control data exchange across their own borders and, consequently, are looking to modernise how they do that.

Tech Monitor: How big a revenue driver will the sovereign cloud be for Oracle? 

Jason Rees: I won’t comment on growth. But I do think there’s a market for customers who haven’t moved. Often, when we meet potential customers and ask why they haven’t moved, they say that it’s because they don’t yet understand who will be in control of the workloads when they move and what jurisdiction they’ll fall under. It’s very much a case of, “Who can trigger an update on this platform?” they’ll say. “Is it someone outside of the country? And how will I know who that is?”

AI will be another complicating factor. There’s a real desire among customers to make use of AI technologies, but there’s a real nervousness about making sure that any model is properly trained on the data contained within the company and not unduly exposed to training material scraped from across the internet. 

That’s why we recently announced a partnership with Nvidia. We’re not only harnessing its GPUs within our network but doing so in a way that ensures that they’re operated in a sovereign context. That really is an area that we’re ploughing ahead with because we just think there’s a lot of demand for such an approach.

Tech Monitor: Your chief technology officer, Larry Ellison, predicted that soon enough every country will be able to call on a sovereign cloud capability. Where does Oracle fit in that future? 

Jason Rees: Everyone gets the value of cloud – ultimately, it’s a way of making sure that your company is focussed on your core business, while firms like Oracle and others are providing you with compute support in the background. I believe what Larry is saying is that each country is looking at how the cloud is going to help its own systems, how it’s going to make sure that they have the ability to get better use of technology to make their life better.

But ultimately, we live in a world where people want to make sure that they’ve got control of their borders; they want to get control of what they’re doing. What I think Larry is saying there is we’ll make it easier for nations, for companies, to deploy cloud technologies than they’ve ever done before. And we want to make sure that that data sovereignty control that they’re worried about is fixed. 

Read more: CIOs in the banking sector want to harness generative AI – but they’re still hesitant about where to start

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