European organizations want to address their digital dependency. Insufficient visibility into the supply chain, no short-term way out, and high costs stand in the way.
Digital sovereignty has moved from the policy debate to the boardroom, Capgemini notes based on a survey of 1,300 business and technology executives. Business leaders from Germany, France, the Netherlands, Italy, Spain, and Sweden made up half of the sample. 59 percent of all surveyed organizations find full digital sovereignty unrealistic in the current ecosystem structure.
European companies are concerned
Sovereignty is primarily a European concern. In Europe, 84 percent of organizations say they are worried about maintaining critical business processes in the current geopolitical context. Two-thirds of European respondents (66 percent) explicitly cite excessive dependence on foreign suppliers as a risk to digital resilience.
That concern is translating into policy. 37 percent of European companies say they have a sovereignty strategy, 47 percent are developing one, and another 15 percent plan to do so within the year. Barely 1 percent have no plans.
66 percent have allocated a budget for it, slightly more than the global average of 65 percent and significantly more than the 59 percent in the US. One in ten European organizations has already appointed a chief sovereignty officer or similar role; 41 percent are considering it.
There are different views on what sovereignty entails. European companies see sovereignty more as a matter of risk management and resilience (52%) than compliance (25%). Three-quarters of European respondents (75%) define sovereignty as ‘resilient interdependence.’ This is exactly the logic that the EU has embedded in the Cloud and AI Development Act with layered assurance levels, where only the highest level requires full EU control.
Challenge one: lack of visibility
The road to sovereignty begins with knowing where you are dependent. This is where the problem lies: only 14 percent of organizations have a complete picture of dependencies in their own technology chain. Capgemini classifies 86 percent of companies as ‘significantly exposed’: high dependency and weak resilience in critical domains.
Only 37 percent of European organizations have a contingency plan ready, compared to 64 percent in the US. Europe is therefore the most concerned, but the least prepared. This gap between ambition and practice also emerged in a study of Dutch organizations.
Challenge two: there is no short-term way out
The dependency is structural. For hardware, 62 percent of organizations say their main supplier is located in another country; for cybersecurity, this is 59 percent; for connectivity, 58 percent; and for software, 57 percent. Only for data is the main supplier located in the home country for a majority (57 percent).
In the cloud, concentration lies with the three American giants: AWS, Microsoft, and Google. They control more than 70 percent of the European cloud market. European companies spend an estimated 264 billion euros annually on American cloud software services.
Breaking free takes time: 31 percent of organizations need three to twelve months to move away from a critical supplier, more than a third (36 percent) need more than a year, and 10 percent say they simply have no viable alternative. Only 13 percent can switch within three months.
Illustrative of this is the Broadcom-VMware saga. Organizations such as Smals, which is building its own Hyper-V alternative, are rather an exception. Cybersecurity (45%), connectivity and AI (43%), and data (42%) are identified as the layers with the greatest risk to operational continuity.
Challenge three: sovereignty comes with a price tag
The third barrier is economic. Just under half (49%) of organizations are willing to pay a ‘sovereignty premium,’ and those who are accept an average price increase of 23 percent. At the same time, the requirements are strict: 71 percent call sufficient supplier choice non-negotiable, 62 percent expect no loss in performance, and 47 percent want no slowdown in the pace of innovation.
We could be more sovereign, but we cannot afford it.
Digital Sovereignty: From Policy Ambition to Executive Imperative, Capgemini Research Institute
Not all respondents see sovereignty as a cost. Fifty-four percent believe that sovereignty can be strengthened without sacrificing competitiveness; sixty-seven percent even see sovereignty as a lever for innovation. 51 percent of European organizations expect digital sovereignty to become a differentiating factor.
Stronger together
Organizations primarily want to take a pragmatic approach. Only one in five aims for full control. About half opt for a federated cloud model where control is shared with certified local partners. Sixty-five percent find selective control over critical technology in combination with strategic partnerships more practical than full ownership, and 72 percent believe that sovereignty is not achievable without partners.
AI has meanwhile become the most prioritized layer of the stack, followed by data. Hardware receives the least attention, likely due to the non-existent supply of European chips and servers. Those who do the math see that the most difficult pieces of the puzzle are currently receiving the least attention: the sector is calling for a clear course for a reason.