How concerned should CIOs be with geopolitics?

Digital sovereignty is becoming more of a headline, jumping from a specific area of technology to mainstream media and geopolitical analysis. The catalyst of this shift comes from growing global tensions, and resulting talk about reducing dependence on third-party countries for tech and innovation, resilience to potential failures and disconnections, and increasingly more sophisticated cyber threats.

“Geopolitics has made a strong impact on company boards,” says Manel Barahona, partner of enterprise technology at Deloitte. “Sovereignty as it relates to technology is consolidating as a top strategic priority, so where the tech is built and operated is as relevant as what the technology is capable of doing.”

Forrester’s projections on the IT market indicate that investment in AI, cloud, and data sovereignty technology in Europe will climb by 6.3% by the end of this year, reaching an all-time high of €1.5 trillion. Sovereignty alone is becoming a defining issue, according to analysis, as the aim is to break free from external dependence. This also impacts cloud computing, where US firms have dominated the European market until now. And in AI, investment in on-prem data centers is accelerating. Gartner has also identified geopatriation as a major issue shaping how data is returning to its origin.

“At a strategic level, sovereignty is something that needs to be on the table,” says Álvaro Ontañón, CIO of Merlin Properties. He believes it already is but it’s gaining importance due to macroeconomic factors starting to directly influence all business scenarios.

It’s also important for CEOs to ask about technological sovereignty, and to analyze how a potential problem with the tech’s country of origin could affect the company’s status. “This discussion is starting to take place at all levels, not just among technologists, but with regulators, politicians, and institutions,” says Ontañón.

How all this impacts the decisions CIOs make and what sets the agenda, are also complex and quickly evolving.

Geopolitics enters into pragmatic decisions

Everything is now so interconnected that a pragmatic approach is to think in geopolitical terms. “Global uncertainty forces us to manage the short term very well, but also to build capabilities that ensure continuity and competitiveness in the medium and long term,” says David Marimón, CIO and VP of Coca-Cola European Partners, Iberia.

Preparing for the future is an integral part of daily operations, he adds, and improving key areas such as data quality, automation, and process simplification ensures a more effective response today, and a more solid foundation for tomorrow.

“We invest in technology to make better decisions, react quicker, and operate with greater stability, addressing urgent matters while keeping in mind that the best way to prepare for uncertainty is to have a robust technological and operational base,” he says.

All of this can impact how the market is organized, what decisions are made, and even which players dominate distribution of IT solutions. Sovereign cloud helps illustrate this because analysts already point out how it could be a positioning opportunity for regional providers, and hyperscalers already offer sovereign solutions, insisting that their global reach doesn’t conflict with local operations. But the change could extend to other areas of IT decision-making, too. 

“Until now, natural inertia has led companies, with their CIOs at the forefront, to opt for market leaders in IT infrastructure,” Barahona says. “But CIOs are responsible for business continuity, not just systems.” This distinction means more factors weigh in the decisions they make. “In this role, minimizing risks of all kinds is key, with geopolitical risks being especially important,” he says, adding that 77% of companies already consider the country of origin of tech providers a key factor.

“It’s no longer just about performance or cost, but reducing critical dependencies, mitigating disruption risks, and ensuring alignment with legal frameworks and corporate values,” he continues. “The most advanced organizations are diversifying suppliers, evaluating local and regional capabilities, and designing hybrid architectures that allow them to maintain strategic optionality in the face of increasing regulatory, commercial and geopolitical changes.”

In such an increasingly complex environment, CIOs and companies are confronting unprecedented transformation needs, and technology is a key differentiator. “Technological dependence is a new strategic risk,” Barahona says. “CIOs have to find a balance between the pragmatism of finding solutions to address day-to-day issues, and making decisions that don’t compromise future risks.”

Geopolitics and technological sovereignty are important to how companies operate today. “Our approach is very pragmatic,” says Marimón. “We don’t address these issues as theoretical debates, but rather from the perspective of their impact on the business.”

Aligning the CIO and business strategy

All these adjustments are also happening in parallel with a change in the CIO’s position on the board as it becomes increasingly crucial and decisive. This has also impacted the types of decisions they must make.

“The CIO has become a key member of management committees,” Barahona says. “There are no significant decisions in a company undergoing transformation where the technology agenda isn’t crucial.” So the head of technology must focus on the strategic vision without losing sight of current efficiencies.

This is also evident on the ground. “A significant part of the focus used to be on building, integrating, and standardizing,” says Marimón. “Today, that agenda has evolved toward a more cross-functional role closer to the business. The CIO no longer only guarantees the infrastructure, but also actively contributes to competitiveness, service quality, planning, employee experience, and commercial capabilities.” They don’t just simply choose technologies, but solve problems and generate value, while maintaining a balance between innovation, efficiency, and resilience.

To ensure that resilience, foresight is more important than ever for CIOs, says Ontañón, considering recruitment budgets, day-to-day operational resources, and escalating prices for devices developing so rapidly that they become obsolete within weeks.

How IT departments adapt to these evolving concerns varies but combining strategic vision with operational flexibility requires simpler processes, more connected platforms, better data access, and working in lockstep with the rest of the business, says Marimón. “High-pressure situations significantly accelerate learning,” he says, “and that agility isn’t only technological, but organizational and cultural, and it requires continuous investment in people and their ability to adapt.”

The learning opportunities CIOs faced in the last decade were a succession of black swans, from the COVID-19 pandemic to current tensions in the Middle East. In tech, this forces CIOs to be prepared for anything. The entire conversation about technological sovereignty is, in fact, closely linked, considering the spectre of not being able to rely on external technology.

 “If we truly care, we must take a medium- to long-term view, and initiate a process of efficiently and effectively reinvesting in technology,” Ontañón says.