Why Data Residency Is Becoming An AI Strategy Decision, Not A Compliance One

Michael Nicosia, COO and cofounder at Salt Security.

For the better part of the last 10 years, data residency was usually something that came up when you needed to meet some compliance standard. You’d identify where data had to reside if you wanted to offer your service in another country. Consult the compliance standard and move on to the next task. You would then assign that to your legal department and IT to figure out.

That is no longer the case. With AI becoming embedded in the business process of companies, many are starting to see where data needs to reside earlier in the expansion journey. Where once data residency was relegated to the bottom of a list of tasks, it has crept its way up to a C-level concern. If you aren’t thinking about data residency, you may not realize you’re making that decision.

Where AI Changes Things

When dealing with traditional software, data is typically confined to a certain area. You have applications that store data and use that data to provide functionality, so where that data resides is a fairly simple question.

AI, however, works with data differently. It learns from that data and will use it to learn even more. Once you introduce AI into your business, you may find your data traveling to various places, such as across international borders, to feed your AI model. If you can’t trace back where your data went after an AI application began utilizing it, you may run into residency issues.

As more countries continue to update their regulations regarding where data can reside, you’ll find yourself having to account for this in your expansion plans.

Thinking About Data Residency When Entering New Markets​

By considering where data needs to reside before you begin your expansion into that country, you can avoid some headaches down the road—whether that be a delay in offering your service or building infrastructure that won’t meet the demands of your customers.