Research reveals changing digital infrastructure priorities as UK businesses reject public cloud
The growing impact of AI is set to make compliance the key driver behind cloud repatriation projects, according to research launched today by digital infrastructure leader Pulsant.
It reveals digital infrastructure investment is the top priority for businesses seeking to maintain confidence in their data strategies.
The independent research, commissioned by Pulsant and carried out by Vanson Bourne, shows that 97% of respondents are confident their current organisational data strategy will remain fit for purpose for the next two years.
However, this self-assurance comes at a cost as nine-tenths of organisations (90%) predict an increase in their technology investment over the same period. This follows 78% reporting that they have increased investment over the past two years.
When asked how businesses will distribute this capital spending, the number one response was to invest in digital infrastructure – with 37% of businesses prioritising the area.
The impact of AI and sovereignty
When it comes to the drivers behind this shift, over three-quarters (78%) ranked AI in the top three changes to have the biggest impact on data strategy. Data sovereignty or residency concerns were a substantial second with more than half (55%).
Nearly four-fifths of organisations (79%) said that sovereignty and residency considerations influenced their digital infrastructure investment. On average, those organisations plan to invest 13% more over the next two years.
Steve Fearon, Chief Commercial Officer at Pulsant, said: “Whilst repatriation was initially based on countering the increased costs of public cloud, this current second wave is being driven by AI and concerns around sovereignty. We expect that compliance will soon become the dominant factor.
“Digital investment and enhanced compliance measures are now critical levers for organisations seeking to safeguard sensitive data, optimise performance, and control costs.”
Going beyond peak public cloud
Organisations are not only planning to invest more, but also intend to redirect that spend substantially. Over four-fifths (87%) of respondents plan to partially or fully move away from the public cloud over the next two years.
Among those repatriating, more than half are considering a move to a private cloud provider (54%), whilst 38% said they are exploring an increased reliance on their own data centres, and 36% are assessing co-location.
“One inevitable conclusion of these numbers is that UK businesses have hit peak public cloud,” continued Fearon. “Despite huge marketing investment by the hyperscale and public cloud giants, the UK – especially the midmarket – has pushed back. The questions now are what shape that market will take and what will drive those changes. Our research shines a light on both.
“Based on what we see in this research, we anticipate just over half of UK businesses leading their data strategies with private cloud in the next two years. Around a further third will prioritise going on-premise or co-locating. The remainder will be likely be focused on public cloud. This will be the hybrid shape of the UK data infrastructure market.”
Notes to editors
This research was commissioned by Pulsant and carried out by Vanson Bourne in May 2025, in accordance with Marketing Research Society (MRS) guidelines. 250 respondents across UK business of various sizes and sectors were interviewed and a full breakdown of the raw data is available on request. 58% of respondents represent businesses of less than 1,000 employees.