Data Sovereignty Revolution: How Enterprises Are Choosing On-Premises Solutions Over Cloud-Connected AI Models

Iron Software Reports 300% Surge in Enterprise Demand for Perpetual, Air-Gapped Solutions as Companies Seek AI Innovation Without External Data Transmission

CHICAGO, Sept. 3, 2025 /PRNewswire/ -- As enterprises embrace artificial intelligence to drive innovation and efficiency, a critical concern is reshaping software procurement decisions: data sovereignty. Iron Software, a leading provider of air-gapped enterprise solutions, today announced unprecedented demand for software that operates without external data transmission to cloud-based AI models, enabling organizations to harness AI benefits while maintaining complete control over sensitive information and intellectual property.

The shift reflects growing enterprise awareness that most AI-powered software solutions require transmitting customer data to external large language models (LLMs) hosted by major tech companies. This external data flow creates compliance risks, potential IP exposure, and regulatory challenges that many organizations are no longer willing to accept.

According to recent industry research, 69% of organizations now cite AI-powered data leaks as their top security concern in 2025, yet nearly half (47%) have implemented no AI-specific security controls. More alarming, 53% of organizations identify data privacy as their primary obstacle to AI adoption, outranking both technical integration challenges and implementation costs.

"We're witnessing enterprises becoming more sophisticated about AI adoption," said Cameron Rimington, CEO and Founder of Iron Software. "They want the productivity benefits of intelligent software, but they refuse to sacrifice data sovereignty for those gains. The question isn't whether to use AI – it's how to use AI without sending proprietary data to external cloud models. Our air-gapped, perpetual licensing approach enables AI-powered productivity while keeping sensitive data completely under customer control."

The Perfect Storm Driving On-Premises AI Demands

The enterprise preference for data-sovereign AI solutions is driven by multiple converging factors:

External Data Transmission Risks: Most AI-powered software requires sending customer data to external LLM providers like OpenAI, Google, or Anthropic for processing. This creates potential exposure points where sensitive information could be inadvertently incorporated into AI training data, accessed by unauthorized parties, or subject to the data handling policies of third-party providers.

Regulatory Compliance Pressure: 2025 has ushered in a wave of new AI and data privacy regulations, including enforcement of the EU AI Act, implementation of four new US state privacy laws, and the Digital Operational Resilience Act for financial services. Nearly 55% of organizations report being unprepared for AI regulatory compliance, risking significant fines and reputational damage.

Intellectual Property Protection: High-profile legal battles over AI training data have heightened corporate awareness of data sovereignty risks. Enterprises are increasingly concerned that cloud-connected AI tools could expose proprietary information to external LLM providers, where data handling practices, retention policies, and potential use in model training remain outside corporate control.

Cost Predictability: In an uncertain economic climate, enterprises are gravitating toward perpetual licensing models that provide upfront cost certainty. Unlike subscription models that can increase over time, perpetual licenses offer budget predictability and eliminate the risk of vendor lock-in or sudden price escalations.

Iron Software Doubles Down on Compliance Leadership

Reinforcing its commitment to regulatory compliance and data protection, Iron Software announced its membership in the PDF Association (PDFA) in August 2025, joining the international organization dedicated to standardization and advocacy for digital document technologies.

"Our PDFA Association membership underscores our commitment to data sovereignty and compliance-first architecture," explained Jacob Mellor, CTO of Iron Software. "We're not anti-AI – we're pro-control. Organizations shouldn't have to choose between AI-powered productivity and data sovereignty. Our solutions enable the benefits of intelligent software while ensuring customer data never leaves their controlled environment."

The PDFA membership positions Iron Software alongside industry leaders committed to open standards, digital preservation, and long-term document accessibility – values that align perfectly with enterprises seeking stable, compliant solutions for mission-critical operations.

Market Validation: Industry Leaders Recognize Data Sovereignty Imperative

Iron Software's focus on data-sovereign AI solutions aligns with broader industry recognition of these challenges. Google recently announced plans to bring Gemini models to air-gapped environments, while GitLab launched GitLab Duo Self-Hosted specifically for enterprises requiring complete data control. VMware, Trend Micro, and other major vendors have introduced on-premises AI solutions targeting government, healthcare, and financial services sectors.

"The market is validating what we've always believed," noted Cameron Rimington. "AI innovation and data sovereignty aren't mutually exclusive. The future belongs to solutions that deliver both – intelligent functionality without compromising data control. We're proud to be leading this evolution toward more secure AI deployment models."

Industry Experts Confirm Enterprise Data Protection Concerns

The enterprise focus on data sovereignty aligns with broader market observations from software industry consultants. Frederic M. Wilf, founder and managing partner of Wilftek, a technology and intellectual property law firm, reports that client concerns have shifted dramatically in recent months.

"The most common questions my software clients are asking me right now center on how to protect their intellectual property and customer data from AI," said Frederic M. Wilf, Founder and Managing Partner of Wilftek. "They're not asking if they should use AI – they're asking how to use it safely. The fear of inadvertent data exposure to external AI models is keeping executives up at night, and they're actively seeking solutions that eliminate that risk."

The Iron Software Advantage: Three Pillars of Data-Sovereign Computing

Iron Software's enterprise solutions are built on three fundamental principles:

1. Air-Gapped Architecture: Complete network isolation ensures sensitive data never leaves customer premises, eliminating exposure to external AI models, cloud breaches, or unauthorized third-party access.
2. Perpetual Licensing: One-time purchase model provides cost predictability, eliminates subscription risks, and gives enterprises complete ownership and control over their software investments.
3. No External Data Transmission: Software designed to operate without sending customer data to external AI services or cloud-based LLM providers, ensuring complete data sovereignty while maintaining intelligent functionality.

Industry Impact: The Return of On-Premises Computing

The demand for air-gapped solutions represents a broader trend toward digital sovereignty that extends beyond individual software purchases. Organizations are increasingly prioritizing data residency, regulatory compliance, and intellectual property protection over the convenience of cloud-based solutions.

This shift is particularly pronounced in highly regulated industries including healthcare, financial services, defense, and government agencies, where data exposure risks can carry severe penalties and national security implications.

—--- About Iron Software —----

Iron Software develops enterprise-grade, air-gapped software solutions that enable AI-powered productivity while maintaining complete data sovereignty. Founded with deep expertise in enterprise security and regulatory compliance, Iron Software has established itself as the leading authority on data-sovereign computing for mission-critical environments. The company's engineering team brings decades of combined experience from defense, healthcare, and financial services sectors where data exposure risks carry severe operational and legal consequences. With a commitment to perpetual licensing and zero external data transmission, Iron Software serves Fortune 500 companies and government agencies worldwide who require intelligent software capabilities without compromising security or regulatory compliance. Iron Software's solutions are deployed across highly regulated industries where traditional cloud-connected AI models are prohibited or create unacceptable risk exposure. Founded on the principle that enterprises should never have to choose between innovation and data control, Iron Software continues to lead the data sovereignty revolution with solutions that deliver AI benefits while keeping sensitive information completely under customer control.

For more information about Iron Software's air-gapped solutions and perpetual licensing options, visit www.ironsoftware.com or contact our enterprise sales team: https://ironsoftware.com/enterprise/ 

Interview Opportunities Available

The following executives and industry experts are available for interviews on data sovereignty, enterprise AI adoption, and air-gapped computing solutions:

• Cameron Rimington, CEO and Founder of Iron Software
  Can speak with authority on enterprise market trends, data sovereignty business strategies, customer demand patterns for air-gapped solutions, and the competitive landscape shift away from cloud-connected AI models.
  
• Jacob Mellor, CTO of Iron Software
  Can provide technical insights on air-gapped architecture implementation, security protocols for data-sovereign computing, compliance engineering challenges, and the technical aspects of preventing external data transmission.
  
• Frederic M. Wilf, Founder and Managing Partner of Wilftek
  Can discuss the legal implications of AI data exposure, intellectual property protection strategies, regulatory compliance requirements, and evolving technology law as it relates to enterprise AI adoption.

Citations:

1.      BigID's "AI Risk & Readiness in the Enterprise: 2025 Report" - cited for:

• 69% cite AI-powered data leaks as top security concern
• 47% have no AI-specific security controls
• 55% unprepared for AI regulatory compliance

2.      Cloudera's research (involving nearly 1,500 senior IT leaders across 14 countries) - cited for:

• 53% identify data privacy as primary obstacle to AI adoption

SOURCE Iron Software