Enterprise resource and supply chains were put under strain during the pandemic, but 2025 added new and different strains to contend with.

Where availability and low costs were the dominant considerations for both the physical and digital supply chains previously, organizations are now considering a broader geopolitical picture and the ramifications of vendor entrenchment.

Pressures across multiple fronts are threatening to crack open the protective structure of existing supply chains:

Tariffs

US-introduced tariff policies could increase hardware costs between 9% and 45% if they're in place for the long term (IDC, 2025). Manufacturers pass on the cost of tariffs to customers and impact IT budgets. The uncertainty of what tariffs are in place and whether they will remain in place long term also creates unpredictability around quotes for procurement. With the global supply of semiconductors dependent on Taiwan's production, avoiding cost increases from tariffs is unlikely.

Geopolitical Tensions

Aside from tariffs, rising tensions between different regions is driving a bigger wedge in trade connections. Supply chains are becoming more reoriented around shared values and security interests. With ICT specifically, western countries are blocking Chinese-made manufacturers from participating in infrastructure projects. For example, the US Federal Communications Commission designated both Huawei and ZTE as national security threats due to close ties with the Chinese Communist Party (FCC, 2020). More recently, TikTok has been the subject of regulatory scrutiny in the US and Canada because of its Chinese ownership and the mobile app's collection of sensitive data (uOttawa, 2025).

Vendor Risks

Technology vendor contracts have tended toward a subscription model that allows enterprises to leverage their operating budgets instead of making capital investments, especially since the cloud computing era began. Negotiating with vendors on a price per user per month is the standard, but enterprises risk becoming locked into platforms and being prone to steep vendor price hikes. Further, enterprises have seen the risk of “supply chain attacks” on very large vendors that cater to millions of customers. Even internal errors can result in outages for clients with many negative downstream effects.

Disruption From Emerging Technology

Dependence on large vendors for technology platforms is creating risks for organizations prone to the cyberattacks and self-inflicted outages of their third-party partners. A recent example was a major cloud service outage with Google Cloud on June 12, 2025, that spiraled out to affect internet services including Cloudflare, Spotify, Twitch, Snapchat, and Discord (The Verge, 2025). AI-driven attacks are also becoming more commonplace and more difficult to detect, from constructing fake vendor emails to deepfake voicemails that sound like a company executive (Supply & Demand Chain Executive, 2025).

Increased Regulatory Complexity

There's more regulatory variation in different jurisdictions around the world, in particular around environmental, social, and governance (ESG) considerations. Manufacturers are being held accountable for their product's entire lifecycle in some regions. Other regions require detailed carbon emissions reporting, including “scope 3” emissions from their supply chain. A new wave of human rights due diligence laws in the EU and the US put pressure on companies to prove no forced labor is involved in their supply chains (Inspectorio, 2025).

To what degree organizations can bring their supply chains closer to home or alter vendor relationships is uncertain. But the need for supply chain management that's more holistic, proactive, and adaptive is clear.

Signals

Despite a year of upheaval in trade due to new US-introduced tariffs and other geopolitical turmoil, overall IT organizations are not more concerned about disruption from government-enacted regulatory changes. This suggests a disconnect with business executives, as 95% cite tariffs as a primary disruptor, leading to shifts in sourcing (Inspectorio, 2025).

In fact, on average, organizations rated that disruption factor as slightly lower (3.23) compared to last year's survey (3.35). Government regulations were considered less disruptive than AI or other emerging technologies (3.42) and cybersecurity incidents (3.27). But they are more disruptive than the talent shortage (3.17) or misinformation and disinformation (2.9) (n=525).

Here's how IT maturity shaped how organizations view disruption:

Innovators (n=125)

• Innovators have a heightened expectation of disruption across all factors compared to the average IT department.
• Innovators are more significantly concerned about misinformation and climate/environment/health than the average.
• Innovators are about twice as likely as the average to exclusively use sovereign AI models (59% vs. 31%). They are also more likely to use foreign AI as well (28% use foreign and sovereign AI compared to 17% of the average).
• When it comes to the biggest areas of risk with critical vendors, innovators are most concerned about unanticipated increases in licensing and renewal costs (68%) and vendor roadmap alignment (63%) than supply chain attacks (17%) or logistical disruption (20%).

Innovators have a heightened expectation of disruption across all factors compared to the average IT department.

Average (n=249)

• Rank cybersecurity incidents as relatively higher compared to other disruptive factors, placing it second after AI and emerging tech. (Innovators rank it fifth overall.)
• Rank government-enacted regulatory change above the talent shortage, while innovators reverse those rankings.
• One in six say they have no immediate plans for the adoption of sovereign AI models. No innovators describe their position in this way.
• When considering risk with critical vendors, average departments are also most concerned with unanticipated price increases (58%) but less concerned with strategic roadmaps (33%). They fret over compliance, security, and privacy concerns instead (50%) and less about vendor quality (n=112).

Opportunities

A Rationalized IT Environment

IT departments can increase organizational resilience by rearchitecting their solutions to be component-based and reusable. Getting away from fragmented solutions that solve different functional problems will simplify IT and reduce costs. IT will less often build its own solutions and instead seek to assemble reuseable components provided by fewer vendors that can offer end-to-end ecosystems. This will help IT organizations avoid accruing more technical debt. “Building is the easy part, they've found, but then it's the supportability, the maintenance, the updating from a security and resiliency standpoint that makes it really, really hard for these businesses to keep up as they've done some of that homegrown development,” says Stu Bradley, sr. vice president, risk, fraud and compliance solutions, SAS. With less time spent on managing technical debt, IT departments can focus on solutions that help differentiate their organizations, such as customizing AI with organizational data.

Thrive in Volatility

Organizations that can increase supply chain agility and integrate ESG considerations can position themselves as leaders, future-proofing supply chains for future upheavals while avoiding the negative effects of the current scenario. Consumers are increasingly demanding more transparency from organizations in terms of their ethical and environmentally friendly operations. IT can provide traceability tools that anchor brand credibility to provable data and help the organization stand out from the competition. By accepting less optimal near-term costs in their supply chains, organizations are setting up for longer-term sustainability (Inspectorio, 2025).

Avoid Tariff Uncertainty

Resilient supply chains can mitigate the price increases and uncertain nature of tariffs through a series of tactics:

• Strategically time purchases and contract renewals to avoid peak prices.
• Extend lifecycle of existing devices and avoid refreshing at high costs. Bulk purchase to get a better price per unit, hopefully at a time when market conditions favor the buyer.
• Shift sources to domestic or nearshore locations where possible to reduce tariff exposure and get better long-term price predictability (AIMMS, 2025).

With less time spent on managing technical debt, IT departments can focus on solutions that help differentiate their organizations.

Risks

Higher Spending

More than half of IT departments expect to increase spending between 1% and 10% in 2026, and almost one-quarter expect to increase spending by more than 10%, according to the Future of IT Survey 2025. It's a good thing, because higher costs are likely. Even firms that avoid tariffs by shifting sourcing locations in-market will likely face increased costs in the near term, as domestic suppliers are likely to have higher prices. Pivoting supply chain sources can also incur more logistics expenses and transitional pain.

Audit Fatigue

Organizations seeking to build supply chain resilience by shifting operations or sourcing to different regions may find the complexity of compliance more burdensome than they can keep up with. Commitments to ethical sourcing and environmental standards will require stringent traceability deployed through the supply chain that is above and beyond what most organizations are capable of today. It's no wonder one in five executives worry that “regulatory overhead” will divert resources from trying to improve their businesses (Inspectorio, 2025).

Competitive Disadvantage

With more barriers forming around different markets, organizations may find they are at a competitive disadvantage compared to companies on the other side of that barrier. Certain key goods aren't widely available from different markets, including semiconductors made in Taiwan or rare earth elements mined in China. At the same time, organizations may be diverting investment away from innovation and research and development to restructure their supply chains.

Case Study

The Semiconductor Industry Diversifies Its Manufacturing Base

Taiwan Semiconductor Manufacturing Company (TSMC) invested $165 billion into the US tech sector to strengthen domestic chip fabrication capacity, including three new fabrication plants, two advanced packaging facilities, and a major R&D team center (Atlantic Council, 2025).

Micron, a US-based semiconductor firm, is investing several billion dollars into a certified fabrication facility in India. Although the region isn't known for semiconductor manufacturing, labor costs are comparable to other options and there are less threats of tariffs (McKinsey, 2025).

Intel is doing both onshoring and nearshoring. It promised $100 billion plus into new US fabrication facilities and plans to invest $92 billion over the next ten years into the EU to help develop a full semiconductor value chain, including advanced fabs, assembly and testing facilities, and research and development labs (Intel, 2025).

Recharging Supply Line Diversity

Batteries Plus restructured its suppliers to shift from sourcing one-third of its inventory from China to just 4% between 2018 and 2025. Motivated by tariffs placed on China, CEO Scott Williams sought products from Vietnam, Malaysia, the US, and several other countries. By distributing suppliers around the world, Williams created more flexibility to shift between countries as new tariffs come into effect in the future. At the same time, the company increased automation in its warehouses and renegotiated with suppliers to mitigate the cost of tariffs (Business Insider, 2025).

Calling for Sovereign AI

Governments around the world are making efforts to foster homegrown AI models to protect economic and security sovereign interests. Domestic telcos are getting involved in providing the compute infrastructure and services toward the effort:

• In Canada, Bell Canada's Bell AI Fabric project commits to construct 500 MW of hydroelectric-powered (a renewable energy) AI compute capacity across six data centers. Telus is building two “Sovereign AI Factories” in BC and Quebec, featuring NVIDIA-powered supercomputers. It plans to provide GPU-as-a-service to enterprises through its Fuel iX Gen AI platform.
• In Europe, Orange plans to offer “sovereignty-as-a-service” and provide customers control over their data residency, ethical aspects of LLMs, and ecosystem partners. Deutsche Telekom offers GPU-as-a-service featuring NVIDIA H100 Tensor Core processors from its data centers in Germany, the Netherlands, and Switzerland. FastWeb+Vodafone offers its own local language model, FastwebMIIA, running on an NVIDIA SuperPOD Computer from its infrastructure in Italy.
• Telekom Indonesia is partnering with IBM to provide sovereign AI services based on watsonx (Taafe).

Critical Factors

Strategic Agility

Organizations will try to avoid creating supply chains that are over reliant on any one supplier or region to reduce exposure to tariffs, geopolitical risk, or predatory vendor practices. A more flexible approach will include diversifying inputs and may add complexity as well as higher logistics expenses. At the same time, they may not be able to replace the specialized capabilities of certain hubs. Organizations will be seeking to optimize their own distribution, balancing production times, and conduct location risk analysis when selecting new supplier hubs (AIMMS, 2025).

Sovereign AI

The cloud computing era introduced the concept of data sovereignty, with countries concerned about the location where sensitive data was hosted or even where it transited. Highly regulated industries like the public sector or financial services were more restricted in requirements to locate data domestically when using cloud-computing services from foreign providers. The EU extended the concept even further with GDPR, bringing the private information of individuals into consideration. Now, AI is extending sovereign considerations to the knowledge available in LLMs, the bias they show, and even the cultural context of their outputs. In addition, the economic value of the future AI market is creating incentives for governments to invest in local AI models. On the other end of the spectrum, superpowers and leading AI developers are vying for global reach through their algorithms and more interconnectedness.

Geopolitical Uncertainty and Ethical Misalignment

With the global trade system in a constant state of flux, leaders are concerned about making decisions to restructure supply chains. Choosing a supplier that may offer lower costs today could turn out to be more costly tomorrow after trade policies are updated. Instead, organizations need more permanent competitive advantages in their supply chain strategy. To build that, organizations are more often turning to scenario modeling and forecasting simulations to provide better visibility into future possibilities.

What's Next

Now

Diversify sourcing locations and vendors where possible. Alternatives to China can be found for some supplies in other parts of Southeast Asia that are less impacted by tariffs. For services, renegotiate with vendors when possible and structure in shared responsibility due to tariffs. Time purchases of devices and other components to avoid tariff increases when notice is given or buy in bulk to decrease the cost per unit. Consider tiering device procurement to ensure that devices are right sized for users instead of needlessly buying premium models. Explore device-as-a-service options to create price certainty for device procurement over the long term. When considering new vendors, increase cybersecurity scrutiny and perform due diligence to evaluate risks.

Next

Start running more, better simulations about possible future outcomes. In the financial services sector, organizations were limited to the number of scenarios forecast because of available compute resources and siloed data. With improved cloud infrastructure, organizations can “run more simulations to look at a multitude of different factors and evaluate for better decision-making,” Stu Bradley says. AI can help “sift through those vast data sets to identify patterns, anomalies, and use that data for these risk assessments.” Revisit vendor contracts and consider building clauses for shared tariff responsibilities or performance-based cost adjustments (Anchin, 2025). Mature data governance to enhance AI-driven forecasting, as leading firms invest in this area to create standardized supplier inputs, clear accountability, and metrics for data integrity (Inspectorio, 2025).

Later

Scale demand forecasting to the entire enterprise and extend AI-predicted risks before they materialize across the supply chain. Embrace a component-oriented approach to delivering IT value and rationalize vendor relationships to emphasize simplicity and reusability. Invest in domestic efforts to build sovereign AI and local compute infrastructure to foster a more competitive technology vendor environment. Seek to take advantage of local government funding programs that incentivize enterprises to purchase from local providers.

“We're in a state where governing is a resilience exercise, not an oversight one. So I have to build an organization that can deal with unknowable uncertainties.”
Valence Howden

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