US China Trade War CroppedI touched briefly on the importance of IT portfolio diversification in Friday’s Tech New Digest. I recommended that all senior technology executives review their IT portfolios and look carefully for potential vulnerabilities that could arise if the trade war with China is not resolved.
 
In today’s column, I’m returning to that topic for a deeper dive. At this point, it seems clear that our disputes with China over intellectual capital protection and other key issues may continue for years or even decades.

Essentially, the continual bickering ensures a state of volatility that will be highly undesirable, especially from an enterprise planning perspective. In other words, we’ll never be precisely sure how much to budget for IT products and services whose prices could be impacted adversely by an unforeseen skirmish or incident in the trade war.

As technology leaders, we need to broaden our sourcing options and start looking beyond the usual providers. We live in a global economy, and we should take advantage of our good fortune. In addition to sourcing products and materials from China, we should be looking to sources in South Korea, Taiwan and Singapore. We should look far more seriously at outsourcing services to providers in Eastern Europe, South Asia, the Middle East and Africa. 

From my perspective, the trade war should be seen as an opportunity to expand our universe of trusted vendors and business partners. I predict that savvy technology leaders will take a hard look at their IT portfolios and begin looking in earnest for alternative sources.

Remember when we used to talk about the downside risk of vendor lock-in? I predict an uptick in innovative sourcing to avoid the chances of a similar situation with China. Now is the time to start looking for new vendors and business partners in places you hadn’t previously considered. For senior technology executives, this will mean spending more time in airplanes and hotels, but the effort will be worthwhile.
 
As leaders of the technology community, we simply cannot wait for politicians to solve our problems for us – we need to roll up our sleeves and solve them ourselves. We know what we need to do in terms of re-examining and diversifying our IT portfolios, and I’m highly confident that we will make the right decisions.