It’s hard to escape the publicity-hogging Huawei espionage crisis as it dominates mainstream media for yet another week – and there’s a good reason for it. Implications are huge for both enterprises and service providers – these espionage concerns are causing seismic supply chain disruptions that could significantly impact product delays, causing unforeseen costs and top-line losses. So how can we all learn from this to avert these issues in the future, which will surely only exacerbate in today’s increasingly paranoid “hyperconnected economy”?

The latest onslaught against the firm started with a damaging assessment from the Trump administration. This development has caused firms, including Google and processor manufacturer ARM, to distance themselves from the Chinese technology giant. On the surface, the lesson here seems to be for enterprises to sever ties with Huawei, but at a much deeper level, leadership teams must urgently reassess their supply chain strategies and services partnerships.

The Huawei Story: A cautionary tale to technology firm

Here’s a quick update: Huawei has been under scrutiny for years—largely from fears that the Chinese state would force the firm to build back doors and vulnerabilities into its hardware and software to support state espionage – ruffling western governments due to a Chinese law which forces all national companies to support any investigations or initiatives of the state.

However, the British-led Huawei Cyber Security Evaluation Centre, which has been running since 2010 to dig into the firm’s technology and assess its safety, has struggled to find any intentional backdoors. It has come to the sobering conclusion, however, that the technology is poorly designed and riddled with vulnerabilities, albeit unintentionally. Indeed, a director from the UK spy agency GCHQ has criticized Huawei for its equipment, saying “like nothing else—it’s engineering like it’s back in the year 2000—it’s very, very shoddy.”

Things have come to a head in recent weeks as political leaders, particularly in the US and Europe, have argued back and forth over the prudence of allowing the firm to bid for key infrastructure projects, the highest profile of which is the roll-out of 5G infrastructure. Hawks in the US and UK are urging caution, and doves in Germany and other nations are offering a compromise. With a recommendation for an all-out ban in the US, the destination for a huge amount of tech and services, companies that leverage Huawei’s technology are falling over themselves to source alternatives and distance themselves from what has become a particularly toxic debate.

Partners and suppliers require ongoing assessment to mitigate risks

But really, the lessons that we must learn do not come from the specifics of the Huawei story, because it seems to be changing every day. What we should do instead is examine how the fate of one firm caused a series of issues that we barely considered a few short months ago.

First, this whole debacle is a classic example of what we at HFS are calling the move toward the hyperconnected economy. In the past, blacklisting a company would have had an impact on immediate links in the supply chain, but it’s unlikely that things would have spiraled into an event with widespread global impact because of modern enterprises’ extensive network of dependencies. Simply marking Huawei as a risk has forced enterprises and governments to pore over blueprints and contracts to find out what services and solutions they use from the firm. Global telecommunications firms are already advising of major delays to infrastructure projects and inflated budgets to cover the cost of sourcing new equipment and services. We suspect many of the large IT services firms are anxiously communicating internally to find out how much Huawei kit they have floating around.

Service providers, your call to action is simple: You need to have a much clearer understanding of your supply chains and the roles your partners play. You must build versatility into these networks to mitigate all your risks, from political game-playing to financial collapse, without needing to go to clients with an apologetic grin and a contract with updated legalese.

Enterprises, it’s much harder: You may have brokered a deal with a services firm to unwittingly find out that some of the equipment or services are from firms that are now persona non grata in their nation. Now you have the tricky task of unpicking their contract with their provider—and renegotiating.

Without better knowledge of what is further down the supply chain, it’s nearly impossible to unpick a Gordian knot of this magnitude. It’s not that issues like this haven’t cropped up in the past—HP laptops became almost impossible to get ahold of from some workplace services firms because of an unprecedented natural disaster in the early 2010s, for example. But the truth is that as supply chains, enterprises, and individuals become increasingly connected in our new digital world, we can expect issues like this to appear more often and the impact to be far-reaching. Both enterprises and service providers must ensure supply chain issues don’t catch them off guard.

The Bottom Line: In this hyperconnected economy, we desperately need a clear view of supply chains, partners, and the dependencies we rely on to do business.

The Huawei debacle is a great example of how one firm can have a disproportionate impact on the global economy. From governments to telecommunication firms to technology giants, Huawei’s crisis has quickly become everyone else’s. It’s likely this story is far from over. For example, China may retaliate in kind and ban a major US firm from doing business with them—perhaps IBM, or more likely AWS—with the added benefit of securing the market for the homegrown Alibaba cloud. In a world of increasing uncertainty and paranoia, stability in the hyperconnected economy may be idealistic and unreachable, but having a clear picture of how our businesses stack up on both the buy and sell sides will help us keep the lights on when things get crazy.