A new study from the IBM Institute for Business Value reveals a significant dilemma for businesses harnessing artificial intelligence (AI): a majority of companies struggle with the critical issues of AI control, data residency, and vendor dependencies. As AI becomes deeply integrated into their operations, small business owners, in particular, face unique challenges that could impact their performance and economic resilience.
The study, based on insights from 1,000 senior executives worldwide, found that a staggering 71% of respondents believe switching primary AI vendors or models is a complicated process. This indicates a troubling lack of flexibility for businesses trying to adapt to external changes and demands. With competitive pressures mounting, the need for sophisticated AI governance has never been more pressing.
Among the challenges cited, 68% of executives struggle to meet data residency and sovereignty regulations, raising concerns about legal compliance as AI technologies cross geographic borders. This complexity can make it cumbersome for small businesses to move their AI systems or data between environments, which is critical as they strive for growth and scalability.
Ana Paula Assis, IBM’s Senior Vice President, stressed the urgency of these challenges. She remarked, “AI has introduced new forms of dependency that evolve faster than traditional governance, procurement, or technology cycles were designed to handle. The stakes are no longer technical; they are economic.”
The study highlighted that nearly all respondents—91%—do not fully understand their AI dependencies. This lack of visibility limits their ability to assess risks related to vendor reliability and service quality. A significant portion of respondents (81%) indicated that even a short seven-day vendor outage could result in severe disruptions, presenting a stark risk for businesses that depend heavily on these technologies.
Amid these growing pains, the data suggests a direct correlation between advanced AI control and financial performance. Organizations that can effectively tailor their AI systems to adapt to changing conditions stand to gain a substantial advantage. The study indicates that businesses with high levels of AI governance are able to protect 55% more of their operating profit against AI-induced disruptions compared to their less adaptable counterpart.
Yet, only a minority—7%—of organizations possess the advanced AI capabilities needed to effectively manage their systems. This gap highlights the importance of a strategic transition towards more adaptable AI environments, particularly for small business owners who may have fewer resources to withstand operational hits.
One of the more alarming trends noted was the unexpected changes within the AI ecosystem. These include price increases, usage restrictions, and even deprecations of models, contributing to the operational complexities reported by executives. For small businesses navigating a tight budget, these variabilities create significant planning challenges.
Despite these hurdles, a noteworthy 72% of executives expressed willingness to absorb a 20% increase in vendor costs if it would enhance strategic flexibility. This finding reveals a shift towards prioritizing long-term resilience over short-term savings—a principle that small business owners may want to heed.
The respondents also indicated that their multi-vendor AI environments typically arise from operational realities rather than deliberate planning. Business unit decisions driven by geographical requirements or legacy complexities from historical mergers often guide these choices. This lack of a cohesive strategy could lead to operational inefficiencies down the road.
For small businesses considering their own AI strategies, the findings provide a roadmap. Emphasizing flexibility, resilience, and eventually, control over their AI systems can serve as key differentiators in a competitive market.
While embarking on this journey may present its own set of obstacles, the long-term benefits of a well-governed AI strategy can prove transformative. By building adaptable frameworks, small business owners can not only weather the immediate challenges posed by AI dependencies but also thrive in an increasingly digital landscape. For deeper insights into this evolving landscape, the full study can be accessed here: https://newsroom.ibm.com/2026-06-17-ibm-study-limited-control-and-rising-dependencies-leave-enterprises-exposed-in-the-age-of-ai.
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