Vendor Lock-In: 6 Tips to Avoid Getting Trapped
As humans, we’re always searching for the next best thing. It’s in our programming. But what happens when the next best thing comes along and the risk of moving on to something better isn’t worth the reward?
Let’s take the example of a cloud service provider. Say you’re considering legacy modernization and a new solution comes along that is more agile and offers a much better ROI. But after digging into what it would take to shift all your data to a new environment, you realize the cost and complexity required are somewhere on the scale from excessive to astronomical.
This is vendor lock-in. Read on for a deeper dive into this common business problem and use our tips to avoid vendor lock-in.
What is vendor lock-in?
Vendor lock-in occurs when various restrictions prevent a customer from choosing a new vendor, product, or service.
Vendor lock-in normally happens when customers can’t transition to a new product or service without incurring substantial costs. In these cases, customers will continue to be shackled to a service that may no longer fit their needs or isn’t compatible with newer technologies. Lock-in can also be caused by inefficient processes, contract restraints, or other limiting conditions.
Service providers benefit from vendor lock-in because it can be an effective way of ensuring that a customer stays with them. Lock-in customers are dependent customers and vendors no longer have to compete for their business.
Before cloud computing became commonplace, some cloud service providers locked customers into five or even 10-year contracts by promising scalable discounts. Those discounts may have seemed appealing in the early days of the cloud. At that time, it was a new service and costs were at a premium. But as cloud computing evolved and became more prevalent, costs decreased significantly. So those tiered discounts on long-term contracts with early, less mature vendors didn’t stand the test of time.
The challenges of vendor lock-in
If you’re a customer, vendor lock-in isn’t working in your favor, and there are a number of scenarios where it could negatively impact your business. For example:
- The vendor’s quality of service could decline, leaving you to foot the bill for offerings that don’t cut it.
- Knowing that you’re locked in, the vendor could suddenly implement a massive price increase.
- The vendor might change their product offerings in a way that no longer fits your needs.
- The vendor could go out of business, leaving you stranded with incompatible and essentially non-transferable data.
- The vendor could stop offering support for their product or service, leaving the customer to their own devices if something breaks or goes wrong.
Vendor lock-in is also problematic for any business that relies on data to make decisions. For instance, during the COVID-19 pandemic, the need for nimble, scalable, and collaborative operational approached intensified across the business spectrum. Many chief data officers and data leaders quickly realized that their organizations would have to leverage data to manage the crisis and emerge intact. If the use of that critical data is hindered by vendor lock-in, leading to an inability to grow or adapt to changing business conditions, it could hamper an organization’s ability to stay competitive in an evolving landscape.
6 tips for avoiding vendor lock-in
While vendor lock-in isn’t new, it has become a more significant concern for many businesses in recent years.
According to a 2019 survey from Fujitsu, nearly 80 percent of respondents were worried about the risk of vendor lock-in. The good news is that it is preventable. Here’s how to avoid vendor lock-in:
1. Evaluate the market
Know what solutions are out there and how they stack up against one another. If you know your business inside and out, you’ll be able to make informed decisions about which solutions will help you now and as you grow.
2. Read the fine print
Always read a contract in its entirety before signing. Know its restrictions, and keep an eye out for that auto-renew option. You don’t want to get locked into a subsequent contract without realizing it.
3. Know your provider
The right provider will operate according to emerging industry standards, have a strong reputation (with customer references), and be able to demonstrate a clear vision to continue to evolve and remain technologically relevant.
4. Ask questions
Would the vendor offer migration tools or services to help facilitate a smooth transition? If you decide to change vendors, what will your exit plan look like? These are important questions that you need to know the answers to before signing a contract.
5. Consider a hybrid or multi-cloud solution
Hybrid and multi-cloud solutions are increasing in popularity because they give customers the benefit of choosing cloud vendor add-ons catered specifically to their business, without having to commit to just one provider. It’s comparable to why people are leaving cable for streaming services. Why purchase a package filled with channels you don’t want or need when you can buy only the ones you want?
A hybrid solution offers agility and reduces the risk of lock-in. But just like numerous streaming services can leave you channel surfing between platforms, a hybrid cloud can considerably increase your architecture’s complexity.
6. Have a backup
If having a backup of your data is a viable option, then it’s a great safety net. In the unfortunate event that you do find yourself the victim of vendor lock-in, you can access your backup data, which won’t have been altered to fit with a vendor’s environment. Simply having a backup makes you significantly less dependent on your vendor.
Choose your vendors wisely
No one wants to be stuck paying top dollar for bottom-of-the-barrel tech that barely gets the job done — but that’s the rock and a hard place where organizations struggling with vendor lock-in end up.
Lotus Notes applications, for example, are still lingering throughout the enterprise. Migrating away and evolving beyond legacy systems and software is expensive and risky. You’re really better off avoiding it altogether. But, you can’t make business decisions based on what might happen years down the road.
What you can do is look for vendors who are keeping pace with the ever-changing technology landscape. Is their company expanding? Are they looking to integrate newer technologies into their product or service? Do they focus on innovation within their own organization? Look for vendors that can demonstrate how far they’ve come and have a roadmap to move forward and stay competitive.
Doing so won’t guarantee that you’ll never have to deal with lock-in, but you are more likely to find partners that will change with the forward march of time and not stubbornly fight against it.