As cloud computing has become more accessible than ever, many companies are taking advantage of it to break free from maintaining their own IT infrastructures.
The public cloud offers a number of advantages for businesses, allowing them to scale operations quickly and utilize enterprise-level services without investing in enterprise-level infrastructure. However, companies must be wary about Vendor lock-in and how it could limit their flexibility in the future
.What is Vendor Lock-In?
Vendor lock-in also called customer lock-in or proprietary lock-in occurs when certain restrictions prevent a customer from switching vendors, products, or services.
- Vendor lock-in normally happens when customers can’t switch to a new product or service without incurring substantial costs.
- In such cases, customers will continue to be bound 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 circumstances.
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.
Let’s try to understand this further with an example:
Imagine that an office has coffee brought to it by a coffee vendor, and the vendor requires the office to have specific coffee machines that only the vendor can provide. Imagine that this vendor’s coffee has suffered a steep decline in quality. Switching to a new coffee vendor would mean the old machines they purchased become useless, and it is likely they will need to purchase new equipment. Given the hassle and added expense of replacing every coffee machine, the workers in the office would be effectively locked into their agreement with their old vendor and forced to drink inferior coffee.
A real-world example of vendor lock-in is the way Apple locked consumers into using iTunes in the early days of the service because music purchased via iTunes could only be played within the iTunes application or on an iPod.
Why is vendor lock-in a concern?
A number of circumstances can negatively impact a business if they’re locked in with a certain cloud vendor:
- If a vendor’s quality of service declines, or never meets the desired threshold, to begin with, the client will be stuck with it.
- The vendor may also drastically change their product offerings in such a way that they no longer meet a business’s needs.
- A vendor may go out of business altogether.
- The vendor could stop offering support for their product or service, leaving the customer to their own devices if something breaks or goes wrong.
- Finally, a vendor may impose massive price increases for the service, knowing that their clients are locked in.
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.
The following are six tips that will help you avoid vendor lock-ins:
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.
- 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.
- 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.
- 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.
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.
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.