Vendor lock-in is when someone is forced to continue using a product or service regardless of quality because switching away from that product or service is impractical.
What does ‘vendor lock-in’ mean?
Vendor lock-in refers to a situation where the cost of switching to a different vendor is so high that the customer is essentially stuck with the original vendor. Because of financial pressures, an insufficient workforce, or the need to avoid interruptions to business operations, the customer is “locked in” to what may be an inferior product or service.
Imagine an office that has coffee brought in by a coffee vendor, and this vendor requires specific coffee machines in the office that only the vendor sells. Now, imagine a steep decline in the quality of this vendor’s coffee. Switching to a new coffee vendor would mean the old machines they purchased become useless, as the switch likely requires the purchase of new coffee-making 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.
What is vendor lock-in in cloud computing?
In cloud computing, some software or computing infrastructure is outsourced to a cloud vendor, which offers it as a service and delivers it over the Internet. For instance, cloud-hosted servers are infrastructure-as-a-service (IaaS), and cloud-hosted applications are software-as-a-service (SaaS).
Sometimes, a company may find themselves locked into a particular cloud provider. Vendor lock-in can become an issue in cloud computing because it is challenging to move databases once set up, especially in a cloud migration, which involves transferring data to a different environment and may involve reformatting the data. Also, once a third party’s software is incorporated into a business’s processes, the company may become dependent upon that software.
Why is vendor lock-in a concern?
Several circumstances can negatively impact a business if they are locked in with a particular cloud vendor:
- If a vendor’s quality of service declines or never meets a 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
- Finally, a vendor may impose massive price increases for the service, knowing that their clients are locked in
Overall, handing off foundational, business-critical technology to an external vendor is not easy for any company and requires a significant degree of trust in the vendor.
How can companies avoid the risks of vendor lock-in?
- Evaluate cloud services carefully: Companies should thoroughly research a cloud vendor before committing, ideally with a proof of concept deployment, to ensure their service level is sufficient.
- Ensure data can be moved easily: Companies using cloud computing should keep their data portable or easily moved from one environment to another. They can partially do this by clearly defining their data models and maintaining data usable across various platforms rather than formats specific to a vendor.
- Backups: Keeping internal backups of all data helps a business stay ready to host the data elsewhere if it is too difficult or time-consuming to extract it from cloud service (as well as providing some protection from ransomware).
- Multi-cloud or hybrid cloud strategy: A multi-cloud approach incorporates multiple cloud providers, reducing dependence on any single vendor. In a hybrid cloud, some data will remain within an organization’s direct control, either in a private cloud or stored on-premise.
