The decision to transition to the cloud can bring multiple benefits to your company. From efficiency to flexibility to cost-effectiveness, more businesses are turning to Cloud Service Providers (CSP) to harness its advantages. In fact, 83% of enterprise workload will be in the cloud by 2020.
However, some companies still have reservations about completely transitioning to the cloud. Vendor lock-in is nearly equal with security as a major concern for businesses. They may run into substantial costs, labor, and headache if they find they need a new CSP.
Vendor lock-in doesn’t need to be so intimidating, though. With a little forethought and planning, you can save your business the pain and expense of vendor lock-in.
Here’s what you need to know about vendor lock-in and how you can avoid it.
What is Vendor Lock-In?
Vendor lock-in, sometimes referred to as customer lock-in or proprietary lock-in, is when a customer is dependent on one vendor for their products and services. This can be a precarious situation for a company when their use of technology is restricted to one solution because they can’t easily transition to another vendor if they need.
Although vendor lock-in is a hot topic recently, it's not unique to the cloud. It dates back over 50 years, where it started with the IBM mainframe. It continued in operating systems such as Windows or Mac.
Even databases such as Oracle were infamous for their vendor lock-ins in the 90s. They would attract customers with discounts and platform plays. Once in contract, though, users were stuck with an incredibly expensive operating system that required too much upkeep.
Why Does the Cloud Have Vendor Lock-In?
With companies such as Oracle in mind, many leaders are reasonably worried that they may run into the same problem committing their business data to the cloud. The cloud does provide a challenge because there are no adopted standards that allow users to move seamlessly from one vendor to another.
The vendor lock-in experience intensified when Amazon acquired Whole Foods. This put Amazon, and by extension, their cloud service AWS, in direct competition with Walmart. Because of this, Walmart adopted Microsoft’s Azure. They even took it one step further and specifically warned tech companies that if they wanted Walmart business, they couldn’t run their applications on AWS.
Being one of the largest companies in the world, it’s not surprising that many of their tech companies stopped working on AWS to maintain their business with Walmart. As a result, there is a schism between the two biggest CSPs, AWS and Azure, and companies will often only service one or the other.
Why Fret Vendor Lock-In?
Simply put, vendor lock-in can be costly for your business. Not only can it financially cost a company that needs to migrate to another CSP, but it also requires substantial time and resources.
With vendor lock-in, your business is incredibly dependent because your servers, data, user management, and more are all controlled by a single company. This can spell trouble if you need to switch vendors or should their business fail. It's also a significant liability that you rely solely on their security measures and could spell the end of your company if there is a security lapse.
Your business could be stunted as you seek to wade through the nuisance of switching vendors and could cut into your profitability. The longer you use a CSP, the more exacerbated the problem becomes. Plus, the more you use their specific features the more complicated migration becomes. It’s difficult to move applications because of the lack of APIs.
A migration can be made even more difficult by your agreement with your CSP. It’s in their best interest to keep you with them, so they have subtle ways to make migration as difficult as possible. Many cloud providers place technology-based restrictions that require you to extract data slowly in a disjointed fashion. This fragmented extraction forces you to reconstruct data files and objects in the most painstaking way possible.
CSPs can also end up charging you more than you might anticipate. The charges when you sign the agreement may not initially seem like a lot, such as eight cents per gigabyte to extract data from their platform. However, when it comes time to obtain all of your data during migration, it can be a staggering, and possibly unexpected, sum. You may find it costs $40,000+ to extract the data, depending on how much you have stored in the cloud.
It is also a headache because it forces your business to learn a whole new cloud platform. There is little overlap between providers, so it often requires starting from scratch to relearn everything. It takes time for your IT teams to learn the new tools and configurations. They also need to learn all about the new platform, including infrastructure and implementation processes. If they require certification, that can take substantial time as well. Your business may be stunted while your IT tries to catch up with different technology.
A Case Study of Vendor Lock-In: Snap, Inc.
Snap Inc., formerly known as Snapchat, is an example of how detrimental vendor lock-in can be for a business, even a large technology company.
Snap brought in more revenue than ever in 2016, a whopping 700% increase over the year before. Surprisingly, though, they still failed to be profitable that year and reported a net loss of $515 million. The reason? Vendor lock-in.
Their contract with Google Cloud accounted for 80% of their reported losses for the year. Snap stated that they were contractually obligated to “spend $2 billion with Google Cloud over the next five years and have built our software and computer systems to use computing, storage capabilities, bandwidth, and other services provided by Google.”
Not only did it cost them, but Snap realized that their sole usage of Google Cloud also opened them up to liability. Considering that their revenue comes from advertisers, they risk losing out on valuable ads if Google Cloud failed.
According to Snap, "Any significant disruption or interference with our use of Google Cloud would negatively impact our operations, and our business would be seriously harmed. If our users or partners are not able to access Snapchat through Google Cloud or encounter difficulties in doing so, we may lose users, partners, or advertising revenue.”
Vendor lock-in is not an ideal situation for most business, but it can be downright detrimental for technology companies. When their entire profit is based on their users’ ability to reach the cloud, they run into substantial risks by using only one CSP for all their needs.
Changing Landscape for Vendor Lock-In
In the face of such risk, many companies hesitate to take their business to the cloud and become so dependent on another company. In response, there are changes and advancements in technology to help companies to avoid being locked-in.
Here are some of the resources that can help combat vendor lock-in:
Open-sourced software allows experts, even from competing companies, to collaborate. It's mutually beneficial software that continues to build and improve with each innovator that uses it, so it’s not limited to a single CSP.
Although open-sourced software dates back to 1983, it's more relevant and accepted than ever. While the technological community once frowned upon open-sourced software, it's now considered mainstream. In fact, former Microsoft CEO referred to Linux (an open-source operating system) as a "cancer." Now Microsoft uses it with 40% of Azure software and shares its own Linux tools with the community.
Microservices are an architectural approach to cloud applications. With microservices, each application is built as a set of services, and each service runs its processes and communicates through APIs.
Microservices offer a great alternative to offerings with a CSP. The more a company uses the offerings of a CSP, the harder it is to extract data and migrate from that vendor. Microservices allow companies to use only the services they need and scale based on their growth and changing demands.
Kubernetes, sometimes called k8s, is an open-sourced program that automates container operations. Initially designed by Google, Cloud Native Computing Foundation now maintains it. Kubernetes is the technology behind Google's Cloud.
In the words of Joe Beda, one of Kubernetes’ original developers: “Kubernetes is an open source project that enables software teams of all sizes, from a small startup to a Fortune 100 company, to automate deploying, scaling and managing applications on a group or cluster of server machines."
Kubernetes is vendor-agnostic, meaning that it is not tied to a specific vendor. It is used to host microservice implementation and simplifies the operations and architecture of the cloud.
How to Protect Your Company Against Vendor Lock-In
Although the risks associated with vendor lock-in may seem intimidating, it’s possible to avoid most of the discomfort associated with it. Here are some tips to prevent your company from vendor lock-in.
1. Do Your Homework
Before you sign on with any CSP, make sure that you have a thorough understanding of what you need, what they offer, and the current market. A bit of homework and forethought will save you a lot of regret and frustration in the end.
Some steps to take include:
- Think about what your goals are exactly for migrating to the cloud.
- Do a thorough audit of your IT situation. Find out what your current IT infrastructure is, as well as the costs and resources level that you currently have.
- Decide on what type of cloud you need: private, public, or hybrid
- Find out what cloud components are necessary for your company.
You are then ready to look at CSPs to see which one aligns with your assessment and situation. When it comes to deciding on a provider, think about the following things:
- See their pricing models to find one that works best for your budget. Find the best cost-saving model for your needs.
- Find out what is included in their servicing to make sure you’re getting the most for your money.
- Look at the companies that they work with similar to yours to get a sense of how they would do business with you.
- Check out their offerings and features to see if they have ones that meet your needs.
- Find out their data transfer processes and the costs associated with them.
A thorough look at your business and what potential CSPs offer may make the process longer than it would otherwise be. It’s much faster than having to migrate because you didn't get the right one the first time, though.
2. Come Up With An Exit Strategy
Before you even sign a service agreement with a CSP, be very clear and find out the process should you need to terminate. This is typically in the fine print of the contract and may take some sifting through to find, but make sure it’s well-defined ahead of time. Usually, vendors require a 30-day notice before terminating the contract. Also, check ahead of time to see if there are any fees required to terminate.
Make sure that any elements of termination are discussed and in the contract before you sign. You may need assistance with deconversion, for example, so make sure to get an agreement on that before using their business.
It’s a lot like a prenuptial agreement: discuss everything while the relationship is good. Usually, by the time you end your contract, the relationship with your CSP is soured, and they won’t be eager to help you migrate to another company. When you work it all from the beginning, though, you can get the best agreement and help.
3. Utilize Loosely Coupled Applications
Make sure that any applications you use are built to be flexible. When you solely use your CSP application, you may find the data difficult, if not impossible, to extract and you cannot use it with another provider. However, when your applications are flexible, they have interoperability that allows for a fast migration of workloads and multi-cloud environments.
Business logic and application logic should be kept separate. The business logic needs to be clearly defined and documented to avoid the need to decipher business rules if you need to migrate to a new CSP.
4. Avoid Proprietary Data Formats
CSPs will often store your data in a proprietary format. If you decide to migrate, the extraction process will be even more difficult. To avoid this, you need to get skilled at data integration. Have resources and a plan in place before you ever feel the need to migrate. This means you need to know what format your CSP uses and what formats you may need in the future with a new company.
Be sure ahead of time that your CSP has a way for you to extract data easily. Ask them before you ever sign an agreement, and even have it in your contract. Some CSPs compress data in storage formats. The compressed data makes it hard, if not impossible, to transform the data into something you can use.
5. Implement a Multi-Cloud Strategy
In the example of Snapchat above, their solution was to move towards a multi-cloud strategy once they realized that they were struggling with vendor lock-in. This solution is more complicated and costly, so it may not be right for everyone. Although there may be cons to the multi-cloud approach, it can be useful for those with the developments teams, security, and budget to expand beyond one CSP.
With a multi-cloud strategy, you become less dependent on any one provider for all of your needs. It also harnesses the best-of-breed approach to give you the best offerings from each cloud provider.
Protect Yourself from Vendor Lock-In
Vendor lock-in can be a costly mistake if you fail to put the research in ahead of time and plan an exit strategy should things go wrong. With the proper care and precautions, though, you don’t need to fear it when you move your data to the cloud. You can instead concentrate on using the cloud to make your company more cost-effective and efficient than ever.
MetaRouter is committed to providing highly performant and flexible data infrastructure with transport pipelines at scale using our Enterprise Edition. With a data platform that deploys through Kubernetes and is built with modularity in mind, we fit in where engineers need us and are resilient to changing technologies. Reach out to learn more about how MetaRouter can help your enterprise stay strong in the face of infrastructural lock-in concerns.