CXO

5 ways to avoid vendor lock-in

Don't let vendor lock-in limit IT agility. Due diligence will keep your vendor options open.

Within the last ten years, many companies have migrated to cloud-based technology to avoid the budgetary constraints of funding large capital projects for data centers and agile software development. While cloud solutions offer companies many benefits, it still introduces some risks. For example, vendor lock-in is as great in the cloud as it was in the data center.

Just what is vendor lock-in?

Vendor lock-in is commonly defined as "Proprietary lock-in or customer lock-in, [which] makes a customer dependent on a vendor for products and services, unable to use another vendor without substantial switching costs."

SEE: Vendor comparison tool: Cloud-based integrated management services (Tech Pro Research)

In short, if you are tied to a certain vendor, even a cloud vendor—and you want to change direction—it's going to cost you time and money.

How do you avoid getting locked in in the first place? Below are five steps to avoid vendor lock-in.

1. Negotiate both an entry and exit strategy upfront with your vendor

Many companies are eager to sign on a contract's dotted line without reading the fine print. If you read the fine print, you will usually find clauses that address termination. Often, termination can entail giving a 30-day written notice.

In addition, there are other elements concerning termination that you should discuss with prospective vendors and write into your contract. For example, you need to ensure that your vendor will assist you with a deconversion if you want to migrate to another vendor.

This is important because vendors are notoriously uncooperative once they know you want to leave them for a competitor. The best way to avoid a potentially unpleasant and hostile situation is to document SLAs for deconversion assistance with your vendor upfront in your contract. This way everyone is clear about their respective responsibilities when it comes time to switch vendors.

SEE: Service level agreement (SLA) policy (Tech Pro Research)

2. Watch your contracts for auto-renewal

Many IT vendors auto-renew contracts for a new term unless you notify them that you don't want to continue a contract. This common IT oversight occurs when no one keeps an eye on vendor contracts. To avoid this problem, monitor contractual commitments and when terms come to an end.

3. Have a backup vendor

Let's say that you're using a cloud vendor for data storage. It's always a good idea to have a backup cloud storage vendor at the ready in the event that you wish to leave the first vendor. This way you already have a secondary business relationship, and you aren't exclusively tied to the first vendor.

4. Design portable applications

If you're using infrastructure or platform as a service cloud vendor for your applications, design your applications so that they can easily be decoupled from the underlying infrastructure or platform of your hosting vendor. This simplifies the task of transporting applications and data to an alternate vendor.

SEE: Vendor relationship management checklist (Tech Pro Research)

5. Keep on-premise options open

Don't overlook on-premises options. While some companies opt to move entirely to the cloud, it's not a bad strategy to retain the ability to failover to your own home data center when all else fails.

Also see

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Image: zorandimzr, Getty Images/iStockphoto

About Mary Shacklett

Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President o...

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