What is Vendor Lock In
Vendor lock in occurs when an organization has sourced products or services from a vendor and finds itself unable to move away from them. The reasons for the lock-in can be down to the cost of transfer, loss of knowledge, IPR lock-in or complexity and time challenges to re-engineer dependent processes.
Strategies to Avoid Vendor Lock-in
Plan Your Exit Upfront
One of the topics covered in my book on outsourcing is to plan your exit strategy when you first sign any new contract. It might feel odd planning for exit at the start of a new vendor relationship, but this is the point at which you have most leverage.
Remember, the alternate is to wait until you want to exit, at which point your vendor may be extremely uncooperative once they know you want to leave for a competitor.
Ensure that the agreement covers all of the basics such as how you extract your data – the format of any data extracted and delivery method – and how the outgoing vendor will work with the incoming for knowledge transfer and sharing of documentation.
Watch for Auto Renewals
Most new contracts, especially for subscription based services, auto-renew unless you give notice for termination. Moreover, the termination notice may have to be served some way in advance – I have seen many examples of a 90-day termination notice period.
Ensure that you avoid accidental vendor lock in by monitoring the terms and renewal data of your contracts.
Design for Portability
Decoupling your application from the underlying platform is a great way of avoiding vendor lock in to an infrastructure provider. This is especially pertinent when dealing with cloud IaaS and PaaS cloud services.
Containerisation and infrastructure as code are good strategies for potability.
I do not believe that maintaining an on premise data centre is necessary, but you do need to consider how you would move away from a cloud vendor if there terms or costs became commercially disadvantageous.
Have an Alternate Vendor
Whether you choose a multi-vendor or a single vendor strategy, it makes good commercial sense to have identified an alternate supplier to take on the provision of products or services in the event that your primary supplier fails for any reason.
Having a competitor snapping at your supplier’s heels may also add commercial tension to keep them keen on price and performance. Of course, it may also make them nervous to make long-term investments in the infrastructure supporting their delivery to you.
You need to recognise these elastic conditions and decide how you keep your alternate supplier in the wings, is it through letting small amounts of work to them, allowing them to bid competitively for individual projects, or just as a paper exercise.
Manage IPR to Avoid Vendor Lock In
Be sure to manage intellectual property and maintain enough information and knowledge to allow you to move away from any vendor. IPR ownership needs to be clear in the contract as well as the provision of process documentation.