Now more than ever, flexibility and quick responses to changes dictate the commercial success of many products. And we are not only talking about e-commerce or other solely digital branches of business but about all kinds of products aimed both at B2C and B2B clients.

So there’s probably no worse thing than to end up with software architecture stuck to a single vendor who is reluctant to change. What is vendor lock-in? How being stuck with a single cloud service provider or specific cloud infrastructure providers can influence your business? All of that and more in today’s post. Keep reading!

Cloud Vendor Lock-In

Cloud vendor lock-in refers to the situation where an organization is dependent on a specific cloud provider and finds it difficult or costly to switch to another provider. This can occur when the organization has made significant investments in cloud-based infrastructure, applications, or services, or if the cloud provider has proprietary technology that the organization cannot replace without bearing serious costs.

From the perspective of a software developer, the vendor lock-in situation is apparent when applications developed for specific cloud platforms (e.g. Amazon EC2, Microsoft Azure), cannot easily be migrated to other cloud platforms. It may result from the differences in the semantics of resources and services, as well as lack of compatibility between cloud APIs which in turn leads to significant portability challenges.

Recent studies have indicated that up to 67% of executives and CIOs in order to avoid vendor lock-in would like to use cloud services from several different vendors. Having said that, 71% of these organizations still rely on the same cloud solution provider, severely jeopardizing their business flexibility.

Why avoid vendor lock-in? Main risks of vendor lock-ins

If you develop a software application based on a single cloud platform, migrating your solution to a different one might be a real pain. But what if the cloud service provider drastically increases their pricing or starts experiencing frequent downtime? Well, that might throw a spanner in the works of your product, seriously threatening its market position.

And this is only the tip of the iceberg when it comes to risks caused by cloud vendor lock in today’s IT market. Understanding these risks can help businesses mitigate vendor lock in.

Let’s now briefly go through the main reasons why it’s vital to avoid vendor lock-in when using cloud platforms in software development.

Higher costs

First and foremost, we’ve got the costs.

In the beginning, you might be tempted by a certain cloud service provider’s offerings. Maybe you’ve got a great deal on a 2-year plan. Maybe this cloud company is just launching its business.

No matter how attractive the price is at this moment, you always have to keep in mind that it can be subject to change. Being locked into a single cloud vendor can lead to significantly higher costs of services down the line and increased business uncertainty in that regard.

Reduced flexibility

As we’ve mentioned in the beginning, flexibility is one of the most important factors influencing the success in today’s market.

But how can your application quickly respond to a sudden market change if it’s locked to one cloud vendor? Lack of diversification in terms of cloud service and solutions greatly limits an organization’s ability to make changes and respond to new business requirements. Adopting a hybrid cloud strategy can enhance flexibility and reduce dependence on a single vendor.

Lack of innovation and scalability

Cloud service providers are more often than not motivated solely by financial incentives and business KPIs. So when the business is doing just fine, why should they change anything about it?

Such a mindset can lead to a very dangerous situation for the applications relying on a single cloud vendor. Such service providers may be less motivated to innovate or invest in their products if they have a captive customer base. It can leave your application with subpar performance, and increased cost of operations, with little room for any other alternatives.

Apart from that, as your application grows, it may turn out that the chosen cloud vendor just cannot support the amount of data that your application is dealing with and the constant influx of new users. This, once again, can significantly hinder application performance and scale-out capabilities, leading to a much worse user experience. Hybrid cloud deployments can ensure reliable performance and scalability without over-dependence on a single provider.

Cloud outage = product’s downtime

In cloud computing, outages are inevitable.

You never know when an electrical disruption will cause the servers to be down for a couple of minutes, or some safety vulnerability will cause a system outage. And it’s not that surprising. It happens even to the most established names on the market like Microsoft or AWS.

Having said that, outages for cloud vendors providing you with their services will almost directly translate to your product downtime. Minor problems with service aren’t going to cause any problems and are rather expected. It’s when the situation repeats itself constantly and for extended periods of time, you have a real problem. Having your product locked in with a cloud vendor that is regularly suffering outages could pose a huge risk to product commercial success, as it hurts both the revenue streams and customer experience.

Dependence on a single point of failure

Cloud providers are often the backbone of various different applications. But just like any other business, these organizations, and all the products they provide, might go bust somewhere down the line.

That is undoubtedly a worst-case scenario, but every cautious online entrepreneur should consider this possibility at the beginning stages of the development process

Of course, huge cloud vendors like AWS, Google Cloud, or Oracle aren’t going anywhere. Smaller cloud platforms on the other hand can’t offer the same level of assurance. Relying on a single vendor with a dodgy reputation for critical technology exposes an organization to the risk of severe service disruptions.

Vendor lock-in examples

Vendor lock-ins can come in different shapes and sizes and are not limited only to the B2B market.

A great example of that is the fact that smartphone manufacturers across the world are trying to build their own product ecosystems to improve brand loyalty. But as you might have guessed, the champion in that regard can be only one – Apple.

Throughout the years, Tim Cook’s company has achieved an almost perfect synergy between its products. If you have an Apple computer, you will unlock special functionalities if you also choose a smartphone and smartwatch from the very same vendor.

But for long-time Apple users, this happens to be a double-edged sword.

Somebody with multiple Apple devices may opt for an Android alternative for their next smartphone upgrade. Then they will lose virtually all the benefits of this special synergy and end up stuck with a single vendor for all of their electronic equipment.

And that is not such a big problem when a company, like Apple, continues to provide its customer base with high-quality products and pushes for innovation. But when the vendor starts to lack in certain areas and negligence is more and more pronounced, that’s where the real danger lies.

How to avoid vendor lock-in

Avoiding vendor lock-in is undeniably a hard task since no cloud platform can give you a 100% guarantee on their services and no organization is fail proof.

Nevertheless, there are several strategies that organizations can adapt to avoid vendor lock-in:

Choose open-source platforms

Choosing open-source solutions is probably the best way of ensuring that your software development project won’t be jeopardized by vendor lock-in.

Basically, open-source platforms provide you with more flexibility, and a big leverage over the cloud vendor in case anything goes wrong.

Open-source solutions provide businesses with complete access to source code as well as complete ownership over the application. Open formats allow companies to develop custom insurance software tailored to a much greater extent and migrate the data altogether without having to deal with annoying waiting times or expensive fees.

Research your vendor

The beginning stages of the development process should always be all about research.

Whether it is choosing an IT outsourcing partner, tech stack, or cloud platform, thorough research can save you from many headaches down the line of hasty decisions taken months in the making.

When it comes to the choice of cloud vendor, it is crucial to evaluate cloud services carefully to mitigate risks associated with vendor lock-in. A key thing is to ask for a proof of concept deployment. This will allow for quick verification of the vendor’s level of service.

Also look into the vendor’s case studies, history, and maybe even some financial figures. Is it a new, start-up company? Does it have an established client base? It’s not important from the business perspective per se, but rather to ensure that the vendor that you want to form a stable and long-lasting business relationship with won’t go bust after a few years.

What’s more, when entering into an agreement with a cloud vendor, it is also worth examining their terms of service and service-level agreements. It will provide you with information about how the company handles data and application migration in terms of legal and financial obligations. It is worth remembering that many cloud providers charge a fee for migrating data, software, and other applications out of the service.

Knowing these rates is key when planning a possible exit strategy for a given cloud vendor.

Also, double-check your contracts for auto-renewal. Many vendors auto-renew contracts unless they’re first notified by you. Keep a close eye on your contracts, monitor your contractual commitments, and know when the contract expires.

Prioritize multi-cloud strategies

How to avoid being stuck with a single vendor for your entire software project?

Use more than one!

Yep, it’s that simple. This strategy is often called multi-cloud, and it involves using multiple cloud providers while retaining the ability to shift workload between them when the situation requires that. Adopting a multi cloud strategy can help avoid being stuck with a single vendor, enhancing flexibility and reducing dependence on one provider. Of course, in practice, it is more complicated than that, but the reality is that diversification always minimizes the risk no matter if we talk about the financial or IT markets.

Although using multiple cloud platforms requires additional protective measures to minimize risks and optimize performance, it is one of the most effective methods to avoid a vendor lock-in scenario. Prioritizing multi-cloud strategies can help identify and address various risks associated with vendor lock-ins, such as data loss and reduced profitability.

You should thus design your solution with a cloud-agnostic approach in mind.

Does it mean that you should avoid all cloud solutions altogether? Not at all!

So what are cloud-agnostic architectures? Cloud-agnostic refers to a software design strategy in which applications, services, and tools are designed in a way to allow for a seamless and easy migration between multiple cloud platforms or between on-premises and cloud in a hybrid model without any serious service disruptions.

Retain data ownership

As we’ve mentioned before, a big disadvantage of many cloud vendors is the way they set up their data policies. Usually, getting your data migrated to another platform involves long waiting times and additional fees. That’s hardly an optimal scenario for online entrepreneurs.

It is especially dangerous in the later stages of the application development process as your data increases in size. Eventually, the cost of migrating it elsewhere might become prohibitive and result in a complete cloud vendor lock-in scenario.

To circumvent that issue, it is worth considering a cloud-attached data storage solution to retain data ownership and protect sensitive information. Also, before choosing a cloud vendor, you should take a really close look at their data policy in order not to miss anything.

[Read also: Data-Driven Insurance: Opportunities and Common Issues]

Develop a potential exit strategy

When choosing cloud services, we usually presume that we will stick to the vendor’s product for a long time.

One of the most effective methods for avoiding a potential vendor lock-in scenario is developing a possible exit strategy before signing an initial service or licensing agreement with a particular vendor. An exit strategy is a clearly defined plan that your company can create to ensure that vendors that support key business processes and operations can be efficiently and effectively replaced or replicated without causing a significant disruption.

This is extremely important because vendors may become extremely uncooperative once they learn that your business intends to stop using their product or service. However, this could have extremely detrimental impacts on your business such as extended downtime, a decrease in organizational productivity, and even a loss of valuable historical data.

Therefore, a comprehensive and holistic exit strategy can help relieve the pressures of vendor lock-in as well as enable your business to ensure that migration to a new solution is as effortless as possible.

Avoid investing in proprietary file formats and systems that can only be used with a particular vendor’s products.

Open-source developments platforms – best no vendor lock-in solution

In a lot of existing low-code programming solutions, vendor lock-in is currently one of the most prevalent issues.

A big risk comes from the fact that after an initial good experience with a low-code platform and devoting substantial amounts of time and effort into developing solutions based upon it, problems arise.

A root cause of many low-code issues is the fact that as the application’s complexity increases, it becomes increasingly difficult and expensive to maintain. After all, various low-code development platforms operate in a pay-per-user model. That means that as the service grows, it becomes less and less beneficial to have it based on low-code architecture.

And what happens if you want to move your application elsewhere?

These platforms usually allow you to run the software that you’ve created on your own server, but, as you might imagine, generated code is usually incredibly hard to decipher and understand by developers. It is thus the true polar opposite of high-quality, clean code written by experienced programmers.

So if a certain cloud low-code platform claims that it solves vendor lock-in problems by allowing it to generate code, take it with a big grain of salt.

The only solution to that problem is choosing open-source development platforms, such as Openkoda – one of the hottest insurance trends out there.

Due to using well-established programming languages like Java or JavaScript and other open technologies, developers are working with tools they are familiar with, but they don’t have to focus on mundane and repetitive components. They can focus their effort almost entirely on the fun parts – the parts that are supposed to generate revenue.

Having that coupled with expandable, multitenant database architecture ensures that the application will perform just fine, no matter how severe load it will receive.

So did you assume that low-code platforms are only good for simple proof-of-concept projects and lead only to vendor lock-in down the line?

Think again!

Open-source solutions appear to be a golden mean in offering simplified and sped-up development processes, as well as a great deal of modularity and scalability.

All of that combined with well-known technologies and programming languages, and you have a pretty tempting alternative to well-proven (but expensive) software development processes.

[Read also: AI-Driven Insurance Analytics: Faster, Better, Smarter]

Cloud vendor lock-in – closing thoughts

It’s certainly not an easy task to switch cloud service providers when your whole software architecture relies solely on a product of a single company.

In the best case scenario, such a situation could lead to worsened user experience and inefficient budget management, in the worst case – threatening products’ existence on the market.

It is thus crucial to always strive for open-source solutions and choose multi-cloud strategies to prevent dangerous vendor lock-in scenarios.