Watch out for that cloud lock-in

Watch out for that cloud lock-in

Summary: The cloud lock-in is often a greater concern than lockout, but both should be top of mind for organizations looking to deploy cloud seriously, according to Gartner.

TOPICS: Cloud, Legal

The cloud lock-in is often a greater concern than lockout, but both should be top of mind for organizations looking to deploy cloud seriously. That's especially so for those who want to deploy cloud for serious business, according to Gregor Petri, research director at Gartner.

Lock-in refers to the situation where it is often difficult — because of time and costs — for user organizations to switch suppliers. According to Petri, this is often because after some time the software becomes so closely linked with the way the organization works that saying goodbye to the vendor becomes virtually impossible. It is no coincidence that there are only two industries, IT vendors and drug dealers, that routinely refer to their customers as "users", he pointed out.

"As long as the supplier still has his sights set on expanding its market share, lock-in is often not a problem. But by the time the revenue from the installed base becomes more important than winning new customers, customers often start to encounter regular price increases, increasingly stringent terms of use and less responsiveness from its vendor," said Petri.

For now, that tipping point is still far away as the cloud market makes up only about 3 to 5 percent of total IT market spend, noted the analyst. However, he warned that it was also an industry where lock-in has a lot more impact that in traditional IT.

Most of the time, cloud customers rely on their supplier for the whole service stack: application, middleware and underlying hardware, noted the analyst. SaaS offerings can typically only be bought directly from the authoring organization, he observed.

Plan B and exit strategy

"Just imagine a scenario of a typical cloud provider, who controls the entire stack from application to hardware, unexpectedly going out of business or if that provider decides it does not want to serve a certain company or country anymore. Like how several cloud providers locked out Wikileaks after the first press leaks, or a vendor like Mega Upload, where regular customers lost all access to their data after a judge ordered them to shut down completely based on media industry accusations," said Petri.

Companies can also get cut off from products by reputable providers if they decide those products are no longer strategic, he warned. "The big difference between the cloud and traditional in-house hardware and software is that as soon as the provider stops its service, the custoemr is immediately out of business. This is very different form traditional IT where resources could often still be used for years, even if the hardware is out of warranty and the software out of support."

According to Petri, the cloud era makes having a plan B and an up to date and easy to execute exit strategy even more crucial. Identifying what parties will be allowed and capable to take over is important, though this is only pragmatically possible for open source solutions, he added. "Any good cloud strategy must start and end with an exit strategy."

Topics: Cloud, Legal


Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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  • Lock in not new

    Lock In isn't new. It's been with us for the 30 years I've been in the business and all the same reasons were more true way back then than now.

    You pick who you you do business with and who you hire. It's possible to make bad decisions. Being locked in to your own IT staff can be the worst nightmare. This business is built on partnerships and we all need them to make it work. That won't change in anyones lifetime.
  • Consumers are more subject to lock-in than corporations

    because most consumers have fewer resources to carry out the transfers necessary to change vendors. Want to change your telephone vendor, your cable TV vendor, your internet service provider? These days, in order to change one, you may have to change all three (yes, there are cheap VOIP phones, but they depend on your internet connection, and if you don't ALSO use any computers, I can tell you from formerly being a tech support agent, you will have to BORROW one if your internet service ever goes down, as well as borrow a phone to make the call). And if you use your ISP to provide email service, there are the email addresses to be changed, not only to your friends, but on EVERY web site that uses your email address to help you if you forget your password, or uses it to send you bills or other notices.

    Change your checking account? How many vendors do you pay with a stored default checking account link? How many payors deposit checks into your account (a worst case for a couple would be two paychecks, maybe four, and two pensions if both partners are working past retirement; for the polygamist families it would be even worse ;). And how many months of maintaining two accounts until the last statement on the old one balances with zero transactions?

    If you were a corporation, you would have staff to do all those things during the normal work week. If you are a personal "user" (that insight was funny, although "user" is a carry over from internal corporate IT terminology), it's just you or your spouse doing a lot of extra work for months. If the new ISP, or phone vendor, or TV source, or bank offers you a REALLY good deal, it may be worth it. Sometimes it isn't.