How to escape a vendor lock in IT
‘If you have become dependant on one service or a provider, it is very difficult to escape this situation. We think that we live in a free world and that we are free in our business decisions, but in reality, we are not,’ says Martin Rungi, Sales Manager of Greenergy Data Centers.
Vendor locks limit your choices sooner or later. Photo by Tõnu Tunnel.
In fact, there are many companies in Estonia whose digital development has stalled. This is not because they have reached the ultimate level, but because they are in a relationship with a partner that does not enable development outside its own ecosystem.
Connectivity and cloud services are often a major bottleneck to new business growth. In order to ensure control and commercial autonomy, it would be necessary to use several different providers or at least have the possibility to do that. Sooner or later, the vendor lock becomes a serious problem.
Martin Rungi, sales manager of the largest data center in the Baltics, believes that thinking straight and having a plan to escape this situation help more than complaining. However, first, we have to go back to the beginning.
How are vendor locks formed?
There are several reasons for vendor locks:
Preference for the easiest way out. Someone is offering a suitable solution for you and it is also a completely logical choice. However, if it is future-proof, is not tested.
Convenience. Someone provides you with what you need and some extra services on top of that. Life will get easier in the short term, but you will also be handing over a bigger part of your business to someone else.
Preference for low price. Later, when you take the next steps, it turns out that the ‘platform’ was cheap, but each subsequent step becomes much more expensive. Big cloud service providers that generously offer free credit to new subscribers are a good example.
Getting stuck in the initial choice. As the company preferred one partner at some point, this relationship will continue in other projects without considering any alternatives.
Ignorance of alternatives. The market overview is not updated. The company is simply not aware of alternative solutions.
As a result of the vendor lock, the company has lost some of the sovereignty and control over its business (it does not matter whether this concerns connectivity or cloud services). Vendor locks affect cost-effectiveness, future developments, the quality of the service provided, the ability to choose cooperation partners, etc.
For example, if you have moved your office to a location that is covered only by one service provider, then you have to accept their terms and conditions. There is no other option but to pay because you still need an internet connection.
How to take back control of your business and avoid vendor locks?
It is always a good idea to have alternatives. ‘We provide the necessary means for this,’ says Rungi. Currently, the vast majority of businesses have gone digital in one way or another. ‘If you have an e-shop, then all information – the location of the page and how orders and payments are handled – ultimately reaches devices located in some data center,’ explains the sales manager of the GDC data center in Hüüru near Tallinn. However, this data center is built with neutrality and freedom of choice in mind.
‘There is an alternative provider for every cloud or connectivity service. You will always have more than one option with us,’ he says. On the example of GDC, carrier neutrality means that the service is provided by different operators in the data center and the customer chooses the one that suits them. The same applies to cloud services.
However, data centers are often non-neutral or the freedom of choice is not real. This means that data centers are tied with a specific operator or service provider. ‘However, if you are dependant on one partner and only expanded your activities in their ecosystem, it can be very difficult to escape it later,’ he says.
Why is it important that data centers are neutral?
When a data center is completely neutral in terms of both cloud and connectivity services, it gives businesses back their sovereignty. This means that they can choose their business partners and business model themselves. They can also choose who will provide them with devices and connectivity services, software solutions, etc. ‘You will control the whole chain of operation,’ explains Rungi.
According to Rungi, the best thing to do is to start with having an ‘exit plan’ at the very beginning of a more serious relationship, so that you could change partners if necessary. Having an exit plan should be a requirement for any procurement of services critical for the business. The plan allows you to adapt to changing situations. Without it, you must first deal with the emotion that all is futile. It never is. However, in more complex cases, you have to start with small steps – for example, setting up a new business line or making backups in an alternative location to ensure freedom of choice. After a while, other parts of the business can be relocated or started in an alternative location.
‘In this case, you should definitely consider the possibility that your old partner will make life difficult for you because the business arrangement that was beneficial for them will start to crumble,’ Rungi advises.
To illustrate this, imagine if you have built your office or production facility in a location covered only by one internet service provider. Finding an alternative and doing the construction work will obviously take time, but it will pay off in the long run. If the building has cable connection from two companies, you can ask for competing offers or use both for greater reliability.
‘If you have kept all your eggs in one basket until now, you can still take them out one by one,’ explains Rungi. It all starts with mapping out what can be done differently or reorganised. The alternative solution may not only be right for you, it may also be technically much more modern and cost-effective.
Talk to people
This point sounds so simple that it is perhaps even strange to suggest, but in fact, there is a grain of truth in it. If you do a bit of digging online or talk to your network of contacts, you are bound to find someone who has had a similar problem or who can relate and offer solutions from their own experience. You are probably not the first to get stuck. Listen to the experiences of others and learn from them. It is only a matter of taking the first step.
What could a start-up learn from the mistakes of others?
For starting businesses, the most common example is the cloud (there is an older blog entry about the pros and cons of a cloud service and a data center). As cloud services are often a reasonable choice for start-ups, that is where they start. If all development work is made with only one provider ecosystem in mind, you may have only a few options left in the end. All of this is more difficult to fix later.
In conclusion, remember that when you choose a partner who is critical for your business, it is important to consider the alternatives and think ahead. Be like a special agent who has an exit plan for each room in case things get hot. That is partly why the neutral data center of Greenergy Data Centers was born – to ease the limits of vendor locks and give back control and freedom to companies.