CIO

Is the concept of enterprise lock in a red herring?

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There is quite a bit of discussion about the concept of lock-in by pundits, providers and consumers. While I take the perspective of looking at lock-in within the enterprise IT space, the same issues apply broadly to a number of industries, products and consumers.

So, is lock-in really a concern for the enterprise? Or just noise that distracts from the real issues? To answer those questions, we need to look at the problem from a few different angles.

PROVIDERS LOVE THE CONCEPT OF LOCK IN 

Lock-in is something that just about any provider loves to consider, talk about and use as ammunition against their competitors. From the provider perspective, lock-in creates sticky customer relationships due to switching costs. By creating a tighter relationship with the customer, they are more apt to stay rather than start the process of untangling the web of connections with any specific provider. A good example that many people tout is the lock-in related to Enterprise Resource Planning (ERP) solutions. Once you install the system and integrate all of the connections, it is incredibly hard and costly to consider switching. Hence the very high switching costs. ERP is not alone. Most enterprise solutions today suffer from these same issues.

For the provider, lock-in provides some flexibility to get away with flaws and system issues. Providers know that customers will not switch to an alternative solution until the pain threshold reaches a certain point. Again, this is where the switching costs come into play. Keep in mind that switching costs are just hard costs. However, costs come in many different forms…read on.

DOES THE CLOUD CHANGE LOCK IN?

In a word, no. Cloud does change the delivery method in which enterprises consume services from providers. However, many of the core issues that result in switching costs are still present in cloud-based solutions. Yes, lock-in is still present in cloud-based solutions. There are a few variables that may change the pictures for specific customers. But on the whole for most customers, cloud does not improve or worsen the lock-in situation.

LOOKING AT THE ENTERPRISE PERSPECTIVE

On the surface, enterprise IT leaders hate the concept of lock-in. Lock-in creates a restrictive situation that works counter to the flexibility that many IT leaders strive for. But the reality is that lock-in exists everywhere. Just about every enterprise solution today has some form of lock-in. From the most basic file sharing solution to email to enterprise software solutions, lock-in exists in many forms.

To take this a step further, one need to understand the enterprise perspective from a few facets. Many pundits focus on the technology itself. Yes, that is one facet to consider, but not the only one. Enterprise IT leaders must consider integration and user interactions as well. A good example of this is email. One may believe moving from one email solution to another is relative trivial. In an enterprise, that is simply not the case. Switching from Microsoft Exchange running in your corporate data center to Google Apps (for example) running in the cloud presents a number of challenges. Sure, there is work to migrate user mailboxes and change application integration points from one system to another. There are also challenges around resource allocation in terms of license agreement, organizational responsibilities and data center resource allocation. However, one issue that is often misunderstood, misrepresented or simply ignored is the user interaction component. Training users to switch to a new way of doing things is not a trivial matter. At some point the costs will need to be weighed against the risks. While the upside may seem palatable, the downside may quickly change that perspective when weighing all of the facets.

SO IS LOCK IN A RED HERRING?

While many tout that lock-in is something that enterprises can avoid, the reality is those statements are often only looking at a single facet. One of the more challenging factors to considering lock-in within enterprises today is data. As the size of data grows exponentially, the term Data Gravity comes into play. Not to mention that the sheer time, cost and risk to simply moving the data becomes challenging. Even with faster and cheaper bandwidth options, it is still faster to move large quantities of data via FedEx than over the wire. And therefore the switching costs related to data are only going to grow regardless of the application or service consuming the data.

Change is hard. Change at scale is incredibly complicated and there are many factors for an enterprise IT leader to consider. And here is where switching costs come into play for enterprises. The reality is that lock-in is a reality in our world and bound to only get more complicated as time goes on.

Replacing one solution with another to avoid lock-in is a red herring. The only real way to reduce the switching costs is to break down the problem into smaller components. That may be easier said than done and simply not possible with many enterprise solutions today.

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