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CIOs urged to address the risks of cloud vendor lock-in now

Divina Paredes | Aug. 15, 2017
‘Avoid long-term cloud SaaS contracts and prepare exit ramps,’ advises Forrester.

The shift to public cloud solutions brings risks of vendor lock-in, higher prices and reduced innovation in the future, according to a new report by Forrester analysts Andrew Bartels, Dave Bartoletti, and John R. Rymer.
The shift to public cloud solutions brings risks of vendor lock-in, higher prices and reduced innovation in the future, according to a new report by Forrester analysts Andrew Bartels, Dave Bartoletti, and John R. Rymer. Credit: Thinkstock 

New research from Forrester finds that Amazon Web Services (AWS) and Microsoft Azure will capture almost three-fourths of all revenues in public cloud platforms this year.

The analyst firm notes that in desktop applications, Microsoft, Google, and Adobe already have a combined market share of nearly 90 per cent.

It says public cloud platforms and applications have provided CIOs with new business technology agility, modernity, and financial flexibility to meet the demands of the age of the customer.

But the shift to public cloud solutions also brings risks of vendor lock-in, higher prices and reduced innovation in the future, according to a new report by Forrester analysts Andrew Bartels, Dave Bartoletti, and John R. Rymer.

They write: "Clients rent access to a cloud solution; they don't own it and have it under their control. As anyone who has rented an apartment knows, rentals leave you vulnerable to landlord neglect and rent gouging - particularly if you can't easily decamp to another apartment."

 

'Prepare exit ramps'

CIOs have options with license software. They can skip upgrades or turn to third party maintenance providers to reduce fees.

The SaaS customers do not have these options, they state. If they stop paying the vendor, they lose access to the apps. Their processes and employees are just as tied to the SaaS app as they were to the licensed software apps, making switching costs almost as high.

Thus, Forrester advises CIOs to avoid long-term cloud SaaS contracts, and to "prepare exit ramps".

For many SaaS applications, the three analysts recommend CIOs to keep their contracts to three years or less. They should also start preparing for renegotiation 18 months into those contracts.

"Preparing means looking at alternatives, understanding their strengths and weaknesses, and having access to your data so you can take that to another vendor," they state.

Forrester analysts Dave Bartoletti, John R. Rymer and Andrew Bartels
Forrester analysts Dave Bartoletti, John R. Rymer and Andrew Bartels. Photo via CIO New Zealand. 

The analysts also recommend including private cloud into the strategy.The Forrester report says CIOs may still opt to renew the contract with the SaaS vendor, but their negotiating position is much weaker if they are not prepared to move to another vendor.

 

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