Vendor Lock-In & Proprietary Technology: Ask the Right Questions!

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Vendor Lock-in. Proprietary Technology. Switching Costs. I feel these phrases are thrown out there much too often, more often than they need to be, without giving much of a thought to what the “real” concerns could be.

It is indeed important to be cautious when one’s building systems that would actually run your business. You don’t want someone else to be in a position to just pull the plug from outside. But, how cautious one needs to be and should we be asking that question every time a good option pops up? And more importantly, is the so-called vendor lock-in or proprietary software really that bad?

Consider Microsoft. We have lived through decade of whining around (so-called) proprietary software that Microsoft built. And it has not only lived through it, but Enterprises and individual users alike have made it one of the strongest brands for the last two decades. The reason: “users” of these products didn’t need to get to the APIs, and to worry about the openness of their system. They needed their work done, and it did decently well on functionality (not fantastically but well enough in absence of strong competition). A good question would be on backward compatibility and support, which actually needs to be asked though.

Consider SAP or IBM. They, and some other Enterprise App vendors, built the spines of core enterprise solutions for decades. They have been successful. Reasons: One, enterprises were not savvy enough on technology and they often looked at technology as a sourced-in component of the business. And Two, it did make the “business” run better than otherwise. Three, these worked as self-encapsulated systems that did most of what was required. Integration options opened up when they were needed.

Consider Sony and Bose. Sony uses the vendor lock-in strategy for the peripherals and additional components, ex. Memory card for cameras. In TV and sound systems, they have equivalent examples. Bose uses patented technology, and often terrific, to deliver the quality of sound that people are “ready” to pay premium for. No one’s complaining among consumers. People who complain are the techies in media that want to rip the components apart, do some other stuff with it too.

I think that for a COTS product or platform to “really” provide the value for customers’ money, it needs to have the internal technological strength and some unique ways to address customer problems. And, that shouldn’t be looked upon as proprietary, just because how it actually works is not completely transparent. One needs to differentiate between a closed system and a proprietary technology.

So, here are the questions one needs to actually be asking, and not just throw the vendor lock-in and proprietary software question out there –

  • What functionality am I expecting the product to provide? Does it solve it for my needs for say, next 3-5 years?
  • Is the technological and functional roadmap of the product clear enough? [Are they going to still have the critical functional and technical capability you’re buying them for]
  • Do I anticipate the product or platform to integrate with other systems? What kind of integration capabilities am I expecting? And at what all layers or components, in the order of priority? Are “those” plug points open and accessible enough?
  • Is the (business) data produced by the product accessible? Through APIs, through database access, or through extraction? [For DR, Biz continuity, Reporting, Analytics, Security]
  • To what extent do I need the metadata access? Is it really important for me to have the access the metadata? For what purpose? [mostly this is just a hunch and there may not be a use case]
  • What’s the key technological strength of the product that I’m paying for? Will exposing the underlying technological complexity of the product be counter-productive and counter-functional for the vendor and for me?
  • What’s the upgrade policy of the vendor? Is the contract going to cover the support for existing installations for previous versions? How far back are they ready to go for support? [This is one of the strong reasons for the cloud approach to take off, as the upgrades are transparent to the customers]
  • What are the Exit options, if at all an acquisition or financial risk comes into picture, for the vendor to support the existing installations? How sound is the company background and strategy? [Validating and relying on this, for all we know, could still be futile exercise. We have seen companies like BEA, Compaq and EDS taken over]
  • And this may be happening as well. Are you too scared of making a decision now? What can actually go wrong once you buy the product? Are there ways to address those differently than cutting through the skin?

If you want some real functionality and technological strength for a price, prioritize that and do not confuse a proprietary & strong enclosed technology with a closed & rigid architecture. Asking the right questions is very important. Everything, that is standard today, was once proprietary in our minds until it eventually became common, universal or functionally indispensable.

And also think about the vendor lock-ins that you have for the last 10 or more years because you actually loved them. Or think of your car(s)!

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  1. #1 by Mani Doraisamy on August 30, 2010 - 12:41 am

    Great post, Ashish.

    I think, there is significant difference in lock-in between applications and platforms:
    – If it enterprises are using an application, they dont mind using a proprietary technology, IMO.
    – But when ISVs are building applications/competency on a platform i.e. their business strategy, they dont like lock-in. Having pricing & business continuity dependency on another company (especially if the other is a smaller company), is a big risk for them.

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