Supplier lock-in has been a major issue with savvy decision makers for many years, and with good reason. Allowing your company to be overly subjugated to a specific supplier (often with little control of the situation) often turns into a monopolistic relationship. The script gets flipped and rather than exercising your buyer power, you become the passive party, beholden to any changes in terms and conditions having little power to stop it. Unfortunately, with the exodus from data centers to the cloud, companies are now finding themselves being locked-in to AWS, Azure or Google with their increased need for cloud flexibility and scalability in an uncertain post-covid world. In order to avoid this predicament, clients should assess, plan, and eventually enable a multicloud strategy.
Click here to get NET(net)’s Multicloud Strategy eBook.
The risks of lock-in or ‘standardization’ are well known, but bare repeating here for context:
- Negotiating favorable pricing is more difficult after the initial agreement because the suppliers have full visibility in your consumption patterns and the unique services and workloads that create high barriers to change or ability to move to other platforms. There is also increased pressure and incentive from Sales teams to set incremental commitment growth in agreement renewals and less flexibility on contract terms.
- While providers incentivize clients with migration credits to accelerate workloads migration, many are challenged to meet the timeline and bare the risk of receiving less credits than anticipated and at same time experience escalating costs and little ability to revert back to data centers.
What about the ‘best of breed standardization’ argument? Many companies argue that standardizing on the ‘best’ platform should position you for maximum success. Certainly, at the start this is the lowest risk proposition in the short-term, however, as a long-term strategy you will certainly pay more later. And usually, a great deal more. Remember, what is ‘best of breed’ today, could be tomorrow’s rotary phone. Best of breed will be different for varying use cases.
For example, a simple file server is likely to stay at commoditized pricing, whereas an integrated ERP platform may require specific features that are only offered by one vendor. However, if your IT investments are a “portfolio” then portfolio theory suggests you should mitigate risk by spreading investments across numerous investment types and suppliers.
Multi-cloud strategy is way to mitigate these risks and solidify your position for the long-term, and ensure you are always in the driver’s seat with your supplier relationships by providing:
- Flexibility to choose cloud services from different cloud providers based on the optimal combination of pricing, performance, security compliance requirements, and geographical location
- Ability to rapidly adopt “best-of-breed” technologies from any vendor, as needed or as they emerge, rather than limiting customers to whatever offerings or functionality a single vendor offers at a given time
- Reduced vulnerability to outages and unplanned downtime
- Compliance with security and operations regulations in the market you serve. These regulations and providers capabilities vary greatly from one region to another
- Reduced exposure to a sole provider’s licensing, security, compatibility, and other related issues
Multicloud management does comes with some challenges including:
- Consistently deploying applications across target environments (e.g., development, staging, and production) and various hosting platforms
- Maintaining set of common cloud security and compliance policies across multiple platforms
- Ensure logging and monitoring tools are set to create a singular view and configure consistent responses
- Sustained knowledge and expertise across different cloud platforms
- Lower potential discounts as you aren’t committing the entire estate to one company
Said another way, a multi cloud approach requires further investment and planning for right sized implementation. But in the long-term (two to five years+), you will reap the benefits in being an independent decision maker, and by positioning your company with predictable cloud cost and greater flexibility to take advantage of innovation and changing market conditions.
Remember, you don’t have to ‘boil the ocean’ and can start off small. Even if you only begin by running test environments and or beta platforms. Creating a risk-free, small-scale test environment or running small application environments can yield much in terms of learning and experience. Teams can gain a tremendous amount of confidence enacting these programs and can even transfer this process to other suppliers and technology stacks, mitigating risk and reliance on a monopolistic style relationships.
Your added workloads and instances can be allocated around, and risk mitigated across the entire enterprise.
With multicloud, you are controlling and managing your relationships for best outcomes as well. In our experience, nothing good has ever come from a buyer-supplier relationship wherein the buyer has no other options. The worst part? Suppliers know this and are actively working to lock you in as much as possible now. There are multiple reports of AWS salespeople getting more and more aggressive seeking lop sided terms with customers who already have little leverage. Microsoft as well, where they are able to leverage its licensing advantage for unfavorable Azure terms. What will happen on the next renewal when they are even more entrenched? You already know the answer.
Contact us anytime to have a chat about your situation. We may be able to help, we may not, but we will tell you what we think so you can make better decisions. Again, check out our eBook on multicloud and let us know what you think!
About NET(net)
Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get and keep more economic and strategic value. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client captured value in excess of $250 billion since 2002. NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact us today at info@netnetweb.com, visit us online at www.netnetweb.com, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and relationships.
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