What are the switching costs from moving from one cloud vendor to the other?  Can vendor lock-in ever be valuable?

Top Answer : I've been on the end of being told to run the script that costs a quarter million dollars, and it's not a fun experience. It's like, "Hi, can I get that request in triplicate, and double approved?" Because you're going to cry when you get the bill. So it really comes down to two drivers.  One, where you’re going, "Ooh shiny! I have to be in the cloud because it's the thing." I hear that every single day from people that work in more traditional industries like banking and finance. Finance for the most part, but also people that have lots of compliance issues, or reporting, or get to deal with auditors. Especially when you have you're on the edge of a finding against you. And it's because someone spoke incorrectly or did not interpret the same thing in the same way. Then, you also have the mandate of, "I must do it this one way,” and not every problem is the same. And sometimes you have benefits by using certain technologies. And you have additional cost by paying for that 10, 20, 30, 100 milliseconds latency that you incur.  Those are all business and technical decisions that have to be negotiated. I think the huge problem is that people don't talk about these things when they make a lot of these decisions.

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Blue Processor
Software
I've been on the end of being told to run the script that costs a quarter million dollars, and it's not a fun experience. It's like, "Hi, can I get that request in triplicate, and double approved?" Because you're going to cry when you get the bill. So it really comes down to two drivers.  One, where you’re going, "Ooh shiny! I have to be in the cloud because it's the thing." I hear that every single day from people that work in more traditional industries like banking and finance. Finance for the most part, but also people that have lots of compliance issues, or reporting, or get to deal with auditors. Especially when you have you're on the edge of a finding against you. And it's because someone spoke incorrectly or did not interpret the same thing in the same way. Then, you also have the mandate of, "I must do it this one way,” and not every problem is the same. And sometimes you have benefits by using certain technologies. And you have additional cost by paying for that 10, 20, 30, 100 milliseconds latency that you incur.  Those are all business and technical decisions that have to be negotiated. I think the huge problem is that people don't talk about these things when they make a lot of these decisions.
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Pink USB Stick
Professional Services
And this is part of the reason why I get really amped up when people start talking about lock-in. I wrote a post several years ago about how enterprise lock-in is a red herring. My argument behind it was based on what we did and what companies still do today, which is... there are real switching costs. There are real business impacts to making a change from product A to product B. There's pain involved, there's risk involved, there's cost involved whenever you make a change. And so that's just one of many aspects.  But the other piece is, there's actually benefit in being in the company of other customers like me. And so being with a larger company, as opposed to a smaller company, or having that lock-in into a specific provider, I also might benefit from that, in the sense that those add on products that lock me in are the same products that are providing value for me.  For example, on public cloud services, it's not the core foundational services where I get the best value. It's the things that are built on top of that...the services I consume, as well as the applications I build to be able to use it. That does build in lock-in, but I would argue that there's actually value I get as a customer from that.  And so I do agree with Mark in the sense that at some point, I think you need to have a suspicious side to say, "Okay, well, if they're going too far afield, I need to know when to get off that track and head in a different direction." I think we've seen a number of companies that have really kind of led us astray, at least from a customer standpoint. I could name off companies that I would love to have been able to just throw out the window, but the reality is those switching costs are significant. And I don't just mean the cost to the CFO. I mean, the cost to the organization in terms of risk, resources, etc.  It's not as simple as just saying, "Hey, I'm going to pick up my ball and take it somewhere else to play in a different playground." It doesn't work like that. The other thing is, the decisions that we make as enterprises.  We can argue separately as to whether this is right or wrong and should change. But the decisions we make as an enterprise today, we will stick with for multiple years in the future. And that's been played out time and time again. I think there are some risks to that, but I also think there are some rewards to that kind of approach. I would say that the people who are arguing against lock-in today in the public forums like Twitter, are also people who haven't had to live with a budget and an organization that they've had to manage, and understand all the ramifications of making that switch. They may see it from a standpoint of, "Okay, I'm in the cheap seats and can see, 'Oh, well, that quarterback should have gone here, and that head coach should have made that decision.'" Okay well, when you're on the field, it's a totally different scenario. And I think that's the problem here.  It's the difference between, have you actually carried a budget? Have you been responsible for an organization? Have you had to make that argument or not?
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