Cloud computing, slated to be a nearly $600 billion industry by the end of this year by Gartner, is one sector that has remained unaffected by the global slowdown due to the changing macroeconomic headwinds.
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Cloud computing, slated to be a nearly $600 billion industry by the end of this year by Gartner, is one sector that has remained unaffected by the global slowdown due to the changing macroeconomic headwinds. It has shown remarkable financial resilience in the face of eroding markets and reduced corporate spending. And for good reason.
Digital transformation needs, driven by generative AI, big data, and ML, have become the core drivers of new investments in the cloud. Organisations have come to realise that the only way to remain competent in the current economic climate is to innovate faster. Unsurprisingly, most of them are opting to rely on the flexibility, organisational agility, and accelerated value realisation of cloud computing to achieve that goal. In fact, according to the Google Brand Pulse Survey, 41.4% of organisations are looking to increase their investments in cloud products and technology.
However, the growth of cloud computing has coincided with the rise of a significant problem: cloud vendor lock-in. Organisations are essentially forced to work with only one cloud provider due to proprietary standards and protocols that inhibit the interoperability and portability of data and applications. According to the data published in the Journal of Cloud Computing, over 80% of companies fear vendor lock-in for failure to meet SLAs. Similarly, fears of data breaches, performance outages, process incompatibilities, costly data migrations, and cyber attacks stemming from the risks associated with vendor lock-in are significant barriers to cloud adoption.
Organisations increasingly prefer to use a cloud-agnostic approach to overcome these challenges. In this blog, we’ll discuss the challenges and how a cloud-agnostic approach can mitigate them.
Basic economics defines vendor lock-in as a situation where companies become highly dependent on just one vendor for certain services due to the prohibitive repercussions of switching providers. This concept, when extrapolated to cloud computing, has organisations inflexibly tied into the services of just one primary cloud provider and are handicapped by the sheer costs, legal constraints, lack of a skilled workforce, and fear of business process interruptions from switching to other competitors. Many vendors also force organisations to sign multi-year contracts and saddle them with proprietary software, effectively manufacturing a vendor lock-in. Companies can also face situations where their workforce is skilled in building only cloud-native applications, i.e., they can only design applications that pair with specific cloud platforms. Young startups, with shallow pockets, can be particularly exposed to the predatory tactics of established cloud services providers. Cloud platforms entice these startups with free cloud credits for upt o a year. But once the credits are up, the small companies can no longer afford to switch to better competitor clouds. Companies caught in a vendor lock-in become vulnerable to the operative ability, pricing changes, centralised downtime, and business viability of the cloud service provider.
One of the biggest lessons the COVID-19-related lockdown taught us was that business agility was key to surviving, even growing, through systemic disruptions. But how can companies become agile and flexible when their operations are tied to the reliability of just one cloud provider, especially when 60% of their entire workload is on the cloud? Here’s why vendor lock-in is such a big issue:
With little freedom to move due to the massive operational scale of shifting cloud providers, organizations are missing out on new opportunities offered by the rapid technological advances in this field. For instance, the AWS EC2 instance M5.large appears to be quite similar to its Google Cloud counterpart with two virtual CPUs. However, AWS provides a significantly higher network bandwidth compared to Google Cloud within the same price range. Businesses solely relying on Google Cloud might not be able to leverage this enhanced network performance available through AWS.
The hold that the three major cloud providers — AWS, Azure, and Google Cloud — have on the market has given them the power to dictate prices, leaving little room for negotiations. As and when they increase their costs, companies are forced to follow suit or risk losing access to critical services. Companies are putting as much as 30% of their IT budgets into cloud computing, taking resources away from other crucial areas.
In 2021, both AWS and Google Cloud experienced outages affecting the services of major firms such as Adobe, Autodesk, and even the New York Metropolitan Transport Authority. And then there was Nirvanix, which stopped its cloud services in 2013 without warning, forcing customers to transfer their data within just two weeks. Vendor lock-in exacerbated the fallout from both of these situations.
While putting data on the cloud is free, taking it out or transferring it to another cloud can be extremely costly. Leaked internal documents from AWS showed that Apple had to pay $50 million for data transfers, and Pinterest was charged $20 million. Rising data gravity, complex data compliance laws, and privacy risks just add to the problem.
But that’s not all. Organisations stuck with one vendor can find it harder to scale their digital infrastructure, update technology stacks, or identify optimisation opportunities. It’s no wonder that organisations are opting for a cloud-agnostic or multi-cloud approach to give themselves room to switch, pivot, or entirely upend their operational model without affecting their business.
Cloud agnosticism refers to a strategic approach to designing applications, tools, and services that prioritises interoperability and portability between different clouds, and even cloud to on-premises, over everything else. The functionality of the applications is entirely independent of the underlying virtualisation system, maximising efficiencies and limiting potential downtime during migrations. Some organisations use the tenets of the cloud-agnostic approach to design applications that can function on multiple cloud platforms to leverage the advantages of each. There are yet other organisations that build products that can seamlessly work on any platform, letting them flexibly move between the cloud and on-premise infrastructure.
With a cloud-agnostic approach, companies can flexibly move between service providers whenever required. Moreover, it also enables you to scale faster and more efficiently. With multiple cloud providers at your disposal, you can capitalise on their varied array of powerful capabilities.
Disruption of business operations is one of the biggest fears associated with vendor lock-in. Outages can be expensive, not just for your bottom line but also for your reputation. But when your applications are built to perform equally well on all platforms, you can simply switch providers when there are disruptions such as outages, security breaches, or performance degradation and maintain seamless business continuity.
Each cloud provider has its own strengths and weaknesses. A cloud-agnostic approach will enable you to cherry-pick the best features of each vendor to build a platform specific to your business needs. Innovative cloud tech from different vendors will help you create a moat around your operations, giving you unmatched functionality.
The ballooning costs of cloud services have compelled organisations to take a closer look at efficiencies that can help lower overall costs. While the upfront investments of cloud agnosticism can be high, its long-term savings offset them. The high ROI and risk mitigation of a cloud agnostic or multi-cloud approach makes it a sound investment.
