Technology stagnation: Imagine you invested millions in an ERP system that was state of the art when you first implemented it. Although the vendor continued to update its software, other ERP solutions began to outpace it in terms of offering new features, functionality, and delivery models, such as SaaS. You begin falling behind newer, digitally advanced competitors who are operating on more modern technology, while you have to wait for the next software update to get capabilities they already have. This type of technology stagnation can quickly stifle innovation and agility, making it difficult to respond to market risks and opportunities alike.
End of support: Similarly, what if the system you’re running gets sunsetted? You may be able to prolong its life by modifying it to perform new functionality, but eventually you will be forced to replatform — that is, take all your data and port it over to a new system — which is a potentially costly, lengthy, and highly disruptive process.
Unanticipated costs: One of the great advantages of data and application portability is that you are free to shop around for solutions that deliver the most value — a new cloud host or a new development platform, for instance. But if your company is locked in to a particular vendor’s technology, the vendor has little incentive to let you go — and you may become vulnerable to onerous charges, or a shift in cost structure that is not to your advantage.
Technical debt: One strategy to overcome technology stagnation if you are locked into a single vendor is making costly and complex modifications to the system’s source code. This type of customization can expose your organization to the risk of technical debt.
Technical debt accrues when you take shortcuts to build applications and solutions quickly, only to have to spend time and resources fixing them down the line. If, for example, you make changes to a proprietary software system you’re locked into, those changes could break (or simply be overwritten) with the next update, placing you in technical debt. The cost of this debt — in terms of both the resources you’ve spent and the opportunity costs of time wasted — can significantly hinder a company’s ability to innovate, adapt, and grow.
Complexity: Another approach to dealing with vendor lock-in is to add more and more point solutions to get work done. But this leaves users working across multiple interfaces. The situation is even worse if the data that feed these additional solutions — and the data they generate — are not shared with each other or with your core systems. The risk of duplication, error, and inefficiency increase significantly.
Platform dependence: Some low- and no-code application development platforms can create vendor lock-in, while others can liberate your business from it. In the case of the former, consider this scenario: suppose you’ve created several mission-critical applications on a low-code platform, then decided to switch to a better-performing platform. With some platforms, it’s possible that the applications you’ve built can run only on that platform. They use a proprietary runtime engine to run applications, or produce non-standard code. This can leave your business dependent on the platform to run the apps you’ve invested in building.