Is SaaS Prone to Vendor Lock-In?

Is SaaS Prone to Vendor Lock-In?

Every organization should consider this: how easy is it for me to switch software vendors without having wasted a lot of work and/or having to redo part of that work?

Many organizations don’t know whether they are dealing with vendor lock-in or what the consequences might be. Are they lacking the knowledge, or do they simply care about the price?

With this blog, I want to make you aware of the risks of vendor lock-in in SaaS applications in general and digital asset management systems (DAMs) in particular. After reading this blog, you’ll also know how to recognize vendor lock-in and how to prevent it (next time)!

What Is Vendor Lock-In?

According to Wikipedia:
“Vendor lock-in makes a customer dependent on a supplier for products and services because they are unable to switch vendors without substantial switching costs or inconvenience.”

That’s the definition.

Wikipedia goes a step further by quoting M.H. Paapst (Barrières en doorwerking, Dissertation, University of Groningen, pp. 21–22):

“To speak of vendor lock-in, there must also be a superior or better alternative that the customer would want to switch to. If no superior or better alternative exists, then the chosen solution is optimal and the customer will not consider their dependency on the vendor as a lock-in.”

In my opinion, this addition is heavily biased; even if you don’t mind not being able to switch or if there is no superior alternative, it still constitutes vendor lock-in. If you would experience substantial switching costs or inconvenience when switching, that is vendor lock-in. A product can be cheaper or easier to use without being directly superior to your current product. If you already know you’re stuck with your vendor, this alone might discourage you from even looking at alternatives. Talk about vendor lock-in!

Why Should Vendor Lock-In Concern You?

I know plenty of organizations that don’t mind being tied hand and foot to their vendor. But the largest group simply doesn’t know that they are tied hand and foot to their vendor!

Of course, it may not be a problem for now—the product works as it should, the vendor is easy to deal with, and you haven’t found an alternative that comes close to what their product offers.

But planning ahead is key… Yes, it’s a cliché, but in this case a very legitimate one. Perhaps you want to grow, downsize, or take a different direction. Maybe the product isn’t being developed further, and you’re drifting away because you continue to evolve with the market…

Keep in mind that for many companies, vendor lock-in is a business model. The regular costs may be lower than the competition, but once you part ways, you often end up paying far more. I know situations where companies even had to pay double because their old system’s data couldn’t be imported into the new one.

Many organizations want to switch but simply can’t afford to.

Only on a Large Scale?

I’ve encountered vendor lock-in at many levels. Usually, it involves large or specialized software packages. Recently, I discovered at a client that vendor lock-in has even made its way into WordPress themes!

Some themes store page and post content in their own tables, which are not read when switching themes. This makes it look as though your content has disappeared. The small company in India behind the theme offers to convert the content for a fee but recommends using one of their themes to avoid the issue altogether.

This example involves small costs, and with some (SQL) skills, you can extract the data yourself. But it’s only a matter of time before a theme starts storing content encoded.

Government agencies and large companies are more aware of vendor lock-in and usually include content transfer requirements in their contracts, but even there, it still happens far too often that they become tied to a vendor. These constructions might make the initial solution cheaper (and often involve bundled sales), but you can’t easily switch vendors if you later discover the solution doesn’t align well with your needs or workflow.

Of course, you can always switch, but you need the vendor’s cooperation—and as you can guess, that will cost you dearly. The solution is often so custom-built that it can’t be reused in another system, leaving you with unusable content. What seemed cheap turns out to be extremely expensive, so most organizations stay where they are…

How Do You Prevent It?

Another cliché: prevention is better than cure.

You can include in your contracts that content must always be exportable in a format specified by the client if you switch vendors. This alone gets you a long way. Reasonable costs may apply.

Another option is to require that the software handles content in accordance with industry standards.

What Really Belongs to You?

The content your organization creates and puts into a system is always your organization’s property, unless contractually agreed otherwise. In DAM systems, content includes documents, photos, etc., but also the metadata associated with these files. It’s crucial to stipulate that you receive all forms of content in a generally usable format after terminating the contract. This includes metadata and, if necessary, the linkage between the metadata and the associated file.
Metadata added by the vendor may also be valuable for your organization.

You can debate what constitutes a “generally usable format,” but compliance with industry standards is a common requirement. A vendor may charge a reasonable fee for this, depending on storage method, volume, and metadata structure.

What Are Industry Standards for DAM Systems?

For DAM systems, several industry standards exist. File formats are usually simple: whatever you upload is what you should get back. Metadata, however, is more complex. For both the organization and the vendor, metadata is essentially the “gold” of the system and must be well-defined.

Not all vendors follow the same approach, resulting in differences in how data is returned. Metadata storage generally falls into three categories:

1. Sidecar file

2. Database

3. Embedded in the file itself

Sidecar File

This is a separate file, often with the same name as the asset but a different extension. Sometimes it contains a preview (THM). Other common extensions include: XMP, IPT, IPTC, XML, MIE, and INFO.

Sidecar files are often plain text, but I’ve often seen them encoded—an immediate red flag for vendor lock-in…

Reading and decoding them can be time-consuming due to the sheer number of files.

Database

When metadata sits in a database, it can often be exported easily to another database format or even a text file or Excel. This is usually straightforward and not time-consuming. Exporting thousands of rows typically only takes a few hours.

Embedded in the File Itself

This is the simplest and therefore preferred method.

Most file types support embedding metadata directly in the file using IPTC/XMP. The major benefit is that once you receive the files, the metadata is already included—no need to match or retrieve anything.

In Practice

As many vendors as there are, there are ways to store metadata. Many inexpensive systems make it difficult to extract images along with metadata.

Metadata may sit in a database and be exported through convoluted, proprietary structures not usable by other systems. Converting, restructuring, and importing this data into a new DAM can easily cost hundreds or thousands of euros. Many organizations shy away and decide not to switch.

DAM systems that follow IPTC/XMP standards have a major advantage. The metadata is recognized by other programs (like Adobe Photoshop), and you avoid conversions and high costs.

You can continue working immediately after transferring content—no expensive import/export process. Even better… No vendor lock-in!

Do You Always Need to Escape Vendor Lock-In?

As mentioned, vendor lock-in doesn’t have to be a problem if you’re satisfied with the situation.
Still, I always advise asking about the costs and conditions for exporting your content—long before you actually need to. Vendors who use lock-in as a business model can smell urgency or know your contract is ending… In those cases, you will always pay top price.

You don’t have to escape vendor lock-in, but you should make sure you know whether you are in one, and what it would cost to get out.

Conclusion

SaaS is not inherently more susceptible to vendor lock-in than non-SaaS solutions, but because the entire system runs externally, it may feel more vulnerable. Before signing a contract, it’s important to ask about content export options and associated costs. Make sure this is documented!

If you do find yourself trapped in vendor lock-in, there are often still ways out. Determine the following:

• how business-critical the information is

• how much time remains before the contract ends

• what to do with new content in the meantime

• whether you can still negotiate with the vendor

• what your budget is to safeguard your content

• what role your new vendor can play

Not sure whether you can switch easily? Ask your vendor, or let an independent party take a look. DAMsupport is happy to help.