Vendor Lock-in Issues with your Cloud-based CRM: What to do about it?

Vendor Lock-in Issues with your Cloud-based CRM: What to do about it?

For any business enterprise, the primary concern is customer satisfaction. Companies go above and beyond to provide the best service possible to their customers, and any technology that helps increase efficiency is always high in demand. Customer Relationship Management (CRM) systems have been dominating the customer service sector for a while now. Such systems enable companies to handle customer data, as well as office-internal data.

The high demand for organised and accessible data for businesses of all kinds and sizes combined with the need for affordable and manageable data storage options indicate that Cloud-based CRM systems are here to stay.

Why choose cloud-based technology?

Generally-speaking, these are the main reasons companies are choosing cloud-based technology:

  • Setting up and managing an onsite data storage facility is a huge expense. The hardware needed to set it up and the electricity cost to run it will eat into the capital of a business, which could be fatal to startups.
  • Flexibility, accessibility: Unlike onsite data centers, data stored on a cloud based technology is accessible from anywhere and flexible for the customer’s needs.

Customer Relationship Management solutions

How to choose a CRM vendor

CRM softwares are used by businesses of all kinds. These days, it is an established expectation that a company should have a CRM software for effective customer service. However, not all of these businesses have a clear idea of the full functionality of CRM software.

Like most things that you spend money on, if you don’t have clarity on how you are going to use the CRM software for the specific purposes of your company, you will be wasting money.

The following are things that you need to be careful about when finding a suitable CRM:

  • Identify the problems you are facing in your customer base, be it limitations on reaching people, your marketing strategies or customer service. If you don’t know why you need a CRM software, you won’t be able to use it effectively.
  • Understand the benefits and functioning of the CRM software and check if they match with your needs. This will help you narrow down the type of CRM software you need.
  • A CRM vendor is as important to your business as your employees. Do as much research as you can before you choose a CRM. Just as with any long term investment, look at all your options and compare the features they offer with your needs. Go through user reviews.
  • A CRM that gets too complicated to use can turn out to be a huge hindrance. Make sure that you opt an easy-to-use CRM and a vendor who is ready to explain its functionality to you.
  • Finally, the most important aspect of choosing a CRM is finding a reputable vendor. Once you hire a CRM vendor, you commit to a long term business relationship with this person. It is extremely important that your CRM vendor is willing to cooperate with you for as long as you work together. A reputable vendor is more likely to have experience of working with a growing business and can be expected to assist you as your business grows.

Vendor lock-in

What is vendor lock-in?

As mentioned, when you choose a CRM vendor, it is most likely a long-term commitment. This is partly because it can be very difficult to switch vendors after working with one for some time. CRMs have a disrepute for this reason. It is often reported that CRM vendors refuse to cooperate with data transfer when the customer decides to switch. Transferring data to a different platform gets especially difficult with cloud-based CRM software.

In addition to being cumbersome to transfer data from one platform to another, some vendors add in an extra clause in the contract which could make switching vendors an expensive process. This is called a vendor lock-in.

In essence, a vendor lock-in means you get stuck with a vendor even if they underperform, change their services, drastically increase prices or even go out of business.

Measures to avoid a vendor lock-in

There are several ways you can avoid yourself from vendor lock-in issues:

  • Establish expectations before entering a contract. Often, people sign terms and agreements before reading it completely through. Fine print is often overlooked when going through a contract. A lot of vendors take advantage of this tendency but adding in terms such as compensation on switching to another CRM. Make sure that you go over the terms and conditions, sign only if they are convenient for you.
  • Ask the vendor what their policies are on termination of services, and the services they are willing to offer during the migration.
  • Emphasise on the terms of termination and migration when you sign a contract with your service provider.
  • A lot of service providers automatically renew contracts at the end of a term. This is often convenient for the customers but this can be used to make it difficult for you to disengage their services. Be aware of the terms of your contracts so that when you decide to terminate it at some point, you can opt out of renewal.
  • Be prepared for a potential change of data storage platforms. Structure your data to be functional on different platforms. It is likely that your data will be manipulated to fit the CRM you commit to, but this can make it extremely difficult to transfer to another CRM. Store your data in formats that are compatible with several platfroms. Make it structurally easier to disengage with the platform you are currently using.
  • Multicloud: Multicloud ensures that your data is distributed over several cloud platforms and several vendors. This way, cloud migration is made easier.
  • Have a backup vendor: A lot of people prepare backup vendors to enable fast and smooth transition from one vendor to another. In addition to choosing a backup vendor, it is important to build a relationship with them beforehand because it can save a lot of time when you have to eventually switch.

Cloud-based CRM system


The number one mistake a company makes when considering a cloud-based service is neglecting the vendor lock-in issue. When discovering that their software is no longer suitable for the company’ needs, decision makers are finding themselves vulnerable to changes as they are unable to adapt their CRM system in response to those changes. Migrating the system becomes an expesive and complex endeavor.

The good news is, it doesn’t have to be that way. Following the tips above in avoiding the potential vendor lock-in can give your business a better chance to minimize the costs and disruptions caused by changing CRMs.

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