Well, lock in is big. It's the thing that makes the sales geek's eyes light up and the CxOs to go "ooo."
The company I am working for is contemplating SaaS. We have a customer base that is currently really dependant on some rather niche third-party apps to get their work done. They then hand the data off to us, and we push the button to create goodies. The thing is that we have customers that vary from the ma an' pa, to the fairly enormous. Ma an' pa have a little trouble affording [X] worth of licensing every couple of years just to get data to us.
A little bit of brainstorming between the developer of these apps, (we are usually the supplier of them to our customers, along the other services we provide,) and the devs were coaxed into allowing a SaaS model. Offer up the app running in a VM inside our server farm. Get all the devs to agree, and hey, now you can rent a VM from us for a [Y] a year, (or whatever the sales geeks set,) and use the apps to your heart's content. The data is already in our warehouse, so you push button, receive bacon from a goodies side. Great for Ma an' Pa, they don't have to shell out so much, and can still get work done.
The kicker is, however, that all that data lives in our little cloud, and we own the licenses to everything, and the hardware, etc. etc. etc. Leave, go ahead, but to where? If you go anywhere else, you have to buy that full suite of apps, because our competition simply isn't there yet. Even if they were, we have your data.
I'll be honest, the SaaS bid for a mid-sized business like ours is a gamble. We are cutting our teeth on the technology, trying to build a small, google-style whitebox datacenter, with ultra-low costs, while still providing all the uptime, backup, redundancy etc. So far as I know, our team is the only one in our industry on our continent even capable of attempting this. In trying to pull this off, we work out all the bus, we broker the deals with the providers, and we do all the legwork getting customers used to the idea. The next guy in simply has to copy, and *bang* instant problems.
The idea of locking the customers in hard, and locking them in early is the only way this would even be financially viable. If customers could simply rotary shop for the lowest price on something like this, it’s be unimplementable. Our industry has razor thin margins as it is, we couldn’t afford to subsidize a cloud setup for our customers the way some of the larger behemoths in our industry could.
Those are the issues of a medium enterprise in North America. When you deal in customer numbers on the scale of Google, the reason for lock in becomes ever more understandable.
Anonymous Coward so as not to be giving away ideas to our competition. :)