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Key Takeaways AI is aiding disintermediation and quietly removing vendor lock-in. It reduces the technical effort and cost of migrating, making it easier for businesses to switch vendors and move their data.
For buyers: Before renewing, price the exit. Get a rough scope for moving your data and integrations somewhere else. Ask your vendor for a full export of your data in an open format, and then negotiate a lot harder.
Since customers of “sticky” legacy providers are no longer trapped, smaller vendors can step in and give those clients what they actually need, and offer to handle the migration — the part that used to kill these deals.
I was talking to a founder who builds software for banks, and we drifted onto a theme I have not been able to let go of since: AI is aiding disintermediation and quietly removing vendor lock-in.
If you think of old-school tech lock-in, perhaps the best example you can think of is banks and mainframes. The code is decades old, the vendor knows everything about it, and nobody on the inside wants to touch a migration. This is the founder’s business. Between the contract lengths and the termination fees, he told me, “It’s very, very sticky, and it’s very, very hard to move away.”
That stickiness has been the business model for a big chunk of enterprise software. I think it is about to stop working, and the way I would frame it is as an opportunity for small businesses, in two different directions.
Understand what made lock-in work
Software vendors in particular assumed that if they served a piece of your technical infrastructure, they would be tricky to get rid of. And for most of the last few years, this has been true. If you provided someone with their core banking infrastructure, or the CRM system they use to manage their sales and customers and so on, well, it was risky to migrate away from you. Companies like Salesforce have managed to latch onto a huge part of the digital economy simply by being the vendor of choice and making it very difficult, risky and cumbersome to leave.
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