Technology lock-ins often hold organisations back from achieving greater success, but cloud solutions are the answer, according to Fronde, the Auckland based software company.

The company says, one of the single biggest barriers to an organisation's ability to adopt a digital strategy is the impact of capital depreciation and multi-year licencing contracts from legacy IT investments.

James Valentine, Fronde chief technology officer, says, “Nimble start-ups are using technologies like cloud, mobile, social media, the Internet of Things, and analytics to create new ways to take market share away from traditional, local-based businesses.

“Traditional businesses must invest in digital transformation programmes both to adapt to the threat and to capitalise on the growth opportunities these new technologies can present.

“Unfortunately for established businesses, they often rely on legacy systems that are neither easy nor cheap to replace. Compared with start-ups, who are not locked into any technology, this weakens traditional businesses,” he says.

Standard procurement practices include multi-year software licencing agreements and capital investment. These agreements cannot usually be changed if the company experiences operational or strategic business changes, locking the organisation into potentially high residual costs, Fronde says.

According to Valentine, cloud technologies are the answer as they provide access to infrastructure and software on a pay-as-you-go basis, and you can scale up and down fast as needs dictate.

“Companies who let themselves be locked in to on-premise equipment or software licencing agreements will find it difficult to accelerate digital transformation initiatives, which in turn makes it difficult to compete in the current marketplace. It is crucial for organisations to break the cycle of lock-in and retain freedom of choice when it comes to technology, or risk being surpassed by the new, agile start-ups,” he says.