The Risks of Over-Relying on Large Software Companies: A Cybersecurity Perspective

While large software vendors offer robust, reliable, and scalable solutions to address business needs, becoming over dependant on a single vendor can undermine the very efficiency and security that businesses seek to enhance. When coupled with some of the anti-business tactics employed by some of these companies, it can pose a serious financial and security risk to your company.

While organisations, especially enterprise grade and tech companies, chose large software vendors for reliably addressing their needs in a way that is scalable, with decent customer support, and extensive help resources available, there also come many risks associated with them. In this blog I will discuss these risks and the pitfalls of becoming over-reliant on large vendors and how to avoid them.

Vendor Lock-In

Vendor lock-in is a serious business risk and seems to be an increasing problem. If you rely on Palo Alto networks for your firewall and threat detection, for example, switching to a different provider means costly migrations, reconfigurations, and staff retraining. This creates a high financial and operational barrier to cross, which gives your provider plenty of room to hike up prices, knowing it will still be cheaper for you to stay with them. This often leads to budget overruns and financial strain for businesses that cannot easily transition away.

Large software companies are increasingly leaning into the proprietary nature of their products and services for exactly for this reason – and no one does this better than Apple. Apple’s operating systems (iOS, macOS, watchOS) are designed to work exclusively with Apple hardware like the iPhone, Mac, and Apple Watch. Features like AirDrop, Continuity, and iCloud allow these devices to share data effortlessly, creating a user experience that’s difficult to replicate with non-Apple products. But it’s not just an ecosystem of products and services designed to work seamlessly, it’s an aggressive handicap on compatibility with third-party products and services. You really need to buy Apple and only Apple to get the best experience. And once locked-in, you’re in it for the long run. A good example of this is that Apple have recently come under fire with a lawsuit from the DOJ for offering enhanced security and privacy for iPhone-to-iPhone messaging, but not iPhone-to-Android messaging, when they could easily do both. It is alleged to hurt the competition and users, all in the name of

And while Apple might be the best at leaning into vendor lock-in, there’s no sector worse for it than cybersecurity – for one simple reason: switching providers could disrupt your entire security infrastructure, exposing you to costly cyber risk. Security solutions are deeply integrated, often with custom integrations. New tools might not be compatible with your existing infrastructure and switching often results in costly system downtime, a learning curve for your staff and data migration challenges. Together, these can seriously weaken your overall security posture, putting you in an even more difficult position.

Another downside of vendor lock-in, is that it makes the vendor lazy. Once a vendor has a decent customer base, there’s less incentive to spend more on updates and new features when they can rely on continued loyalty due to vendor lock-in. This leads to situations where you buy a solution which, at the time, offers a decent purchase, but in a few years that same solution won’t be keeping up with your changing business needs – and you’ll probably be paying more for it at that point. So, it’s worth taking this in to consideration when planning software purchases.

Here’s how to avoid vendor lock-in:

1. Go for a multivendor approach – While this does avoid lock-in and generally offers better security and flexibility, it’s an option that’s only available to mature security teams with higher budgets and more technical know-how.

2. Ensure data portability – Choose solutions that allow you to easily export data and provide tools or APIs for data migration. This avoids data migration issues.

3. Document your configuration and processes – Keep thorough documentation of your security architecture, configurations and procedures to ease the migration process.

4. Develop an exit strategy – Create a well-defined plan for transitioning away from a vendor, including timelines, responsibilities, and procedures for data migration and system reconfiguration.

Single Point of Failure

Depending on a single cybersecurity vendor can create significant risks if that vendor experiences any technical issues or cyberattacks. For example, if Microsoft’s cloud-based security services like Azure Sentinel face downtime, companies relying solely on this service could see their security monitoring and response capabilities severely compromised. Such single points of failure can bring business operations to a halt and expose you to increased security threats.

Over-reliance on one vendor means that any operational failures on their part directly impact your business. A prime example is the SolarWinds cyberattack in 2020, where hackers compromised the company’s Orion software, affecting numerous organisations that depended on it for network management. The breach underscored the dangers of relying too heavily on a single vendor, as it exposed critical systems across multiple industries.

While the recent CrowdStrike outage might seem like another example of this, there was really no way around that one besides not using CrowdStrike – since it wasn’t just the CrowdStrike Falcon software that failed, but an entire system failure on anything running it.

How to avoid single points of failure:

1. Adopt a multi-vendor approach – Avoid putting all your eggs in one basket by employing solutions from different vendors for various needs. For example, use one vendor for cloud storage, another for cybersecurity, and yet another for CRM. This approach reduces dependency on a single provider and mitigates the risk if one vendor experiences a failure.

2. Implement redundancy – Create redundant systems and backup solutions to ensure continuity if one fails. E.g., use a multi-region cloud deployment in case one data centre goes down.

3. Leverage cloud solutions with multi-cloud capabilities – Utilize cloud services that support multi-cloud environments, allowing you to distribute workloads across different cloud providers.

4. Monitor vendor performance – Regularly monitor and evaluate the performance and reliability of your vendors. Stay informed about their service levels, security practices, and financial health to anticipate and address potential issues.

Lack of Customization

Large software companies often offer standardized solutions that may not align perfectly with specific business needs. In cybersecurity, this can mean that a company’s unique security challenges are not fully addressed. For example, a business with specialised data protection needs might find that off-the-shelf solutions from a large vendor lack the granular controls necessary to meet their security requirements, leading to inefficiencies and vulnerabilities.

Big vendors may also be slow to adapt their products to emerging threats or specific client needs. In the cybersecurity, where new threats pop up all the time, this can be particularly problematic. Often, if a new type of cyber threat emerges, a large vendor might not prioritize the development of a solution quickly enough, leaving their clients vulnerable in the interim. It’s often smaller vendors who offer new solutions to deal with new threats.

How to avoid a lack of customisation:

1. Prioritize flexible platforms – Choose solutions that allow you to tailor features, workflows, and interfaces to better align with your business processes.

2. Integrate with Other Tools – Use software that supports integration with other tools and systems. This allows you to combine different technologies and build a more customized solution by linking various applications together.

3. Utilize APIs and SDKs – Leverage these tools to build additional functionality or integrate with other systems.

4. Negotiate for customisation options – During the procurement process, negotiate for custom development services or configuration options that are tailored to your business needs.

Data Security and Privacy

Using large software vendors, especially those operating internationally, can raise concerns over data sovereignty and compliance with local regulations. For instance, a company using Microsoft’s cloud services might face challenges in ensuring that their data remains compliant with GDPR or other regional data protection laws, particularly if data is stored in servers located in different jurisdictions.

Although large vendors typically employ strong security measures, they are also prime targets for cyberattacks. A breach at the vendor level can compromise your business’s data security. The 2021 cyberattack on Kaseya, a major IT management software provider, is an example where hackers exploited vulnerabilities in a widely used platform, impacting numerous businesses globally.

How to avoid data security and privacy issues with large software vendors:

1. Maintain data ownership and control – Choose software solutions that allow you to maintain full ownership and control over your data. Avoid vendors that restrict your access to your data or make it difficult to retrieve and move it if needed.

2. Implement strong encryption practices – Use strong encryption to protect your data both at rest and in transit. This ensures that even if the vendor’s system is compromised, your data remains secure and inaccessible to unauthorised parties.

3. Adopt a multi-cloud or hybrid cloud strategy – This approach distributes your data across multiple platforms, reducing the risk associated with a single vendor breach or failure.

4. Conduct regular security audits – Regularly audit the security practices and infrastructure of your software vendors. Ensure that they meet your security and privacy standards and are compliant with relevant regulations.

Innovation Stagnation

Heavy reliance on third-party cybersecurity solutions can lead to complacency within an organisation, reducing the incentive to develop proprietary tools or innovative strategies. For instance, if you depend entirely on Cisco’s security suite, you may overlook opportunities to create custom solutions that could better address your specific threats or operational needs, losing a potential competitive advantage.

Dependence on large vendors can also limit your ability to experiment with and develop unique solutions. Without the need to innovate internally, companies might miss out on creating tailored security tools that offer enhanced protection and operational efficiency.

How to avoid innovation stagnation with large software vendors:

1. Develop in-house capabilities – Invest in building internal development teams and innovation labs. For example, create a dedicated R&D team tasked with exploring emerging technologies like AI, blockchain, or IoT, and developing prototypes that could be integrated into your existing operations.

2. Use multiple vendors and technologies – Avoid relying on a single vendor for all your technology needs. Diversify your technology stack by incorporating solutions from various providers and open-source communities.

3. Engage with startups and niche providers – Engage with startups and smaller niche providers that are often at the forefront of technological innovation. These companies are typically more agile and willing to adapt their products to meet your needs, which can drive innovation in your business.

4. Regularly review and adapt your technology strategy – Regularly review your technology strategy and the tools you are using. Stay informed about new technologies and trends that could benefit your business and be willing to adapt your strategy as new innovations emerge.

Loss of Control

The strategic priorities of large software vendors may not always align with your business goals. For example, if your cybersecurity vendor decides to focus on different market segments or discontinue certain products, your business could be left without critical tools or support, forcing you to scramble for alternatives.

When relying on a large vendor, you are at the mercy of their product development roadmaps. If a cybersecurity provider like Symantec decides to deprioritize certain features or delay updates, your organization might struggle to keep up with evolving threats or compliance requirements.

How to avoid loss of control:

1. Use multiple vendors – Spread your reliance across several vendors instead of putting all your eggs in one basket. This reduces the risk of losing control if one vendor changes its policies, pricing, or strategic direction.

2. Negotiate favourable contracts – When negotiating contracts with large software vendors, ensure that the terms protect your business interests. Include exit clauses, data portability agreements, and service level agreements (SLAs) that allow you to retain control over key aspects of your operations.

3. Maintain data independence – Keep your data independent of any single vendor’s proprietary systems by ensuring data portability. This involves storing your data in formats that can be easily transferred to another platform if needed.

4. Leverage APIs and integration capabilities – Choose software that offers robust API support, allowing you to integrate with other tools and services. This reduces dependency on a single vendor and gives you more control over how your systems interact.

Economic vulnerability

Economic instability affecting a large vendor can directly impact your operations. For instance, if a cybersecurity company faces financial difficulties, this could lead to reduced service quality or even the discontinuation of essential security products, leaving your business exposed.

Changes in a vendor’s business structure, such as mergers or acquisitions, can result in shifts in service focus, pricing, and support. When Broadcom acquired Symantec’s enterprise security business, many customers experienced significant changes in service levels and support, highlighting the risks associated with vendor consolidation.

How to avoid issues with econmic vulnerability of vendors:

1. Conduct financial health assessments – Before entering into a long-term contract, review the vendor’s financial statements, credit ratings, and market performance. Continuously monitor these indicators throughout the relationship to identify any emerging risks.

2. Maintain redundancy in critical systems – Ensure you have backup systems or alternative providers for critical operations. This reduces the risk of a complete shutdown if your primary vendor becomes economically unstable.

3. Engage with smaller, niche providers – While large vendors offer stability and comprehensive services, engaging with smaller, niche providers can add flexibility and reduce reliance on any single large vendor.

Regulatory and Compliance Issues

Shifts in the regulatory environment can impact how you use software from large vendors. For example, changes in cybersecurity regulations might necessitate additional compliance measures that your current vendor’s solutions do not support, leading to potential fines or operational disruptions.

Geopolitical tensions and trade disputes can affect the availability and reliability of services from international vendors. A global cybersecurity company relying on a vendor with operations in multiple countries might face service interruptions or legal challenges due to international conflicts or sanctions.

How to avoid regulatory and compliance issues:

1. Thoroughly assess compliance needs – Ensure that you have a deep understanding of the regulatory requirements relevant to your industry, including data protection laws, industry-specific regulations, and international standards.

2. Choose vendors with proven compliance records – When selecting software vendors, prioritize those with a strong track record of compliance with relevant regulations. Look for vendors that provide clear documentation and certifications related to compliance, such as ISO 27001, SOC 2, GDPR, or HIPAA.

3. Use custom or hybrid solutions – Where possible, customize your software solutions or use a hybrid approach that allows you to manage compliance directly. This reduces the risk of depending on a vendor’s ability to meet specific regulatory requirements.

4. Maintain control over critical data – Store the most sensitive data in-house or in a private cloud where you have direct control over compliance measures. This ensures that even if a vendor’s compliance falters, your critical data remains secure and compliant.

Conclusion

While large software companies provide essential tools that can drive business success, particularly in the cybersecurity sector, it is crucial to maintain a balanced approach to software dependency. By diversifying your software portfolio, fostering internal development, and staying flexible with vendor choices, you can mitigate risks and safeguard your business against the potential pitfalls of over-dependence. Strategic management of your software relationships ensures that you can leverage the strengths of these vendors while protecting your business from the vulnerabilities that come with excessive reliance on a single provider.