In a post on the Xero Blog today, Mark Vickers discusses how users of software (desktop or web-based) are always vulnerable to “vendor lock-in” – in essence having their data stuck in a system they now want out of.

He cites the example of FaceBook’s recent change to its privacy policy, then moves on to accounting software providers and states:

“Vendor lock-in has a long and nefarious history in the software industry. Traditional accounting software has been guilty of locking people in with proprietary formats and compulsory upgrades.”

Of course, the point of Mark’s post is to try to convince us that Xero is not guilty in this regard, that it plays fair with your data. He tells us that data can be exported from Xero in commonly used formats. He also reminds us that upgrades to the software are very regular and come free as part of the service.

So, I thought I would examine Xero’s credentials. Are they playing fair with our data? Are they justified in taking the moral high ground here?

Firstly, let’s deal with the “compulsory upgrades” point. In his post Mark outlines this scenario:

“You might buy some accounting software and run it for a couple of years. An upgrade becomes available, but it’s expensive. You decide you don’t need it, because the upgrade doesn’t offer anything new. A few more years pass, as do a few more upgrades, and you choose to ignore them all.”

He then talks about the user finding out that, because they missed some steps in the upgrade process, they are no longer in a position to make the jump to the latest version. Disaster!

Now, I agree with what he is saying. Many readers will have experience of the annual QuickBooks upgrade cycle and the serious consequences that can result from falling behind in the version number race. I well remember the huge problems clients had moving to QuickBooks 2008 – it’s one of the reasons we were able to move many of them over to Xero.

But is Xero innocent here? No it isn’t, because Xero DOES force its users into compulsory upgrades. The fundamental principle of the “software as a service” model is that all users always have the latest version. What about the user who sees the changes coming in the next upgrade and doesn’t want them? The changes may be regarded as an advancement by Xero and most of their users, but seen as a backward step by an individual user. That user does not have the option to say, “no thanks, I’ll stick with what I’ve got please”.

The continuous, automatic upgrades model is the right one in my opinion but there will always be someone who prefers the status quo and, to that user, Xero will be enforcing a compulsory upgrade.

I will explore the data export features in my next post. Is Xero really playing fair with our data?