Despite frequent outages, GitHub retains its large enterprise clients because migrating extensive codebases to a competitor like GitLab is prohibitively costly and disruptive. This inertia provides a powerful, albeit temporary, defense against customer churn while the company addresses its issues.

Even if AI makes it easier to build competing software, incumbent SaaS giants retain customers due to immense switching costs. The operational disruption, retraining, and integration challenges of migrating a large organization create a powerful moat against new entrants.

In legacy industries like insurance and law, incumbents often claim their advantage is 'relationships.' In reality, this is often a euphemism for high friction and annoyance in switching providers. Customers stick with subpar service not out of loyalty, but because the effort of moving (e.g., finding 40 documents) is too high.

While creating a strong moat, high switching costs make it difficult to acquire new customers from competitors who enjoy the same advantage. This industry-wide customer inertia can severely limit a company's growth potential.

The D-NOW/MRC merger reveals the severe risk of ERP system failures in distribution. For a business model reliant on thin margins and working capital efficiency, a botched implementation can cripple operations, bloat inventory, and erase profits, as seen with MRC's struggles.

True defensibility comes from creating high switching costs. When a product becomes a system of record or is deeply integrated into workflows, customers are effectively locked in. This makes the business resilient to competitors with marginally better features, as switching is too painful.

Industrial tech tools build a deep moat through stickiness. Once integrated, they become the trusted system of record not just for the company, but for its partners and government customers. This ecosystem dependency, like Palantir's, makes them nearly impossible to replace, leading to near-zero churn.

The most defensible businesses, especially in enterprise software, create such high switching costs that customers are essentially locked in. This "hostage" dynamic, where leaving is prohibitively difficult, is a stronger moat than simply having satisfied customers who could still churn. It's the foundation of an enduring software business.

When fighting a wildfire, customers need retardant that works perfectly and is available instantly. Because lives and property depend on product effectiveness, customers develop a high degree of trust and are extremely reluctant to switch providers, creating a powerful competitive advantage.