Vendor Incentives

Understanding the economic model of your System Integrator (SI) or SaaS vendor explains their behavior.

The "Land and Expand" SaaS

Vendor Goal: Get you hooked on a proprietary feature.

• Example: Cloud Provider Lambda.
• It's cheap and easy. But once you write 500 Lambdas, you can never leave Cloud Provider.
• Advice: Use standard containers (Docker/K8s) if you want negotiating power.

The "Body Shop" SI

Vendor Goal: Maximize billable hours.

• If they fix the problem efficiently, they make less money.
• They are incentivized to create complexity that requires their maintenance.
• Advice: Never sign T&M contracts for maintenance. Sign Outcome-based contracts ("We pay for 99.9% uptime, you figure out how many people it takes").

The Enterprise License Agreement (ELA)

Sales reps are paid heavily on multi-year lock-ins. They will give you a 40% discount if you sign for 3 years. The Trap: In 3 years, technology changes. You are paying for "Shelfware"—software you bought but don't use.