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Platform Economics - Why Your 130 Tools Are Killing Your ROI

The Platform Engineering Playbook Podcast​

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Duration: 18 minutes Speakers: Alex and Jordan Target Audience: Senior platform engineers, SREs, DevOps engineers with 5+ years experience

📝 Read the full blog post: The $261 Billion Problem: Why Your Platform Engineering ROI is Broken (And How to Fix It) - Comprehensive written analysis with actionable strategies and resource links.

Cold Open (0:00-0:30)​

Alex: [mid-conversation] "...and that's when I realized we were paying for 47 different monitoring tools, but the engineers were basically just using Datadog and occasionally checking Prometheus."

Jordan: "47?! OK wait, hold on. Let's back up because I think our listeners need to hear this whole story. Welcome to The Platform Engineering Playbook - I'm Jordan."

Alex: "I'm Alex. This is the show where we dissect the technologies, trends, and decisions that shape platform engineering at scale."

Jordan: "And today we're diving into something every platform team faces but nobody wants to talk about - the economics of platform engineering. Specifically, why you're probably bleeding money on tools you don't use and metrics that don't matter."

Landscape Overview (0:30-4:00)​

Alex: "So Jordan, let me paint a picture that's probably familiar to our listeners. Small company: 15-20 tools. Medium business: 50-60. Large enterprise? We're talking 130 plus."

Jordan: "And the kicker - teams are using maybe 10-20% of the capabilities they're paying for."

Alex: "Right! There's this stat that keeps me up at night - engineers are managing an average of 16 monitoring tools. When SLAs get strict? That jumps to 40."

Jordan: "Wait, 40 monitoring tools? How does anyone even—"

Alex: "They don't! That's the point. It's this accumulation problem, right? Every team picks their favorite, nobody wants to migrate, and suddenly you're in what I call 'tool sprawl hell.'"

Jordan: "I've been there. We had three different APM solutions because each team swore theirs was critical. Turns out, they were all monitoring the same services, just... differently."

Alex: "And here's where it gets expensive. Global spend on security tools alone? Projected to hit 261 billion by 2025."

Jordan: "Billion with a B."

Alex: "With a capital B! But the real cost isn't even the licenses."

Technical Deep Dive: The Hidden Costs (4:00-9:00)​

Jordan: "OK, so let's dig into these hidden costs. Because when I talk to CFOs, they see the license fees and think that's it."

Alex: "Oh, if only. So first, there's the context switching tax. Microsoft research shows it takes 23 minutes to fully refocus after switching contexts."

Jordan: "23 minutes. And if you're jumping between 16 tools..."

Alex: "Do the math. Ten switches a day, that's almost 4 hours. For a 150k engineer, that's 71 thousand dollars per year in lost productivity. Per engineer!"

Jordan: "That's... actually horrifying."

Alex: "But wait, there's more! Remember that 'cost-saving' custom monitoring solution your team built two years ago?"

Jordan: [laughing] "Oh no, I know where this is going."

Alex: "20-30% of your team's capacity. That's the ongoing maintenance burden for self-built platform tools that people consistently underestimate."

Jordan: "We had this exact situation with a custom deployment tool. 'It'll save us money,' we said. Two years later, we had two full-time engineers basically just keeping it alive."

Alex: "And then there's my new favorite category - AI trust debt. Companies spent an average of 400k on AI-native apps last year. 75% year-over-year increase."

Jordan: "But I'm sensing a 'but' coming..."

Alex: "Only 29% of developers actually trust the AI outputs. And 66% report spending more time debugging AI-generated code than expected."

Jordan: "So we're paying premium prices for tools that create more work?"

Alex: "In many cases, yes. It's like we learned nothing from the low-code revolution."

The Metrics Problem (9:00-11:00)​

Jordan: "This brings us to something I'm really passionate about - why traditional ROI metrics are essentially lying to us."

Alex: "Oh, this is good. Go on."

Jordan: "So a platform engineering manager told me something that stuck: 'What they mean by ROI is convince me that this change is going to have benefits we can represent as money.'"

Alex: "Right, everything has to be dollarized."

Jordan: "But here's the thing - what even is productivity in development? If we optimize for lead time, like DORA suggests, we might discourage engineers from taking time to do things right."

Alex: "The Goodhart problem - when a measure becomes a target, it ceases to be a good measure."

Jordan: "Exactly! I've seen teams game every metric. Lines of code? You get verbose code. Commit frequency? You get tiny, meaningless commits. Story points? Don't get me started."

Alex: "So what metrics actually matter?"

Jordan: "IDC did this study - downtime costs between 500k to over a million dollars per hour, depending on industry. That's your North Star. Everything else should ladder up to availability and recovery."

Alex: "Platform teams that focus on this see real results too. 40% fewer outages, 60% reduction in incident management costs, 60% faster recovery times."

Jordan: "And change failure rate - if it's over 15%, you're spending too much time fixing instead of shipping."

Build vs Buy Reality Check (11:00-13:00)​

Alex: "OK, so let's tackle the elephant in the room - build versus buy. Because I keep seeing this pattern where teams think building their own will save money."

Jordan: "Spoiler alert: it usually doesn't."

Alex: "Well, there are exceptions. I know a company that saved 800k a year moving off AWS."

Jordan: "Sure, but what was their scale?"

Alex: "Exactly the right question. They were spending millions. For most teams, the math doesn't work out. There's this startup I worked with - they saved 20k annually just by consolidating licenses. No custom building required."

Jordan: "I think the threshold is around 5 engineers. Below that, you simply don't have the bandwidth for custom platform tools."

Alex: "And even above that, the hybrid approach is winning in 2025. Buy the foundation, build the differentiators."

Jordan: "Spotify does this brilliantly. They use standard tools for most things but build custom stuff for their specific music streaming challenges."

Specialized Solutions and Underdogs (13:00-14:30)​

Alex: "Speaking of alternatives, let's talk about some of the underdogs in this space. Because not everything has to be Kubernetes."

Jordan: "Thank you! The Kubernetes complexity backlash is real."

Alex: "For teams under 5 engineers? Look at AWS App Runner, Fly.io, even good old Docker Compose for development."

Jordan: "We've also been seeing Nomad gain traction in specific use cases. It's like Kubernetes but with 80% less cognitive overhead."

Alex: "And for the 'I just need to run some containers' crowd, Railway and Render are doing interesting things."

Jordan: "The key is matching complexity to actual needs. You don't need a Formula 1 car to go to the grocery store."

Alex: "So given all this economic pressure, what skills should platform engineers focus on?"

Jordan: "Financial literacy is becoming table stakes. You need to speak CFO."

Alex: "FinOps certification might actually be worth it now."

Jordan: "Also, product management skills. The most successful platform teams think like product teams. User research, continuous discovery, measuring adoption not compliance."

Alex: "What's losing relevance?"

Jordan: "Deep expertise in any single tool. The ability to learn and consolidate tools quickly is worth more than being a Jenkins wizard."

Alex: "Harsh but true. What about emerging skills?"

Jordan: "Platform as a Product thinking, cost optimization automation, and honestly? The ability to say no. To new tools, to complexity, to features that don't move the needle."

Practical Wisdom (16:00-17:30)​

Alex: "Let's get practical. If I'm a platform engineer listening to this, what do I do Monday morning?"

Jordan: "Tool audit. List everything, map actual usage versus licenses, calculate true costs including training and context switching."

Alex: "And be honest about that usage. We found teams claiming they 'needed' tools they hadn't logged into in six months."

Jordan: "Then identify your biggest overlap. Monitoring is usually the worst offender. Do you really need Datadog AND New Relic AND Prometheus AND CloudWatch?"

Alex: "Pick one area for consolidation. Just one. Prove the value, then expand."

Jordan: "And start measuring differently. Track incidents reduced, recovery time improved, developer satisfaction. Connect these to dollar values."

Alex: "Most importantly - involve your developers. If they bypass your platform to use their own tools, you've already lost."

Closing Thoughts (17:30-18:30)​

Jordan: "You know what struck me while preparing for this episode? We've created this entire industry around managing complexity we created ourselves."

Alex: "It's like that quote about how every organization will eventually produce a system that mirrors its communication structure."

Jordan: "Conway's Law, yeah. But with tools. Every team adds their favorite, and suddenly you're spending more on tool management than actual development."

Alex: "The fundamentals of good engineering remain constant, even as the landscape evolves."

Jordan: "That's what we're here for - cutting through the noise to help you make better decisions for your teams and your career."

Alex: "If there's one thing to take away: the best platform is the one your developers choose to use, not the one you mandate."

Jordan: "Consolidation is coming whether we like it or not. The economics simply don't support 130-tool portfolios anymore."

Alex: "Thanks for tuning in to The Platform Engineering Playbook. Keep building thoughtfully."

Jordan: "Until next time."

Show Notes​

Resources Mentioned:

  • Microsoft research on context switching (23-minute recovery time)
  • IDC downtime cost analysis ($500k-$1M per hour)
  • DORA metrics and change failure rate benchmarks
  • Spotify's platform engineering approach
  • FinOps Foundation certification

Key Takeaways:

  1. Tool sprawl is costing more in context switching than licenses
  2. 20-30% maintenance burden for custom tools is often forgotten
  3. Build vs buy threshold: ~5 engineers
  4. Measure outcomes (uptime, recovery) not outputs (tickets, commits)
  5. Platform as Product thinking is the future

Action Items:

  1. Monday morning tool audit
  2. Calculate true costs including hidden ones
  3. Pick one area for consolidation
  4. Start measuring what matters
  5. Talk to your developers

Connect: