How Commerce Leaders Avoid Renewal Traps and Vendor Drag - with David Cost of Rainbow Apparel

**Daniel Faggella** (0:12)
Welcome everyone to the Emerge AI in Business Podcast. Today's guest is David Cost, Chief Digital Officer at Rainbow Apparel. David discusses how AI has fundamentally shifted the enterprise built versus buying equation, giving technology leaders a credible in-house alternative that vendors can no longer ignore. He outlines practical contract strategies that ensure vendors consistently earn their relationship rather than rely on switching costs. Today's episode is sponsored by UpperEdge. A quick note for our audience that the views and opinions expressed by David Cost on today's program are his own and do not reflect those of Rainbow Apparel or its leadership. In this episode, we cover how AI is reshaping the power dynamics between enterprises and their software vendors, and what that signals about where enterprise technology investment is heading. To go deeper on this topic and learn how to identify the real AI trends by tracking where venture funding is flowing, and by listening to how leading CEOs describe risk and competitive strategy, download our free PDF report, Three Ways to Discover AI Trends in Any Sector, at emerge.com/ait2.
That's emerj.com/ait2 to download your copy. Now the conversation with David Cost.
David, welcome to the show.

**David Cost** (1:52)
Thanks for having me. I've been really looking forward to this.

**Daniel Faggella** (1:54)
Yeah, I think we're gonna have a great conversation today on how commerce leaders avoid renewal traps and vendor drag and things like that. And I wanna start with something that we see pop up again and again with the senior leaders that we talk to, and that is there's almost this widening feeling that what they're paying for software and what they're actually getting out of it, it's starting to drift into different directions. I think we see contract numbers going one side, we see the actual value numbers going into a complete different direction, and it's hard to pinpoint when exactly this started happening. So where do you see the biggest gap right now between what an enterprise is paying for these days, in terms of their commerce or martech tools, and what's actually getting delivered to them?

**David Cost** (2:38)
I think AI is introducing yet another complication into this, right? So we've got developers that are willing to use cloud code a replacement for something that we're paying for.
So I think in the past where we might have felt boxed in because we needed the solution that we already have, now we're actually entertaining, is this something we want to use cloud to code for ourselves? That wouldn't have been something that we would have had the development bandwidth to do. That now puts a whole another variable on the table that I think vendors are going to have to be careful about in terms of price creep.

**Daniel Faggella** (3:10)
Yeah.
I mean, it's not even just in enterprises, I think in daily households these days, like, oh, I don't need to pay anyone to do this, or I don't need to think about doing this, I can just hop on it myself. And then we've always been trying to make things easier for ourselves and trying to see where we can cut costs in enterprises. How is this gap different? How does it feel different? Or is it just a new version of an old story? Where do we think it's going?

**David Cost** (3:34)
I think this gap is different, right? Because we've kind of the old build versus buy question, that was a tough balance. Now introducing AI into that equation, the build question is getting a whole lot easier and a whole lot less expensive. So I think it's opening up ways of thinking and pressure on existing vendors that they've never really had before. I mean, I can tell you there's one, if you like a specific circumstance, I can give you one. In our business, we use something called a PIM, a Product Information Management System, and it's the place that we manage all of our product data before we push it up to the website and other third-party marketplaces.
That software has gotten increasingly expensive, and we've really said to that vendor, no more. You either hold the line or actually come down a little bit, or we're going to code it ourselves. And we would not have been able to essentially make that proposition without having AI and being able to use AI to be that credible threat.

**Daniel Faggella** (4:32)
Yeah, it's scary to think that it's an exciting time, but it's also a scary time. It depends on which side of the conversation you're sitting on. I'm concerned about what happens after these contracts have been signed. There's obviously a different discipline that most companies put into the buying decision from what we see two years or three years down the line.