Though on one hand I'm inclined to agree with you regarding Nagios, on the other hand I disagree. What you're missing is the concept of developer empowerment. I am a sysadmin / operations engineer, and one trend I've noticed over the course of the past ten years is one toward developers venturing further and further into what could be labeled "traditional" systems administration. Do not underestimate developer demand. It's fueled many technological "movements" in the past ten years, infrastructure automation being a huge one.

I'm not going to get into the pros and cons of "should you hire a sysadmin", but I think the priorities of a lot of these businesses are really screwed up.

Fixed costs like an employee are scary even though services cost more and security isn't even a real concern.

I can't argue with you there. I'm fortunate that my current organization isn't this way, but I have worked at places where this has DEFINITELY been the case. It was mind boggling then and it's mind boggling now. The only explanation I can think of is the (at least perceived) speed and impatience of the modern customer / market. Maybe businesses feel a pressure to make these sacrifices? I'd even go as far as to say the marketing teams for these various "services" capitalize on this feeling of urgency, and try to perpetuate it culturally (e.g. "If you don't use <insert ultra insecure SaaS app here> your company is going to fall behind. Here, look at this list of all of the other companies that aren't yours that use our service!"