Vendor Reviews

Purpose

You chose vendors for good reasons (price, features, support, reputation). But business changes. New competitors emerge. Vendors change (acquisition, price increase, feature removal, support degradation). Regular vendor reviews ensure you're still with the right partner—and can pivot if you're not.

This guide explains how to conduct systematic vendor reviews.

Context & Assumptions

Who this is for:

• Operations managers and procurement teams
• Business owners evaluating vendor relationships
• IT administrators managing multiple vendors

Key assumptions:

• You work with multiple vendors (email provider, CRM, payment processor, cloud provider, etc.)
• You want to ensure vendors are meeting your needs
• You're open to switching vendors if better alternatives exist

What Is a Vendor Review?

A vendor review answers:

1. Are they delivering what they promised?

   • Uptime/reliability
   • Feature set and roadmap
   • Support quality and response time
   • Security posture

2. Are they good business partners?

   • Pricing competitiveness
   • Transparency and communication
   • Willingness to negotiate
   • Road map alignment with your business

3. Should we continue with them?

   • Renew existing contract?
   • Upgrade/downgrade tier?
   • Switch to competitor?
   • Consolidate with another vendor?

Vendor Review Framework

Conduct reviews quarterly or at renewal time.

Step 1: Gather Data

Reliability/Uptime

Check: Vendor's public status page or SLA (Service Level Agreement)

Data sources:

• Vendor's status page (statuspage.io, etc.)
• Your own logs/monitoring
• Customer community (Reddit, Twitter, vendor forums)

Feature Completeness

Ask:

• Do they have the features you need?
• Are planned features on their roadmap?
• Have they removed any features recently?

Action: Review vendor roadmap quarterly. Major feature removals might trigger switch decision.

Support Quality

Evaluate on:

• Response time: How fast do they answer?
• Resolution time: How fast do they fix problems?
• Competence: Do they actually solve your problems?
• Availability: 24/7, business hours only?

Metric: Track support tickets over past 3 months.

Security & Compliance

• Is the vendor SOC 2 certified (if handling sensitive data)?
• Do they have a security policy in writing?
• Have they been breached or had public security incidents?
• Do they patch/update promptly?
• Do they comply with your data residency requirements?

Red flags:

• Vendor refuses to disclose security certifications
• Public security incidents without transparency
• No SLA for incident response

Pricing

Compare your current contract against:

1. Market rate: What are competitors charging?
2. Volume discounts: Are you getting the best tier for your usage?
3. Renewal rate: Is the vendor raising prices above inflation?

Example:

Step 2: Score the Vendor

Create a simple scorecard (1–5 scale):

Interpretation:

• 4.5–5.0: Excellent, renew as-is or negotiate better terms
• 3.5–4.4: Good, renew with improvements required (better support, lower price)
• 2.5–3.4: Acceptable, explore alternatives
• <2.5: Poor, start migration to alternative

Step 3: Document Issues & Observations

Create a list of any problems or gaps:

Step 4: Comparison (If Considering Alternatives)

If your vendor scores below 3.5 or pricing is significantly above market, evaluate alternatives:

Decision: If Alternative A scores 4.2 and costs $150/month less, but migration is 2 weeks—calculate: 2 weeks of internal time cost vs. $150 × 12 months = $1,800/year savings. Usually worth it.

Step 5: Negotiate or Decide

Based on review, take one of three actions:

Option 1: Renew with Current Vendor

When to choose:

• Score is 3.8+
• Switching costs outweigh benefits
• Vendor is responsive to feedback

Action:

• Renew existing contract (or switch to annual if on monthly for 15–20% discount)
• Document any negotiated improvements (lower price, better support SLA)

Option 2: Renegotiate with Current Vendor

When to choose:

• You have leverage (renewal coming up, competitive alternative exists)
• Vendor is close to acceptable but pricing is too high

Approach:

1. Get competing quotes
2. Contact vendor rep: "We're considering alternatives due to [price/feature/support issue]. Can you improve?"
3. Present competing offer
4. Vendor often matches or improves terms

Example email:

"Our contract with you renews in 60 days. We've been a good customer (paid on time, minimal support issues). However, your pricing is 25% above market for comparable features. Competitor X is offering the same package for $350/month (vs. your $500/month). Can you match that price or improve your offer?"

Result: 50% of the time, vendors will negotiate. If they don't, proceed to Option 3.

Option 3: Switch Vendors

When to choose:

• Score is below 3.5
• Vendor is unresponsive or unreliable
• Competitor clearly offers better value
• You've attempted negotiation and it failed

Process:

1. Select alternative vendor
2. Plan migration timeline (don't rush)
3. Set up new vendor in parallel with old one
4. Migrate data/users gradually
5. Confirm everything works
6. Cancel old vendor (or reduce to minimal plan during transition)

Timeline: Typically 2–8 weeks depending on complexity

Communication: Notify internal team and customers (if applicable) of change

Vendor Review Checklist

Use this quarterly:

Reliability

• Uptime met SLA target?
• Any unplanned outages?
• Response to incidents satisfactory?

Features

• Required features available?
• Any features removed?
• Roadmap aligned with our direction?

Support

• Support tickets resolved on time?
• Quality of support satisfactory?
• Any unresolved escalations?

Security

• Any security incidents?
• Compliance certifications current?
• Data protection satisfactory?

Cost

• Price competitive with market?
• Getting value for cost?
• Negotiation opportunity available?

Relationship

• Vendor communication good?
• Account manager responsive?
• Any concerns about vendor stability?

Annual Vendor Review Meeting

Schedule 1–2 hours annually with:

• Finance/procurement
• Operations/IT
• Business owner or relevant stakeholder

Agenda:

1. Review all active vendors (15 min per vendor)
2. Identify underperforming vendors
3. Decide which to renegotiate or switch
4. Assign owners for each vendor relationship

Output: Renewal decisions, renegotiation targets, migration plans

Common Pitfalls

• No formal review process — "We'll review when the contract expires." Result: Renewing bad relationships on autopilot.
• Loyalty without verification — "We've been with them for 5 years." Things change; review anyway.
• Ignoring small issues — Poor support or reliability degrades over time. Address early.
• No switching plan — "We'd switch but it's too complicated." Plan migration upfront; complexity becomes manageable.
• Emotional attachment — Avoid bias toward vendors you like personally. Use objective scoring.
• Not negotiating — Vendors expect negotiation at renewal. If you don't ask, you won't get concessions.
• Switching too frequently — Every 6 months creates instability. Review quarterly, switch annually at most.
• Not involving finance — Operations makes technical decision, but finance may see cost savings that change the calculus.

Practical Example: 30-Person SaaS Company

Vendors under review:

Review findings:

1. AWS: Hosting 3 applications; utilization is good; team skilled in AWS; renewal recommended as-is
2. Salesforce: CRM score 3.4/5; support response time poor; pricing 20% above HubSpot; renegotiate or switch
3. Datadog: Uptime excellent, but team using only 30% of features; consider downgrading tier (save $800/year)
4. Slack: Free tier sufficient for current team size; no cost; no action needed

Actions:

• Negotiate with Salesforce (target: 15% price reduction)
• Downgrade Datadog to lower tier
• Keep AWS and Slack

Expected savings: $1,700/year

Related Documentation

• License Management — Vendor licensing terms
• Cost Optimization — Vendor pricing strategies
• Maintenance Strategy — Vendor relationship as part of overall maintenance
• Security Audits — Vendor security assessment

This documentation is for informational purposes only and does not constitute procurement, legal, or contract advice. For complex vendor negotiations or contract reviews, consult with procurement and legal specialists.