Selecting the right vendor can make or break your projects. But how do you ensure you’re making the best decision? The wrong partnership can lead to cost overruns, delays, and a string of frustrating problems. While initial promises may sound great, looking beyond the surface and assessing potential risks is key. Vendor evaluation, especially in a close-knit business environment like New Zealand, requires more than ticking boxes. It demands a sharp eye to identify potential red flags before they become costly mistakes.
Why Vendor Evaluation Matters
A vendor isn’t just a service provider; they’re a partner in achieving your goals. Whether you're sourcing technology, tools, or services, your vendor plays a key role in influencing timelines, costs, and the quality of your outcomes. Rushed decisions often lead to underperformance, miscommunication, or situations where expectations don’t match reality.
To avoid this, rigorous vendor evaluation is essential. This is especially true in New Zealand, where personal connections and localisation often determine trust and long-term success.
Key Red Flags to Watch Out For
Single Point of Failure (Person or Technology)
Relying on one key person or fragile technology without adequate backup is always risky. If something goes wrong, the lack of contingency options can massively disrupt your operations.
What to do: Ask about backup strategies, redundancies, and contingency plans. Vendors with a reliable system will have these in place and confidently outline their approach.
Unclear Escalation Process
When things go wrong, you need a clear and responsive path to address critical issues. If the vendor’s escalation process is vague or non-existent, it could spell delays or unresolved headaches.
What to do: Request documentation outlining their escalation process. Ensure they clearly define contact points and timelines for issue resolution.
Security and Compliance Evasiveness
Vendors reluctant to discuss their security practices or compliance standards should raise alarms. An opaque or dismissive attitude towards data privacy or compliance could signal potential risks.
What to do: Ask specific questions about their data security protocols and compliance certifications. Ensure their practices align with industry regulations and your own standards.
Weak Service Level Agreements (SLAs)
A robust SLA is essential to setting expectations and ensuring accountability. If the vendor’s SLA lacks measurable guarantees (e.g., response times, reliability), it signals a lack of commitment to performance.
What to do: Review SLAs in detail. Confirm they include specific, actionable metrics like uptime, response times, and penalties for non-performance. Don’t settle for vague promises.
Reactive Service with No Strategy
If a Managed Service Provider (MSP) only reacts to issues and doesn’t discuss long-term risks or opportunities, you're missing out on a valuable partnership. Your vendor should provide a vision for how their services support your future goals.
What to do: During discussions, ask how their service aids long-term growth or addresses emerging risks. A strategic vendor proactively collaborates to drive value beyond immediate needs.
Data Privacy and Security Opacity
How a vendor handles your data matters. If their data practices are unclear or poorly defined, it’s a sign they might lack proper safeguards or accountability.
What to do: Ask for clear policies on data handling and storage. Vet their compliance measures and ensure transparency around how they manage your sensitive information.
Hidden Costs
Ongoing fees for licensing, maintenance, or upgrades that weren’t discussed upfront can wreak havoc on budgets. Vendors that underbid to win and then pile on charges later are a major red flag.
What to do: Insist on a detailed pricing breakdown. Ask about potential extra charges and confirm the cost of renewals, upgrades, and additional support services upfront.
Misaligned Business and IT Goals
Your IT vendor needs to understand how their services fit into your broader business objectives. A provider unable to articulate how they’ll support your outcomes may hinder progress.
What to do: Share your long-term goals with the vendor and see how they respond. Look for alignment in how their solutions help you achieve measurable success.
Generic, Untailored Services
One-size-fits-all rarely works for unique businesses. Vendors unwilling to adapt solutions to your environment risk delivering tools or services that don’t fully meet your needs.
What to do: Evaluate whether the vendor is willing to customise their service offering. Ask for examples of other clients they’ve tailored their solutions for in industries like yours.
Lack of Relevant Experience
Partnering with a vendor lacking experience with your specific industry or technology stack is a gamble. Without proven expertise, they may struggle to meet your needs or solve unique challenges.
What to do: Ask for case studies, client testimonials, or success stories involving businesses like yours. A good vendor will gladly showcase their relevant experience.
Avoiding the Risks
When evaluating vendors, resist the urge to overlook potential red flags. A bad experience with a vendor can lead to wasted resources, dissatisfied teams, or worse, a tarnished reputation.
Taking the time to choose the right partner isn’t about simply spotting weaknesses. It’s about ensuring alignment with your company’s goals, values, and future ambitions.
At the end of the day, finding the right vendor should feel like a win-win. When both parties share values, communicate clearly, and work in harmony, great outcomes naturally follow.
Take action today: If you’re ready to refine your vendor evaluation strategy, reach out for a chat. Together, we can remove the guesswork and help you make confident decisions for your business.
