9 IT Vendor Management Best Practices For Better ROI in 2025

IT Vendor Management Best Practices

Gartner data shows that 60% of organizations work with over a thousand third parties. That’s why you can’t afford to complicate operations with vendors, as it opens up doors for massive operational failures and security issues.

Follow these best practices to stay on the safe side:

1. Reduce vendor friction by defining ownership and internal accountability

Vendor management can be overwhelming, and with dozens of vendors, there’s always scope for things to go wrong. Just a stroll around sysadmin subreddits will tell you how daunting vendor management can be:

Via Reddit

Organizations managing more than 25 active vendors experience a 35% drop in cross-team productivity due to coordination drag and decision fatigue.

Surprisingly, most vendor-related issues don’t originate with the vendor, but from unclear ownership within the organization. When no one’s accountable for vendor onboarding, performance tracking, or renewal strategy, things are bound to go wrong.

You can avoid that by clearly assigning responsibilities across the vendor lifecycle:

• Procurement teams own the selection. They vet pricing, potential risk, and compliance.
• IT or business stakeholders are responsible for performance. They monitor delivery and give feedback. 
• Finance owns the spend. They also flag overruns or duplicate contracts.
• A vendor manager or sourcing lead owns the coordination. This person maintains the relationship and drives QBRs. 

This clarity reduces delays, avoids finger-pointing in case of issues, and creates a consistent vendor experience.

Read More: 6 Best Vendors for IT Asset Lifecycle Management

2. Standardize vendor evaluation with fit and foresight in mind

Let’s reel back to the start. Do you have a repeatable process for screening potential vendors that go beyond considering feature checklists and cost comparisons? If not, start right away.

Here’s a quick framework you can adopt to evaluate potential IT partners:

• Clarify your IT and business needs: You can’t pick the right partner if you don’t know exactly what you need. Start by outlining your must-haves today and where you want to be tomorrow.
• Define clear evaluation criteria: Setting measurable standards (such as technical fit, functional coverage, customer reviews) upfront keeps the process smooth.
• Create and share a structured RFP: Give vendors a clear, consistent framework to respond to, which helps you quickly spot who truly fits versus who’s just good on paper.
• Assess vendors against your real-world needs: Equally important is to look beyond glossy presentations and test how a vendor’s solution will actually perform in your environment.
• Do your homework with due diligence: Vet financial health, security protocols, and customer feedback — because trusting blindly isn’t an option.
• Use a weighted scoring system to compare options: A structured scorecard can help you weigh technical fit, cost, and strategic alignment without bias when evaluating multiple vendors.
  
  

Here are some more vendor selection tips from a Reddit user:

Via Reddit

Read More: 20 Best IT Asset Disposal Companies for Global Teams

3. Settle on SLAs that mirror your business objectives

Many service-level agreements are copied from vendor templates or negotiated in isolation from the teams that rely on the service. With this approach, your contracts might technically meet expectations but fail operationally.

To prevent this mismatch, compose your SLA terms with business objectives in mind: 

• Define acceptable recovery windows and escalation protocols tied to business hours and user geography.
• Build in thresholds and scaling options so you don’t have to re-negotiate every time a new region or user group comes online.
• Track how well your vendors help prevent issues. That includes root cause analysis, update cadence, and roadmap transparency.
• Use service credits wisely. Service credits should be scaled according to the severity and frequency of SLA breaches.
• Involve operations, product, and security teams to align the technical expectations map to business outcomes.

Remember that SLAs need to be treated like commitments, not just contracts. Clear SLAs greatly improve cost savings and strengthen compliance. 

In one KPMG case, implementing a centralized SLA‐tracking system increased overall supplier contract compliance by 30%.

Here’s a Redditor describing how they manage vendor SLAs:

Via Reddit

4. Measure vendor performance with quantifiable KPIs

Once you’ve onboarded a vendor, you must track performance with clear, quantifiable KPIs.  

The key is to set up well-thought out and quantifiable performance indicators that actually matter. Not everything should be a KPI.

In his book Supplier Relationship Management, Jonathan O'Brien writes, “the point of key performance indicators is…to identify the handful of indicators that will guide actions effectively and efficiently. 

What you measure depends on what matters most to you, but here’s a list of some important KPIs to monitor.

• Project completion rate: Shows how often vendors deliver on time and in full.
• Response time: Measures the time it takes vendors to respond to support tickets or escalations.
• Issue resolution time: Measures how long it takes to resolve incidents.
• Contract compliance rate: Flags how often vendors meet (or breach) agreed terms, like SLAs or security obligations.
• Innovation contribution: Tracks vendor-led initiatives or improvements, especially in long-term partnerships.

Once you have KPIs in place, O'Brien says, you need to think about “ways to interpret data, analysis techniques, and data presentation methods,” to actually make KPIs work for you.

5. Maintain documentation across the full vendor lifecycle

This one is important. 

Vendor knowledge lives in email threads, scattered folders, or worse, in the heads of whoever managed the last renewal. This can be manageable until someone leaves, an audit hits, or a problem escalates and no one remembers what was promised.

That’s why it is essential to treat vendor documentation as a mandatory system, not a formality. 

Build a single source of truth for each vendor that includes:

• Pre-contract evaluation notes like shortlist rationale, red flags, internal scores
• Signed contracts with renewal dates, terms, and exit clauses
• Communication history, including QBRs, feedback loops, and incident reports
• Performance scorecards with tracked KPIs and qualitative observations
• Change logs documenting scope adjustments, pricing updates, or resource swaps

This documentation facilitates better decision-making and enables you to evaluate vendors more effectively. Moreover, with complete context, new managers can be onboarded faster, finance can measure ROI with solid data, and legal teams can find patterns in risk exposure.

We like to call it “vendor memory”. Then, since vendor portfolios change frequently nowadays, institutional memory is one of the most underrated risk controls you have.

6. Use centralized tools to reduce chaos and email chains

Admin overhead grows hand in hand with vendor ecosystems. Without a centralized system, vendor interactions are scattered across inboxes, spreadsheets, Slack threads, and personal knowledge. Fragmentation slows decision-making and makes transitions nearly impossible when team members leave.

A centralized vendor management platform or an integrated spend and procurement system gives your team a single source of truth. It standardizes onboarding, renewals, escalations, and captures key documentation in one place. 

Traditional vs. ERP-based vendor management (source)

A 2025 study of 1,750 organizations found that those using ERP-based vendor management systems saw a 62.8% reduction in vendor onboarding time and an 89.3% improvement in compliance tracking accuracy. These numbers you cannot ignore. 

Workwize, an IT hardware lifecycle management platform, can simplify how you manage your IT and vendor contracts. You can choose to partner with Workwize for all critical IT operations, such as procurement, equipment retrieval, and disposal, thereby eliminating the headache of managing multiple vendors and suppliers.

7. Build a proper framework for performance evaluation

According to Harvard, a vendor performance evaluation system, sometimes also referred to as “vendor scorecards” or “vendor report cards,” is a standardized way to capture a record of a vendor’s performance to monitor whether a contract’s desired outcomes are being met.

It helps you not just evaluate current vendor performance but also help you during future vendor onboarding.

A solid vendor performance framework should be

• Standardized: Use a common scorecard format across vendors to simplify comparisons and reporting.
• Multidimensional: Evaluate categories like delivery timelines and quality of output, innovation, fulfilment of KPIs, and security practices.
• Actionable: Include space for qualitative notes and areas for improvement.

Ultimately, these reviews should lead to meaningful conversations. Share your findings during scheduled QBRs (quarterly business reviews) or monthly syncs. 

And NEVER wait for issues to escalate. If data indicates declining responsiveness or slippage on SLAs, it’s your signal to re-evaluate the partnership.

8. Prioritize risk, security, and compliance from day one

Most data breaches occur not because your internal security is weak but when a vendor with access to your data is breached. In fact, third-party involvement in data breaches has doubled from 15% to 30% in just one year.

Plus, if you're operating under regulations like GDPR, HIPAA, CCPA, PCI DSS, DOX, they also extend to your vendors. You're ultimately accountable if a vendor fails to meet compliance standards or mishandles data.

That's why risk, security, and compliance management should be part of an effective vendor management strategy. Start with a tiered risk assessment. Before even signing contracts, look for SOC 2 Type 2, ISO 27001, or similar certifications. 

Additionally, include security controls in your contract. Outline the industry-specific controls the vendor must implement, including data encryption standards, access controls, and timely vulnerability management. If there is scope, reserve the right to audit security controls throughout the contract lifecycle.

Apart from keeping you more secure and compliant, tight security practices also help prevent burnout that vendor management teams face when an audit fails or critical data is compromised. 

It’s way more common than you think:

Via Reddit

Security and compliance aren't something you impose on a vendor. They're a shared responsibility.  Since you'll be partnering with your vendor, why not be secure partners?

9. Grow your outsourcing models as your vendor relationships mature

The last one is important.

Many organizations shift toward SLA-driven or outcome-based contracts as vendor relationships mature, but few adjust their governance models to match.

This mismatch leads to serious blind spots. A large number of organizations struggle to quantify value delivered in managed service agreements, often because their original management structures weren’t designed to track it.

To avoid this, you need to transition their engagement model in phases:

• In early-stage engagements, focus on clarity: deliverables, timelines, and roles.
• As trust builds, shift toward SLAs that define service levels and KPIs. 
• Eventually, tie compensation to business outcomes, like reduction in support tickets, faster onboarding, or specific automation benchmarks.

Maturity in outsourcing should be accompanied by maturity in oversight. And this leads directly to the next point: to manage this progression effectively, you need a team with the right skills and visibility.

Read More: Top 12 Procurement Management Software in 2025

How Workwize Helps You Operationalize Vendor Management at Scale

Good vendor management is a lever for transformation, not operations.

Workwize, an IT hardware lifecycle management platform, simplifies IT vendor and hardware management by providing one platform for handling everything—from procurement to offboarding. 

Instead of juggling emails, spreadsheets, and multiple vendor portals, you get a streamlined system that saves time, reduces errors, and clarifies your IT operations.

• One platform for all vendors: Manage every supplier in one place, so nothing slips through the cracks.
• Automated asset lifecycle: From ordering to retrieval, tasks that used to take days now take minutes.
• Global logistics, handled: Get devices delivered or picked up anywhere in the world without lifting a finger and relying upon 10 different logistical partners.
• Real-time visibility: Know where every device is, what it costs, and when it’s time to take action.

Teams like DuckDuckGo, HighLevel, and more trust Workwize to manage IT procurements, retrievals, and disposal with ease. 

See how Workwize can help you, too.