What is Vendor Review Process – Document Review & Examples

When you use a SaaS product or platform, you’re not only using it to support your organization’s function, you are placing your confidence in that business to keep communication, reports, strategy, and other sensitive data about your business in a secure state. Many customers assume that the data is held safely, but it is the duty of the holder to safeguard confidential information and process it responsibly.

The key to success in any SaaS partnership lies in assessments, evaluations, and optimizations. As a result, it’s crucial to ask: how are things truly going with your vendor partners? Fortunately, vendor security reviews provide a concrete and definitive response to this query.

What is a vendor review?

The vendor review is a procedure that helps an organization evaluate any potential vulnerabilities or risks associated with a vendor’s product or service and serves as a periodical check to ensure that vendors uphold security best practices at any given point in time. Vendor reviews cover areas like data handling methods, physical security, and compliance with security standards and data regulations such as HIPAA, GDPR, ISO 27001, and SOC 2.

Each organization has a different vendor review procedure. However, typically they consist of a security questionnaire, an analysis of incident reports, action plans, and consumer surveys. Vendor evaluations are carried out while onboarding a new vendor, but they’re also carried out regularly to make sure the vendor is continually compliant.

When are you required to conduct a vendor review?

Vendor security review is conducted to maintain standards and contract agreements, it is important to conduct risk assessments before contracting with vendors regularly or when warning signs appear. 

Here are the three types of vendor reviews and when you should conduct them:

Onboarding reviews

Introduce onboarding risk reviews to vendors as part of the request for proposals procedure (RPF). Keep an eye on things since a vendor’s performance during the RFP is frequently a good predictor of future performance.

You should watch out for the following problems and poor performance indicators in RFP submissions during the initial review:

• No data protection process: This suggests that a company ignores customers’ concerns about security.

• Absence of a formal security policy: Every type of vendor should adhere to the same standards for data and physical security.

• No internal risk analysis: Vendors should have internal risk management procedures in place so they are equipped to spot and address problems as soon as they appear.

• No disaster recovery plan: Security incidents do happen. Hence, a company should have preparation and mitigation strategies in place.  

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Ongoing vendor reviews

Ongoing vendor reviews are conducted on a regular basis to ensure that a vendor is adhering to the most recent best practices in security and compliance. When you initially partner with a vendor, there’s a high chance they will come clean on their responsibilities however, as standards are always changing, it is advisable to frequently check them to ensure that they are still safe.

Here is a better picture of when you should schedule an ongoing vendor review based on their risk levels:

• Regular ongoing reviews: You should group and schedule the reviews in accordance with the company’s designation and renewal date.

• Low-risk vendors: One or two times a year.

• Medium-risk vendors: One or two times a year.

• High-risk vendors: Quarterly or two times a year.

• Upcoming vendor renewal: 180 days before renewal.

Triggered risk reviews

Triggered risk reviews should be carried out when there is news that relates to the security of your vendor. It’s important to be on the lookout for your vendor’s status. Conduct thorough internet research on the vendor and keep yourself up to date on their activities through a variety of sources, including not only the digital sphere but also the sphere of informal discourse, prestigious business publications, and smart investment analyst evaluations. Watch out for the following problems, which should prompt you to assess the risk associated with potential or present vendors:

• Negative buzz: The negative press may be a sign of internal issues.

• Financial Issues: Be wary of bankruptcy filings, layoffs, and declining G2 ratings.

• Prior risk assessment flag: Verify that the flag’s original cause is no longer a problem.

• Legal concerns: Look for cases that include the vendor or important company personnel.

• Safety issues: Examine rumors of a spike in vendor incidents that cause data leaks or internal asset damage.

What is the goal of vendor review?

The goal of vendor review is to thoroughly screen all possible third-party partners before providing them access to business-critical information and systems so that you can proactively identify risks and mitigate them before they become a severe issue. 

Here are some other objectives to carry out a vendor review:

• Determine any risks that the vendor may bring.

• Assess the vendor’s ability to remove such risks.

• Keep an eye on any risks that cannot be removed.

• Analyze the potential impact of any significant risks on the organization.

• Identify whether your company is prepared to take such risks.

• Determine if the vendor’s service offering finally satisfies the organization’s needs.

How to perform a vendor review?

To establish a purchasing process that works for your organization, you’ll need to evaluate vendors and suppliers both quantitatively and qualitatively. It’s a good idea to monitor metrics on a regular basis to ensure that contracts are still advantageous.

Here are the steps you need to follow when performing a vendor review:

Choose the KPIs you want to track

Clearly outline the review’s aims and objectives. Recognise your objectives and the particular components of your vendor connection that you want to evaluate. Gather any necessary information on the vendor, such as contracts, service level agreements (SLAs), pricing, terms, and any other relevant information.

Evaluate how your vendor is performing

When evaluating vendor performance, use preset criteria to measure uptime, responsiveness to support queries, system dependability, speed, service quality, features, and compliance with service level agreements (SLAs).

Ensure optimum data privacy and security

Verify data encryption, access restrictions, legal compliance (such as GDPR, HIPAA), disaster recovery, and vulnerability management in the security assessment to guarantee effective data and system protection.

Ensure promptness and effectiveness of vendor support

Analyze the vendor’s customer service and response time to your questions or problems. Think on things like the speed of response and the overall quality of the service offered.

Don’t forget to document everything

Create a structured report to summarise your review’s conclusions and suggestions. Share this report with the necessary organization stakeholders so that vendors can receive feedback. Vendors can then respond to customer feedback and fill in service gaps by gathering and organizing them, developing an action plan, assigning resources, implementing the necessary adjustments, interacting with customers, tracking their progress, and participating in a cycle of continuous improvement. 

What should you include in a vendor review?

Although reviews may vary depending on the sort of vendor you’re evaluating, there are some broad principles for what a vendor assessment should cover, especially when you’re analysing for security and compliance. 

The following are the most typical categories present in a security vendor review document:

Security questionnaire

When you wish to deal with a vendor and need to know about their possible limitations, you send them a security questionnaire. These inquiries often take the form of lengthy spreadsheets with a series of questions to understand security and compliance practices, such as how they keep your data and what security measures they take to prevent breaches.

Security plans

A security action plan outlines a company’s current and long-term security, governance, and data protection approaches. You should check the vendor’s active action and incident plans while performing a vendor evaluation to make sure they adhere to your criteria.

Incident reports

Security lapses and data leaks have affected some of the world’s most renowned businesses. Companies create thorough retrospectives following a security incident to make sure it never happens again. 

You should read incident reports before working with a vendor to ensure what went on during the event and what actions were taken to safeguard the organization.

Interviews with customers

It’s a good idea to consult with current clients when performing vendor reviews to learn how they evaluated the vendor, why they thought the company had strong security standards, and how they made their decision. The additional advantage of speaking with other customers is that you learn how much value they are getting from a vendor’s services.

Questions to ask in a vendor review

The review questions for vendors should be relevant to the services they provide. Additionally, you must combine particular KPI and SLA queries with general ones. 

The four typical categories listed below can be utilized as a guide to ask questions in a vendor review interview:

• Vendor performance: These inquiries center on requirements that have been contractually agreed upon, such as Key Performance Indicators and Service Level Agreements.

• Security incidents: These inquiries are aimed at identifying any recent or continuing issues with the vendor as well as the efficacy and efficiency of the solutions offered.

• Vendor quality: These inquiries concentrate on the whole interaction with the vendor and can include standards for the vendor’s response, the level of their training, their expertise, and their creativity.

• Vendor billing: These questions focus on billing accuracy and punctuality, as well as any price or cost concerns.

Final thoughts

Vendor reviews are an essential component of efficient vendor management in any organisation. Regularly reviewing vendor performance, security practices, and overall value helps in the maintenance of productive and trustworthy vendor partnerships. These assessments provide you the chance to pinpoint your company’s advantages and disadvantages, choose partnerships and contracts wisely, and ultimately improve the efficacy and efficiency of your business operations.

However, for a partner to come your way, it is important that you also showcase a healthy security posture. One method of achieving this is by getting compliant to your industry-specific compliance frameworks. 

Sprinto is a compliance automation platform that enables you to achieve better security by automating important security workflows such as risk assessment, control monitoring, and gap analysis. In other words, it enables you to automate your security and compliance program, transforming compliance into a strategic, value-adding task rather than merely a box-ticking exercise.

FAQs

Why is vendor review important?

Vendor reviews are crucial for ensuring vendor performance, maintaining service quality, and successfully managing costs. They assist in reducing risks, enhancing accountability, and coordinating vendor services with organizational objectives.

What are the metrics of a vendor review?

Typical vendor assessment metrics include uptime, response times, SLA compliance, cost-effectiveness, and customer satisfaction. Metrics may also cover security procedures including data encryption, legal compliance, and vulnerability monitoring.

How do I pick the best vendors to evaluate?

Prioritise vendors depending on the risk considerations they pose and how they will affect the operations of your company. Vendors with a high potential effect or risk should be examined more often.

What is an example of a vendor performance review?

Implementing strong security procedures while onboarding a vendor protects your company and assists you in meeting regulatory compliance requirements, minimizing potential data breaches and reputational harm as well. A vendor performance review is a significant step in achieving this. Here are some sample templates to help you understand how a vendor performance review is carried out in the real world.