An ISP says it has a 99.5% uptime SLA, but you tell your employees they will get 99% - that does not work. Your SLA cannot be better than your supplier's SLA. Vendor management is the process of tracking whether suppliers honor their contracts. In this article I break down vendor management: SLA tracking, reporting, integration with your ITSM.
How vendor management works
Step 1: Define suppliers and SLAs - a catalog of all suppliers (ISP Netia 99.5%, Azure cloud 99.9%, Dell hardware 24h onsite support). Document the SLA for each one.
Step 2: Track the supplier SLA - each month the supplier sends a report (uptime: 99.6% - OK). You verify whether it matches reality (your monitoring shows 99.4% - not OK).
Step 3: Report to management - a monthly report: vendor SLA performance, breaches, impact. The ISP had a 2h outage? That is an incident on your side. An SLA breach equals a penalty (a credit on the invoice).
Step 4: Renegotiate the contract - before renewal: is the SLA sufficient? Is the price fair? Does the competition offer better terms? You negotiate (higher uptime, faster MTTR, lower cost).
Vendor SLA vs your SLA - alignment
Example: ISP 99.5% uptime equals roughly 3.5 hours of downtime per month. You tell employees you will have 99% uptime? That is not possible if the ISP goes down. You have to:
- Align: your SLA to the consumer must be lower than or equal to the vendor SLA
- Or mitigate: redundancy (two ISPs, failover between them)
- Or carve out: 99.9% SLA, but explicitly excluding vendor outages
ManageEngine SDP - vendor management
Admin > Vendor Management > Add vendor. Document:
- Vendor name, contact, SLA terms
- Support hours (24/7 vs 9-5)
- MTTR expectations
- Escalation contact
Link vendors to incidents: when an incident relates to the cloud, link the Azure vendor. Track what share of cloud incidents was resolved by the vendor versus the internal team.
Vendor performance metrics
KPI #1: SLA compliance % - share of time the vendor honors the SLA. Target: 98%+.
KPI #2: Incident resolution time - when the vendor is engaged, is MTTR aligned with the contract?
KPI #3: Escalation effectiveness - what share of issues is resolved at Level 1 versus escalated?
KPI #4: Cost per incident - are there any unexpected charges? Track vendor invoicing.
KPI #5: Relationship health - does the vendor communicate well? Do they support you? A quarterly vendor review.
Pro tip: Renegotiate contracts 60 days before expiry - the vendor has the motivation to keep you and will offer a discount.
Vendor management for your ITSM?
Rotech Group will configure vendor tracking in SDP, define SLA alignment, and run quarterly vendor reviews.
Book a consultation