AI Vendor Evaluation Template

Why You Need This Template

When you're evaluating AI vendors, every salesperson sounds confident. Every demo looks impressive. Every proposal promises ROI. Without a structured evaluation framework, you end up comparing marketing materials instead of actual capabilities — and that's how businesses waste tens of thousands of dollars on AI tools that don't fit their needs.

This template is the same framework I've used (and refined) over 30 years of evaluating technology vendors — from virtualization platforms at Accenture to AI tools for small businesses. It works because it forces you to evaluate every vendor on the same criteria, in the same order, with the same weight.

The Evaluation Framework: 7 Categories

1. Business Fit (Weight: 20%)

Does this tool actually solve a problem you have? Don't fall for "cool factor."

Questions to ask:

• What specific problem will this solve for our business?
• How many hours per week will this save? (Be conservative.)
• Does this integrate with our existing workflow, or does it require us to change how we work?
• What happens if we don't adopt this tool? (What's the cost of inaction?)

Red flag: The vendor can't articulate a specific use case for your industry.

2. Technical Capabilities (Weight: 15%)

Does the tool actually do what the demo showed — reliably?

Questions to ask:

• Can we see a live demo with our data (or data like ours), not a canned presentation?
• What's the accuracy rate? How is it measured?
• What are the known limitations? (Every AI tool has them.)
• How does the tool handle edge cases and exceptions?

Red flag: The vendor only shows pre-recorded demos and won't do a live test.

3. Data Security & Privacy (Weight: 20%)

This is the most important category. Get it wrong and you could expose client data.

Questions to ask:

• Where is our data stored? (Geographic location matters for compliance.)
• Is our data used to train the AI model? (It shouldn't be, unless you've explicitly agreed.)
• What encryption is used for data at rest and in transit?
• Do you have SOC 2, HIPAA, or other relevant compliance certifications?
• What's your data breach notification policy?
• Can we export and delete our data at any time?

Red flag: The vendor can't (or won't) answer these questions clearly.

4. Integration & Compatibility (Weight: 10%)

How easily does this fit into your existing tech stack?

Questions to ask:

• Does it integrate with the tools we already use? (CRM, email, project management, etc.)
• Is there an API? Is it well-documented?
• What's involved in setup? Can we do it ourselves, or do we need professional services?
• Does it work on the devices and platforms we use?

Red flag: "You'll need our professional services team for implementation" = hidden costs.

5. Total Cost of Ownership (Weight: 15%)

Sticker price is just the beginning. Calculate the real cost.

Costs to include:

• License/subscription fees (monthly or annual)
• Implementation and onboarding costs
• Training costs (your team's time + any vendor training fees)
• Integration costs (API development, custom connectors)
• Ongoing maintenance and support
• Upgrade costs (what happens when your needs grow?)
• Exit costs (data migration if you switch tools later)

Red flag: The vendor quotes a low monthly price but has high implementation fees buried in the proposal.

6. Vendor Stability & Support (Weight: 10%)

Will this company be around in 2 years? Will they support you when things break?

Questions to ask:

• How long has the company been in business?
• How many customers do they have? (In your industry?)
• What's their funding situation? (For startups — are they likely to survive?)
• What's the support model? (Email, phone, chat? Response time SLAs?)
• What's the product roadmap? (Are they actively developing?)

Red flag: The company pivoted twice in the last 18 months.

7. Exit Strategy (Weight: 10%)

Plan for the end at the beginning. What happens if you need to switch tools?

Questions to ask:

• Can we export all our data at any time? In what format?
• Is there a contract lock-in period? What are the termination terms?
• What happens to our data when we cancel?
• Is there a transition period if we switch to a different tool?

Red flag: "Your data is locked into our proprietary format."

Scoring System

For each category, score the vendor on a 1–5 scale:

• 5 — Excellent: Exceeds expectations, no concerns
• 4 — Good: Meets expectations, minor concerns
• 3 — Fair: Meets some expectations, notable concerns
• 2 — Poor: Below expectations, significant concerns
• 1 — Unacceptable: Critical issues, do not proceed

Multiply each score by the category weight, then add them up. A vendor scoring below 3.5 overall should not be selected — no matter how good the demo was.

The Hard Truth

The hardest part of vendor evaluation isn't the scoring — it's the discipline to walk away when a vendor scores poorly. Most businesses adopt tools because the demo was impressive or the salesperson was persuasive, not because the tool actually fits their needs.

Use this template. Score honestly. And if a vendor doesn't measure up, walk away. There are hundreds of AI tools on the market. The right one for your business is out there — but you won't find it if you settle for the first one that looks good.

Need Help Evaluating Vendors?

If you're evaluating AI vendors and want an experienced IT leader to review your shortlist, I can help. Book a consultation and we'll go through your evaluation together.