AI Vendor Selection Playbook.

Every vendor sounds brilliant in the demo. This is how you separate signal from noise before you sign anything.

After this lesson you'll know

The 7 red flags that disqualify an AI vendor immediately
A structured demo checklist you can bring to any sales meeting
How to negotiate AI contracts without getting locked in
The build-vs-buy decision matrix for executive teams

The Problem

The AI vendor market is a minefield.

There are now over 14,000 AI startups competing for your budget. Most of them are wrappers around the same foundation models you could access directly. Some are genuinely transformative. The difference between a $200K mistake and a 10x productivity gain often comes down to how you evaluate before you buy.

The playbook below is battle-tested. It comes from watching organizations make every possible vendor mistake and distilling the patterns into a repeatable process.

Red Flags

7 red flags that should end a conversation.

1. "Our AI is proprietary"

If they won't tell you what model they're built on, they're hiding something. Most enterprise AI tools use OpenAI, Anthropic, or open-source models underneath. That's fine. Lying about it isn't.

2. No data retention policy

Ask: "What happens to our data after we cancel?" If the answer is vague, walk away. Your data should be exportable, deletable, and never used for training without explicit consent.

3. ROI claims without methodology

"Our customers see 400% ROI" means nothing without knowing who, how, and over what timeframe. Demand case studies with named companies and verifiable metrics.

4. No pilot or proof-of-concept option

Any vendor confident in their product will let you test it on real data for 30-90 days. Annual contracts with no trial period are a red flag.

5. Per-seat pricing that scales exponentially

AI costs are dropping every quarter. If a vendor's pricing model gets dramatically more expensive as you scale, their economics don't work. You'll be paying for their inefficiency.

6. "We replace your team"

No responsible AI vendor makes this claim. AI augments teams. Vendors who promise to eliminate headcount are selling a fantasy and setting you up for implementation failure.

7. No SOC 2 or equivalent compliance

If they're handling your enterprise data without SOC 2 Type II, ISO 27001, or equivalent certification, they're not ready for enterprise customers. Full stop.

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