What should you check before renewing a technology contract? Twelve things, and most organizations check none of them: the renewal date and notice window, whether the contract renews automatically, what you are actually using against what you are paying for, the price escalator, the fees that were not in the original quote, the service levels and whether they have ever been enforced, the data terms, and what it costs to leave. A renewal is the one moment a vendor has to earn the relationship again. Signed on autopilot, it is a price increase with a signature.
Why renewals go wrong
The agreement was negotiated years ago by someone who may have left. The vendor's account manager knows the date; your organization does not. The notice window closes before anyone reads the terms, the auto-renewal clause does the rest, and the escalator adds a few percent a year to a bill nobody has benchmarked since it was signed. None of that is malice. It is what contracts do when no one is watching them.
- At least 120 days outStart the review, so the notice window is not the deadline for the whole review
- 60 or 90 days outThe notice window: the date by which you must give notice to change or cancel
- Before the window closesDecide: renew as-is, renegotiate, replace, or renew short while you evaluate
- Renewal dateMiss the notice window and the contract can commit you for another full term
The twelve checks, in order
- Find the date, and the notice window. Not the renewal date alone; the date by which you must give notice to change or cancel. It is often 60 or 90 days before renewal, and missing it can commit you for another full term.
- Read the auto-renewal clause. How long is the new term? Same as the original, or longer? Can you renew month to month while you evaluate? A contract that quietly renews for three years is the most expensive sentence in the document.
- Reconcile what you use against what you pay for. Pull the last three invoices and the usage reports. Circuits nobody uses, licenses assigned to people who left, seats bought for a project that ended. This check alone usually pays for the review.
- Find the escalator. Most multi-year agreements carry an annual increase, sometimes tied to an index, sometimes a flat percentage. Know what it is and whether it has been applied correctly.
- List the fees that were not in the quote. Regulatory recovery fees, administrative fees, early termination fees, professional services billed at rates never agreed. Telecom is the worst for this; cloud is close behind.
- Benchmark the price. What does the same service cost from the same vendor to a new customer today? What does it cost elsewhere? You do not have to switch to use the answer.
- Read the service levels, then ask when they were last enforced. Uptime, response time, resolution time, and the credits owed when they are missed. An SLA that has never been claimed against is decoration.
- Check the data terms. Where the data lives, who can access it, what happens to it on termination, and how quickly it comes back to you. In regulated environments this is a compliance question, not a contract detail.
- Check the exit. What it costs to leave, how long the transition takes, what the vendor is obligated to do during it, and what they can hold hostage. If the exit is punitive, the renewal negotiation is weaker than it looks.
- Look for the true-up. Cloud and software agreements often reconcile actual usage against the commitment at renewal, and the bill arrives after the signature. Know what is coming.
- Ask what has changed. The vendor's product, the vendor's ownership, your own environment. A contract for a system you are retiring in eighteen months should not renew for three years.
- Decide before the notice window, not at it. The options are: renew as-is, renegotiate with the incumbent, replace, or renew short while you evaluate. All four are legitimate. The one that is not is letting the clock decide.
Telecom, specifically
Copper lines being retired and repriced (see the POTS page), circuits that predate the last office move, and fee schedules that grow between renewals. Reconcile the inventory before anything else. POTS line replacement
Cloud, specifically
Commitment against consumption, reserved capacity nobody reviewed, egress charges that surprise the finance team, and a true-up clause that turns a renewal into a bill. The cloud cost posts on this site go deeper on each.
Cybersecurity, specifically
Coverage that has not kept pace with what your insurer now requires, tools reported as one thing and licensed as another, and renewal terms that assume the threat model has not changed. Check the security agreement against the cyber insurance application before renewing either. Cyber insurance requirements
Who should do the review
Not the vendor. The account manager's job is to renew you, and a renewal review run by the party being reviewed is not a review. An internal owner with the invoices and the contract can do most of the twelve. Where an independent read helps is the benchmark, the negotiation, and the decision to keep, renegotiate, or replace. When we do that work, the way we are paid is disclosed before we start, and keeping the incumbent is a recommendation we make regularly. How we're paid
Questions, answered plainly
How far before renewal should I start? At least 120 days, so the notice window is not the deadline for the whole review.
Can I renegotiate without threatening to leave? Yes. A benchmark and a reconciled usage report are enough; most vendors would rather adjust than lose the account.
What if the notice window has already passed? Read the auto-renewal term; some allow changes within the new term, and most vendors will negotiate rather than hold a customer to a term they resent.
