Vendor Overlap Matrix: Visualize Which Tools Do the Same Job

Stop paying for duplicate features: a quick path from clutter to clarity

If your finance team is sick of subscription invoices, ops teams wrestle with five ways to do the same report, and product owners can’t agree which tool owns an email workflow — you don’t have a procurement problem, you have an overlap problem. This article gives a practical Vendor Overlap Matrix template and step-by-step playbook to map tool capabilities, expose duplication, and make consolidation decisions with data and confidence.

Why this matters in 2026

Since late 2024 and through 2025, the market saw a wave of new AI-enabled point solutions and several large vendor mergers that left many stacks more fragmented. Analysts and trade outlets (MarTech, ZDNet coverage in 2025–26) report rising technology debt from unused or overlapping tools. With stricter data residency rules and rising SaaS costs in 2026, organizations are tightening tool governance — and an overlap matrix is now a tactical must-have for audits, budgeting rounds, and migration planning.

What a Vendor Overlap Matrix does (fast)

• Maps capabilities (rows = capabilities, columns = vendors) so you can see feature-level duplication at a glance.
• Scores overlap using a reproducible formula so decisions aren’t based on gut feeling.
• Supports consolidation decisions by combining overlap with cost, ROI, integration complexity, and user satisfaction.

Quick overview: the dashboard you'll build

Your spreadsheet will have three parts:

1. Capability matrix — binary or graded cells (0/1 or 0–3) indicating whether a tool supports each capability.
2. Overlap score & similarity matrix — pairwise similarity (Jaccard or cosine) between tools; a sortable table and conditional heatmap.
3. Decision dashboard — visual rules and recommended actions (Keep, Consolidate, Replace, Investigate) based on composite scores.

Step 1: Define capability taxonomy (the foundation)

Start with a focused, business-driven capability list — not every feature a vendor advertises. Aim for 20–60 capabilities for most mid-market audits. Group capabilities into categories such as:

• Core functionality (e.g., email send, CRM contact management)
• Data & integrations (API, webhook, prebuilt connectors)
• Governance & security (SSO, consent management, encryption at rest)
• Operational tooling (automation, workflow builder, reporting)
• AI/insights (generative content, predictive scoring, anomaly detection)

Tip: Pull taxonomy items from product usage logs, support tickets, and vendor docs. Involve one SME from each team for accuracy.

Step 2: Fill the capability matrix

Create a sheet with capabilities as rows and vendors as columns. Use a consistent scale:

• 0 = absent
• 1 = basic support
• 2 = advanced/automatable
• 3 = best-in-class

Example formula to normalise binary inputs into 0/1 in Google Sheets:

=IF(TRIM(A2)="",0,IF(A2>0,1,0))

Or import usage counts and turn them into capability presence: =IF(COUNTIF(usage_range, vendor)>5,1,0).

Step 3: Calculate overlap & similarity

Two reliable methods:

Jaccard similarity (best for binary presence/absence)

Jaccard(A,B) = |A ∩ B| / |A ∪ B|. In Sheets/Excel you can compute this with arrays (0/1 cells):

=SUMPRODUCT((A_range=1)*(B_range=1)) / (SUMPRODUCT((A_range=1)+(B_range=1)>0))

Returns 0–1; higher means more overlap.

Cosine similarity (best when you have graded scores)

Cosine gives weight to capability depth: two tools both scoring 3 on several capabilities will show higher similarity than two tools with one overlapping basic feature.

=SUMPRODUCT(A_range,B_range)/(SQRT(SUMPRODUCT(A_range,A_range))*SQRT(SUMPRODUCT(B_range,B_range)))

Create a pairwise matrix (vendors as both rows and columns) and apply conditional formatting to produce a heatmap — hot colors = high overlap.

Step 4: Build composite consolidation scores

Overlap alone is not a decision. Combine it with:

• Cost (subscription + integration + maintenance)
• Active users (license utilization)
• Integration complexity (1–5 scale)
• Strategic fit (product roadmap alignment)
• User satisfaction / NPS

Normalize each input to 0–1 and compute a weighted score:

CompositeScore = w1*Overlap + w2*(1-CostNorm) + w3*UserSatisfaction + w4*(1-IntegrComplexity)

Example weights: Overlap 40%, Cost 25%, Integr Complexity 15%, Satisfaction 20%. Adjust by org priorities.

Step 5: Action rules and thresholds

Turn numeric scores into clear actions so stakeholders can act quickly. Example simple rules:

• Overlap >= 0.7 and CompositeScore < 0.4: Recommend Consolidate (high duplication, low strategic value)
• Overlap 0.4–0.7 and Cost high: Recommend Investigate (possible consolidation or renegotiate)
• Overlap < 0.4 and Satisfaction high: Recommend Keep
• Any vendor with low compliance/security scores: Recommend Replace or Remediate immediately

Include a migration risk column (data exportability, API completeness, export formats) to prioritize low-friction consolidations first.

Visualization patterns that drive decisions

Humans reason visually. Add these views to your dashboard:

• Heatmap of pairwise similarity — instant visual of clusters of high overlap.
• Bubble chart — x = overlap score, y = user satisfaction, size = cost. Quadrants show candidates to keep vs consolidate.
• Sankey or chord diagram — use for showing where capabilities flow between vendors (good for executive storytelling).
• Timeline forecast — subscription renewals and cost curves if you keep vs consolidate.

In Google Sheets, conditional formatting + custom number formats gives an effective heatmap. For richer network visuals, export the similarity matrix to a lightweight viz tool (e.g., Flourish, D3, or a Power BI network visual).

Automation & integrations for living reports

Manual audits get stale. Make the matrix live:

• Use API connectors (vendor APIs, Snowflake/warehouse, or middleware like Zapier/Make) to pull license counts and usage metrics daily.
• Use Power Query in Excel or connected Google Sheets scripts to refresh vendor capability data from a canonical CSV or ticketing system.
• Automate alerts: when overlap > threshold or renewals approaching, create a task in your PM tool via Zapier.

For enterprises, leverage the Google Sheets API or Office Scripts to run nightly similarity recalculations; for smaller orgs, a weekly manual refresh is often enough.

Governance & stakeholder alignment (the soft but decisive part)

Matrix outcomes must link to decisions. Use these steps to get buy-in:

1. Invite cross-functional SMEs to validate capability taxonomy and weighted scores.
2. Run a 2-hour validation workshop to confirm critical capabilities and migration feasibility.
3. Publish a recommended quarterly roadmap (deprecate X in Q2, migrate Y to Z in Q3).
4. Create a post-consolidation monitoring playbook: track errors, usage, and SLA breaches for 90 days after migration.

Case study (concise, practical)

Mid-market e-commerce company, 38 SaaS tools, annual spend $420k. They ran an overlap matrix and found:

• Five tools overlapping on cart recovery and automated emails (Jaccard > 0.75).
• Two CRMs with 60% overlapping contact management features but different integrations.
• Outcome: consolidated three email tools into one (35% cost reduction), migrated small CRM to primary vendor’s contact store (reduced integration points by 22%), and set a procurement freeze for new point tools without a matrix review.

Business impact in 9 months: 28% lower SaaS spend on the audited categories, 18% faster onboarding for new hires (fewer systems), and one centralized reporting view for marketing performance.

Advanced strategies for 2026 and beyond

Recent vendor moves in late 2025 and early 2026 have created both consolidation opportunities and new integration headaches. Consider:

• Platform vs best-of-breed analysis — some platforms now embed AI modules that erode point-solution advantages. Use the matrix to quantify capabilities a platform now covers.
• Privacy & data residency weight — add these as hard filters in 2026 audits due to evolving regulations.
• AI capability drift — track AI features separately because rapid vendor updates can change overlap quickly.

Template checklist — what to include in your sheet

• Vendor list (including renewal dates and contract owners)
• Capability taxonomy with definitions
• Capability scoring inputs (0–3)
• Pairwise similarity calculations (Jaccard & Cosine)
• Cost, active users, integration effort, satisfaction columns
• Composite score + action rule column
• Visualization dashboard (heatmap, bubble chart, timelines)

Common pitfalls and how to avoid them

• Pitfall: Too many capabilities — dilutes signal. Fix: Keep taxonomy lean and business-focused.
• Pitfall: Biased scoring by vendor champions. Fix: Use at least two independent reviewers per vendor and record reviewer IDs.
• Pitfall: Decisions that ignore migration cost. Fix: Always include migration effort and data exportability in the composite score.

How to run a 90-minute overlap audit workshop

1. 5 min: Purpose and outcomes (finance and ops aligned).
2. 15 min: Quick walkthrough of the capability taxonomy.
3. 30 min: SMEs score top 10 vendors live in the sheet (use breakout rooms by domain).
4. 20 min: Review pairwise heatmap and surface quick wins.
5. 20 min: Agree next steps, owners, and timelines.

Interpretation guide — what to do with high overlap

High overlap can mean different things:

• Healthy redundancy — deliberate fallback systems for critical operations; keep but document failover plans.
• Accidental duplication — candidates to consolidate.
• Complementary overlap — overlapping capabilities but with unique strengths; consider integration rather than consolidation.

Final checklist before you act

• Confirm contract terms and early termination penalties.
• Inventory data exports and migration constraints.
• Plan 60–90 day rollback windows and support SLAs.
• Communicate change to affected teams and provide training plans.

Takeaways — what to do next

Run a quick 90-minute audit with your procurement, ops, and a product owner using the overlap matrix. You’ll quickly spot low-hanging fruit (redundant point tools) and make consolidation decisions backed by measurable scores instead of opinions. In 2026, with fast-moving vendor features and cost pressure, a living overlap matrix is a high-ROI governance tool.

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Ready to see this in your stack? Download the ready-to-use Vendor Overlap Matrix template from spreadsheet.top, or book a 30-minute consultation to walk your team through a live audit and a customized consolidation roadmap.

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