Why AI Transparency from Your Vendors Isn’t Optional Anymore

(This article is drawn from the Beyond the Horizon Podcast: The AI Landscape for MSPs – Managing Governance, Compliance, and Cyber Threats)

Across IT stacks, AI is silently but powerfully being embedded into the tools organizations rely on. It is being woven into the things we use on a daily basis, from predictive analytics to chatbots and automation, and it is reshaping how IT operates. AI is no longer an add-on or an enhancement. It is being used and delivered as a part of your core stack.

Over the past few months, I’ve spoken with and trained over 150 MSPs, and one thing is clear: we as an industry are not asking enough about how this technology functions, what data it’s accessing, and how decisions are being made. This lack of transparency can have real-world consequences. For MSPs and internal IT leaders, this shift presents immense opportunities. However, alongside these opportunities come significant risks when it comes to transparency and governance.

If your vendors can’t explain their AI, it’s your compliance, your clients, and your credibility that will take the hit. The time to demand transparency from your vendors isn’t tomorrow. It’s today.

Why AI Governance Isn’t Optional in IT

According to McKinsey, 92% of companies plan to increase their AI investments over the next three years. That’s not surprising, given how AI can streamline operations, enhance decision-making, and enable innovation.

But AI is being embedded before it is explained. Many organizations are unaware of where or how AI is embedded into their operations because vendors often fail to provide visibility into its workings. Imagine using third-party code in your platform without fully understanding the licensing terms. If you can’t trace how AI decisions were made, and the implications of them, you may find yourself in legal gray zones. The liability shifts to you, whether you knew the risks or not. Which leads us to the next issue.

The Problem Most Vendors Are Facing

Here’s what I hear from the people I talk to: AI features are getting pushed into their environments by their vendors. But, controls, clarity, and insight into governance… that is lacking or missing entirely. Many vendors, are eager to roll out AI-powered features so they can maintain market leadership positions – at the expense of offering transparency and user control over how AI functions.  Most vendors only provide company-wide opt-out options. For MSPs, that’s a huge problem. You serve multiple tenants. You need controls that support each one individually. Without that, you’re left shouldering the complexity – and the liability.

As I’ve stated before, it is not enough to offer opt-outs. MSPs are stuck navigating compliance and reporting burdens. Worse, they may unknowingly expose both their clients and themselves to legal, ethical, and operational risks.

The Risks of Ignoring Vendor AI Transparency

Failing to demand and implement AI transparency isn’t just a technical oversight; it has real-world consequences. Here’s why ignoring transparency can backfire:

1. Compliance Challenges

Regulatory frameworks like the EU AI Act and other global regulations are raising the bar for governance. Soon, compliance will require clearly auditable AI decision trails and consent tracking. Being unprepared for this can lead to fines and reputational damage.

2. Legal Liability

Without understanding how and where a vendor’s AI is used, your business may unknowingly breach agreements or policies. For example, if sensitive data is processed without user consent, your organization may face lawsuits.

3. Security and Ethical Concerns

AI-powered systems can exploit misconfigurations, as malicious actors often wield AI to find vulnerabilities faster than humans can. But if your vendors fail to disclose specifics about their AI operations, how can you identify weaknesses before attackers do?

4. Client Impact

Transparency fosters trust. Without it, your clients may question your integrity or choose competitors who are better prepared to address compliance and governance.

The Path Forward for IT Leaders

The good news is that proactive governance is an opportunity to boost your organization’s competitive advantage. Here’s what IT leaders, especially CIOs, CTOs, and MSPs, can do right now:

Audit Your Tech Stack

Start by identifying where AI is embedded across your tools and services. Ask:

• Is AI usage declared by the vendor?

• What business units or tenants does it impact?

• Are data sources and outputs controlled?

This transparency ensures nothing slips through the cracks.

Ask Vendors the Hard Questions

When choosing or evaluating vendors, demand clarity on:

• Data Usage: What data is being used, and is it anonymized?

• Governance Mechanisms: Are opt-ins and opt-outs tenant-level or company-wide?

• Explainability: Can AI decisions and outputs be explained clearly, especially controversial ones?

Build Transparency into Procurement

Vendors who prioritize transparency should meet the following criteria:

• Provide documentation on AI systems’ design/access protocols.

• Offer clear dashboards, reporting, and opt-out options at granular levels.

• Demonstrate compliance readiness, showing alignment with frameworks like the EU AI Act.

By prioritizing vendors who meet these demands, you actively mitigate risks while setting higher operational standards.

Foster a Governance Culture

Within IT and MSP organizations, embed governance into your workflows. Create documentation and internal policies that monitor AI systems regularly. Engage a cross-functional team to oversee these policies, and report frequently on audit results. Visibility and accountability should be your guiding principles.

The Opportunity in Proactive AI Governance

Proactive AI governance should be embraced as a way to differentiate your services. By staying ahead, you position your IT team or MSP as an enabler of responsible AI adoption, not a blocker of progress.

This is where forward-thinking vendors like N‑able are investing resources into creating transparent, explainable AI systems. These vendors are delivering AI-powered features and ensuring MSPs and IT leaders have the right tools and insights to govern their AI responsibly.

Take it from those who are already getting it right. Responsible governance amplifies innovation with fewer risks and creates trust among clients. That’s an undeniable advantage for the AI-driven transformation shaping tomorrow.

What’s Next for Responsible AI Implementation

The landscape of AI regulation and governance is in a high state of flux. But those who prepare early will lead the transition. Leaders need to demand transparency, implement proactive governance, and stay educated to adapt to new rules.

Want to learn more about building governance into your AI strategy? Listen to the full Beyond the Horizon podcast episode I recorded recently, The AI Landscape for MSPs – Managing Governance, Compliance, and Cyber Threats, where I outline concrete steps for IT leaders to adopt AI confidently—even as the rules around it continue to evolve.

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Nicole Reineke is Senior Director of AI Strategist at N‑able