Evaluating how your outsourcer or managed service provider is performing in real terms is an area that’s surprisingly overlooked by an increasing number of organisations today. It can be easy to adopt an ‘out of sight, out of mind’ attitude to your service provider, secure in the knowledge that you have KPIs in place to keep them in check, but how do end-users know whether or not they are really getting what they have paid for? Of course, service level agreements (SLAs) are one of the key elements any buyer evaluates when signing up to a service, and can provide a good yardstick for performance management – but exactly how reliable are they?
Of course, end-users will always be keen to clarify what they’ll be getting from their supplier before they enter into a new agreement, but it’s also true that an increasing number of SLAs have ended up becoming a stick with which to beat service providers up with when things go wrong. Perhaps the inevitable consequence of this is that many agreements are now based on best endeavours rather than actual, attainable service levels, which may be much better than what is being promised.
With this in mind, I believe that, from the end-user perspective, there’s a strong case for arguing that using SLAs as penalty mechanisms is something that needs to be re-thought, and that a more collaborative approach is required. In today’s market we need to get closer as suppliers and buyers to work together to set more realistic targets which more closely recognise the levels of service that are actually being provided. On the supplier side, it’s clear that service providers need to start putting their money where their mouth is and sign up to more rigorous measures of performance.
So how can we realistically allow suppliers and buyers to work together to set up SLAs which accurately reflect what both sides need? There are a number of steps that end-users can take to ensure that both parties are satisfied, and that when the project comes to an end, there are no unpleasant surprises.
First and foremost, it’s important for end-users to do their research in order to understand what performance indicators are available and what is reasonable to expect. It's no exaggeration to say that it’s impossible to even start the SLA process without knowing or appreciating what is measurable. For instance, some SLAs are based on a variety of factors, and there can be no way of knowing what suppliers should be charging for, and how that matches to your budget unless you have properly researched it beforehand.
Although there are plenty of different measurements available, it's important to remember that it’s unfeasible to try and have SLAs for every single aspect of a service in place. Instead, end-users should pick the performance indicators that are most relevant and important to their business needs. For example, when it comes to managing network services, for some companies capacity is of paramount importance whilst for others the big issue is latency. Select the ones that are most appropriate and make these the most important items in the agreement.
For both the end-user and the service provider it’s important that the performance indicators selected for SLAs are accurately measurable and simple to understand. It’s also important for end-users to ensure that these thresholds are well below their minimum requirements. For example, if network latency is a key concern and a minimum level of, say, 40ms is required then it’s important to make sure the SLA is well under that figure – although still within the realms of possibility. Basically, make it realistic and keep it straightforward.
Finally, always remember that SLAs are a safety net, but not a cure-all. Having an SLA in place can't guarantee that you won't have problems, but it can give a measure of recourse in the event of a failure that exceeds these predetermined agreements. With this in mind, it's imperative that end-users understand what compensation they are entitled to and that it's equivalent to the damage caused in the event that SLAs are breached. For instance, if an outage for one hour cost your business £10,000, the SLA needs to adequately reflect this overall cost to the business, rather than just the impact to the network.
Perhaps above all, it’s important to remember that although SLAs are not a solution to end-users, they also needn’t be used as a stick to beat suppliers with. Only by working together to identify mutually achievable targets and outcomes, with regular communication on both sides will you achieve success. Having robust SLAs in place might not be a guarantee of a successful partnership, but can be an excellent first step towards achieving your aims!