My SLAs Are Green But My Mood Is Red!

Posted By on Sep 4, 2012


For our loyal readers, please welcome IA’s own Chris Connolly to the blogosphere. In his inaugural piece, Chris asks, “Does your SLA dashboard accurately reflect the true condition of your provider relationship?”

A recent flurry of client-provider satisfaction challenges has me plowing through Service Level Agreements (SLA), Critical Performance Indicators (CPIs), Key Performance Indicators (KPIs) and the other contracted metrics in order to try and uncover likely causes of the clients’ expressed pain. As I have seen before, the reported SLAs appear relatively normal – no significant misses or failures – and yet the client is miserable.

Why is it that all too often, a thoughtfully designed and accurately reported service level agreement does not reflect the true state of the client-provider relationship? Consider one or more of the following likely causes:

  1. The CPIs, KPIs, target performance levels and service credits are not aligned in a way that drives the desired behaviors;
  2. The target performance levels do not factor in the implications of an “acceptable” level of failure;
  3. The provider and/or client place too much importance on the SLA dashboard; and/or
  4. There are no supplemental relationship measures in place.

Addressing SLA Imbalance

SLAs, by their nature, measure the service areas of the provider. It is often in the client’s best interest to accept the SLA standards of the provider in order to gain efficiencies in servicing, data collection and reporting.

However, prior to initial service engagement, clients must spend sufficient time in order to thoroughly understand definitions and calculations, gain agreement on what constitutes critical and key performance and impose (within reason) their requirements on the provider. In addition, the opportunity to regularly review and modify or re-balance SLAs should be part of the contracted relationship.

Planning For Failure

Although a 99.9% target performance level may appear appropriately aggressive for a given service area, consider the implications of failure when setting and agreeing on targets and penalties. For example, if a 99.9% target were applied to net payroll calculation accuracy, a provider could generate 20 errors and still have met their monthly SLA for a 10,000-employee organization with 20,000 monthly paychecks. Many clients attempt to account for these failures by imposing stricter performance levels or higher penalties on the provider. However, greater accuracy may be unrealistic (or too costly) and there may be no adequate monetary penalty to compensate for the reputational impact of failure.

A suggestion is to adopt the approach of IT security and plan for failure. In cooperation with your provider, develop failure scenarios and plans for critical service areas that include incident response processes and regularly test these plans to help ensure preparedness. I guarantee that if one of the 20 “acceptable” errors is the CEO’s paycheck, you’ll be glad you did.

Green Dashboards Do Not Warrant Gold Stars

Missed SLAs are obviously cause for concern and concomitant actions but regularly met SLAs should be the expected norm – nothing more and no cause for celebration. SLAs are intended to be representative of the minimum performance required to adequately address market expectations for the product or service. Don’t allow the regular dashboard reviews to be anything more than one facet of a more thorough, regular check-up.

Complex Outsourcing = More Than Simple Diagnostics

Just as perfect blood pressure, temperature, heart and respiration rates do not necessarily reflect perfect health, flawless average speed of answer, first call resolution, transaction timeliness and case resolution rates do not give you the full picture of the health of your provider-client service relationship.

Outsourcing relationships are complex adaptive systems composed of interconnected parts that as a whole may exhibit properties not obvious from their individual parts. As such, there are no simple and absolute ways to predict or measure the overall health of these systems. Recognize that SLAs are only one set of relationship diagnostics.

Closing Thoughts

The addition of strong relationship management and governance with open and honest peer-to-peer communication channels can help ensure that you prepare the appropriate diagnostics, interventions and remedies. Like any good deployment, scenario planning helps to uncover the situational necessities that truly impact the fluid nature of both provider and client businesses. With employers increasingly leveraging outsourcers for a wide variety of employee-facing services, leaning on green alone may no longer be a viable approach.

2 Comments

  1. SLAs, by their nature, measure the service areas of the provider. It is often in the client’s best interest to accept the SLA standards of the provider in order to gain efficiencies in servicing, data collection and reporting.

    Post a Reply
    • I agree in part Millard….It is often in the client’s best interest to accept the SLA standard of the provider but ONLY if those standards align with what matters. Often, I have found that the providers “standards” are measuring stuff that do not matter to the client…only to the provider and that when these SLAs are consistently being met, the provider believes they are or should be commended for doing a great job. My point is to make sure that what is measured matters to both the provider and the client. THanks for your response.
      Chris

      Post a Reply

Submit a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>