Dear customers, Rationalize your SLAs…

You go and ask an ISP (IT Service Provider) of any customer especially in the field of FS (Financial Services).

You: Hi, tell me about your delivery quality.

ISP: Welcome. We are at the top of the delivery excellence curve in the eco-system of my customer. All SLAs are green for the last … years. We are very proud.

You: Good. How many SLAs (Service Level Agreements) do you measure and report?

ISP: We pride ourselves in reporting more than 100 SLAs covering all aspects.

You: Wow! 100+ All your SLAs are green. Can you vouch for no degradation in the performance of your customer’s service to their end-consumers?

ISP: We can’t say that. Whatever we do, we are GREEN.

The above is not an uncommon conversation that can be experienced today. SLAs are good and needed. But what started off as a measurement mechanism is not what you see. It has become muddled, saddled with increasing number of measures and is being religiously reported. The only problem is that who consumes and what useful information is derived from it? What has happened in the last few years?

• The eco-system has more than one vendors.
• Very rarely does a complete business process start and stop with one vendor. Different vendors act on different parts of the value chain to complete a service.
• More vendors result in more hops of process flow. Each hop adds complexity to measurement, governance overhead and lead time.
• SLAs have become more operational and reflect the process capability of the ISP and have nothing to do with the business outcome of the customer. A system has an availability of 99.99%. It is possible to have one minute outage and meet the SLA. If that one minute happens to be during a critical window, business suffers. On the other hand, an outage at some other time may not impact business.
• The amount of time spent in recording data, reporting and managing can fund a fully-fledged vendor department!

What should the customer do?

1. Have a focused 1-2 week exercise. Look at your vendors and different services.
2. Understand your business capability and map the IT processes/vendors against each. Identify the critical points in the value chain.
3. Start developing SLAs to match with the “success criteria” of IT as a whole. For this, assume you are the only party in control of all IT resources/services.
4. Do not waste time in operational SLAs vouching for the process capability of the vendors. If you have selected a vendor compliant with certain process standards, it is the responsibility of the ISP to comply with it. So long as the MSA (Contract – Master Services Agreement) covers it, that should be fine. However, retain the option to ask for artefacts that couch for compliance.
5. Call for a workshop with the ISPs and set about how each one can take the SLA you have devised. It comes in many different flavours:

• Flavour #1: Every ISP can take the SLA and apply it with respect to its domain/services. For example, consider a resource ramp up time of n weeks. It applies to every ISP and can work with their portfolio.
• Flavour #2: The SLAs have to be taken by each ISP; however, the target value should change as the quantum and type of work done by each ISP vary. Consider the fact that 20% of the IT staff are considered “KEY” and there is a whole host of definition behind what is “KEY” including longevity in the account, skills, capability, offboarding procedure etc. Customer’s IT has a target of 25%. But the same % may not be relevant for an infra service provider vs high end application service provider. The values should reflect their role and volume of work.
• Flavour #3: This is the most complex. The completion of a business capability requires services from different ISPs. Here, the respective ISPs should take the entire SLA as it is and have a responsibility to work together and ensure all of them complete the task within the overall time. This will call for a high maturity discussion, understanding and a passion to work with multiple vendors in order to deliver a business outcome. Once agreed, the ISPs will ensure they work seamlessly, find ways to inform one another well in advance, have planning sessions, find ways to reduce the hop etc. If any ISP is not willing to take, you really need to re-examine the fundamental reason behind. Or it is perhaps time to re-examine the relationship with the ISP.
• Flavour #4: This is similar to the variant #3 but with a difference. The single business capability can be broken into distinct steps with each step owned by an ISP. Here,  the ISP take that part of the SLA (After breaking it down) that applies to them with a specific target value.

After agreeing on this, focus on:

• Propagation of the same across all users/stakeholders
• Laying down of the measurement and reporting system to be used and
• Developing an automated system for tracking and reporting eliminating the need for a voluminous governance around this.
• As a guideline, any set of SLAs more than 20 measures may not augur well.

Finally, a word of caution: If, as a customer, you find too often lifting the phone or dropping an email to ask for an SLA report or spend days validating the data in the SLA report or get happiness in organizing SLA meetings, you have slipped into a danger zone.