Service level agreements
Service level agreements (SLAs) are the link between the specifications laid down in the contract and the delivery of the service. In essence they provide the basis of the legal framework under which the performance of the provider is measured.
SLAs naturally vary according to the requirements of the various parties to the outsourcing arrangement. But in each case the quality of the service delivery will depend to a large extent on these factors.
How well both parties have isolated and set down the really critical controls. Although agreement will be necessary, it will be apparent that the client must set its own agenda and not just leave it to the provider;
In an appropriate risk/reward sharing arrangement, creating a dynamic, but flexible service that accepts that changes to the SLA are inevitable and a fact of life if maximum improvements are to be achieved. The ideal SLA for this purpose should concentrate on the service required rather than detailing the methods of obtaining it.
Creating and laying down easily understood service control and service performance metrics. The wise client will attempt to look for continuous performance improvements and where possible build them into the service performance metrics.
Setting up the required quality management and performance review processes.
For each activity it will be necessary to agree both a standard of service and the critical performance indicators. It is important that the various processes are grouped into distinct service activities so that they can be dealt with separately and the performance measures can be directly applied to them.
for each activity it will be necessary to agree both a standard of service and the critical performance indicators
Each activity will need to be clearly defined. This will require a description of its purpose, the volumes involved and the service expectations. In effect the full process is described in sufficient detail to avoid the chance of confusion and misunderstandings. Similarly the service required should be given the same amount of attention to detail. The performance measures are normally tasks and deadlines. In due course they will be compared against the contract standard requirements on accuracy and timing.
It sometimes happens that client organizations reach the pre-transition stage having only recently carried out an exercise that has resulted in full descriptions of the activities to be transferred. Unless this exercise was done previously with outsourcing in mind, it will still make sense to draft out the desired service again and analyze the likely consequences, before starting in-depth discussions with the provider. Not surprisingly the minimum service tends to go up a few notches when outsourcing service providers are likely to be involved.
The actual service level agreements produced will depend on the nature of the processes being outsourced, but typically they will cover the following areas.