Introduction to Implementation Guide for Service Level Agreements (SLAs)
A Service Level Agreement (SLA) is a document which identifies the agreed-upon services that will be provided to an internal or external client for a service in order to ensure that they meet the client's business need. The SLA identifies client expectations and defines the boundaries of the service, stating agreed-upon service level goals, operating practices, and reporting policies. Thus the SLA forms an explicit pact between the service provider and its client for the provision of the service. SLAs have traditionally been used in telecommunications service provision and IT service provision, but, subject to the service being suitable (as discussed later in "What Services are Suitable for SLAs?"), there is no barrier to implementing SLAs for a wide range of services.
The purpose of any Service Level Agreement is to describe and define the following:- what service(s) are being made available to what clients,
- what quality of service the client should expect,
- what period of time will the SLA cover,
- what the costs are to provide those levels of service,
- how the service will be delivered,
- how the service provider will monitor or track and report on performance and
- when the SLA will be reviewed and how to make changes to the SLA.
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What Services are Suitable for SLAs?
The key criteria for deciding whether a service is suitable for creation of an SLA are the following:- the service is fully understood by the service provider and the service provider is experienced in provision of the service. Where the service is novel in its form, complex and unfamiliar, the chance that the service provider will be able to satisfactorily perform the service while returning a reasonable profit is very much reduced.
- the service is provided in reasonably small, discrete and measurable units at a reasonable high frequency. Services which deliver large, amorphous blocks at low frequency lead to uncertainty of cash flow coupled with difficulty in quality management, both of which are contra-indications for SLAs.
- the service is repeatable and does not require significant original intellect to deliver. These characteristics of services lend themselves to initial training of service provider personnel and also to continuous monitoring and quality assurance, thus favouring SLAs as a management approach.
- the client can define the service needs. The client must be capable of describing and specifying what its business needs are and at what level of service they are to be delivered; when this capability is not evident, it needs to be developed before entering into a SLA.
- the service needs are relatively stable; this is a condition for SLAs since the service provider needs to establish a fee-per-service which, when performed over a period of time, results in a full offset of costs plus profit
- the service provider has, or can reasonably obtain, the resources needed for the service provision at the required service quality. Although the other conditions may be met, the service provider will not be able to deliver the services adequately in the absence of a suitably qualified resource pool.
- Writing parking tickets is a service quite suitable for creation of a SLA. The service task is reasonably small, comprised of discrete and measurable units and the frequency of issue of tickets is quite high. The task of ticket writing is repeatable and does not impose any demand for original intellectual effort. The client (usually a city council) can normally be expected to define the service needs and these service needs are quite stable, since illegal parking is not a seasonably variable offence. Provided that the service provider is experienced in this or similar services, understands the service and can obtain s suitable supply of parking inspectors, this is a service which should not only be readily represented by a SLA but which is likely to be best managed by a SLA.
- In contrast, writing novels is a service completely unsuitable for management by SLAs; indeed the management of the task of writing novels is difficult be any means. The service is characterised by large discrete units of delivery which require significant individual original intellectual effort. The time to execute each "service" is prolonged, making opportunities for quality assurance limited. The task is, by its very nature, not repeatable as a novel needs to be "novel". The client is unlikely to be able to specify the service need in any meaningful way; witness the unseemly public contestation which tends to attach itself to every literary prize for novel-writing. The resourcing of the service demands unusual, specialised resources, i.e. fiction writers.
Assessing a Service's Suitability for SLA Management
In order to determine whether a particular service is suitable for management by SLA, we suggest using an assessment table to determine how the service, considered together with the capabilities of the service provider and the client, rates as a SLA client.| Service Assessment: Issue of Parking Tickets | ||
|---|---|---|
| Criterion | Assessment | Fit Assessment (H, M, L) |
| Service provider understands service | Service provider demonstrates clear understanding of the service and has established metrics for its management | High |
| Service provider experienced with this service (or similar) | Has provided traffic infringement services for two years | High |
| Service units small and discrete | Patrol time measured in 8 hour shifts; each ticket issued 5 minutes work | High |
| Service high frequency | ~500 tickets issued per day | High |
| Service repeatable | Issuing tickets, independent of the circumstances is highly repeatable | High |
| Service does not require original intellectual effort | Conditions for issue of a ticket highly circumscribed; issue of ticket is a multiple choice fill-in exercise | High |
| Client can define service needs | Client council has long experience with ticket issue to draw on but may be unclear on service levels | High |
| Service requirement stable | Ticket issue records show less than 5% quarter-to-quarter variation | Medium - service provider may be asked to help client in service level specification |
| Service provider can obtain suitable resources | Service provider must recruit for roles and may encounter some difficulty in view of current high employment levels | Low - this issue needs careful attention |
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Where Next?
The complete series of Business Process Management e-books is as follows:- "Business Process Management Overview" (the grey book)
- "Generating & Selecting KPI Sets" (the blue book)
- "Implementation Guide for Service Level Agreements" (the plum book)
- "Identifying, Documenting & Analysing Business Processes" (the teal book)
- "Selecting & Implementing Internal Controls" (the red book)
- "Good Practice for Commercial Website Design" (the saffron book)
The series is available at the following website:
http://www.modulus.com.au/
Modulus provides tools, applications and services to consultancies and website developers. For more information contact Peter Hill, peter.hill@modulus.com.au.