Service Level Agreements – Planning, Writing & Managing Quality SLAs

How do you measure the quality of a service that you have contracted for? If your company has outsourced its accounting or I.T. support or payroll or direct marketing, how can you ensure that things won’t go wrong; or if they do, how much notice will you get, and what steps will you be able to take to correct the position and mitigate the loss of goodwill flowing from poor performance?

This is the concern of service contracting, by which is highlighted the importance of Service Level Agreements to meet the needs of companies that are dependent on long-term partnership arrangements with external suppliers of services in achieving strategic goals. Those managing such corporate relationships need to know how such a partnership will function and be able to deal with any problems.

Since the SLA contains the agreed criteria which establishes the measurement methodology that should drive the quality of service performance created as a legal contract between supplier and customer, or as a formal agreement between one internal supplier departments that provides corporate services to its internal client, it is imperative that everyone engaged in service provision understands the issues and processes involved in a service contract scenario.

It is not always, nor necessarily a question of protecting a company from loss. Both the internal and external SLA provides an opportunity to incentivise those undertaking services as part of the company’s offering, to its customers but also to its staff. Such incentivisation is a useful means of the company increasing performance, productivity and staff morale at relatively little cost. And such schemes have long been proven to work.

Since the 1980’s this practice has helped to maintain the same quality of service amongst different units in an organisation and also across multiple locations of the organisation. Internal scripting of a Service Level Agreement also helps to compare the quality of service between an in-house department and an external service provider.

Yet it was the development of technology and entry into the digital age that extended the use of metrics to analyse service performance. Such measurements can be extremely complex, with analysis on a dashboard screen that needs careful explanation.

All those involved in service provision need to understand the benefits of using service level agreements; how the different levels of SLAs operate; what is involved in planning, writing and managing service level agreements; what are the different SLA contracting structures and their applications; and the obvious strengths and weaknesses in using SLAs to deal with internal and external contractors.

Service personnel, and particularly service managers in large corporations should ideally be able to plan and draft a range of service level agreements; construct and control SLA negotiations deal with any disputes arising; articulate how quality SLAs should be included within the Procurement process; negotiate service level agreements with internal and external suppliers; document appropriate quality outcomes from service contracts; and evaluate the likely results from alternative service performance frameworks.

Effective SLAs go directly to enhanced sales and therefore the bottom line of the company’s balance sheet. For small companies they generate valuable goodwill which can be monitored. To that end training in SLAs will benefit all levels of personnel engaged in purchasing and procurement, commercial and contracts management departments, and technical operatives providing performance under service level agreements. It will enable them to contextualise their work, understand the contract and become aware of the different issues and risks associated with SLA contracting.

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