Managing Sourcing Relationships

One of the questions I received recently was about reverse KPIs.  What are they and why are they used?  All relationships require activity and commitment on both sides – this is particularly true in outsourcing and shared services.  It is sometimes assumed that Service Level Agreements outline all the services that they must be undertaken by service providers and that they are then used by clients to express dissatisfaction and enforce penality clauses.  In reality many Service Level Agrements now accurately reflect the activities that must be undertaken on both sides to ensure that the SLA is succesful.  Lets take an example.

One client is currently using our SLA Management or SLA Monitoring tool to ensure that the reporting service they outsourced is undertaken as they expected.  One of the key metrics which is recorded is not recorded by the Service Provider – but actually the client – that is whether they provided the raw data to the Service Provider on time every month.  Clearly if the data is not provided on time then it would not be possible for the service provider to meet its obligations.

Capturing SLA information can be difficult and extremely manual.  Often it is captured in Shared Services or Service Provider organisations in spreadsheets – a manual and time consuming activity.  It becomes impossible when there is data to entered on both side of the relationship.  Where you are using reverse KPIs in an SLA I definitely recommend using an online SLA management tool.   An SLA Monitoring tool where data can be entered by all parties to the relationship – ensuring  that you can quickly and easily access the data.

One could argue that there should be reverse KPIs in all SLAs – can the Service Provider do everything with no requirements on the client?  When you are next reviewing your SLAs perhaps this is something you should look out for?