Creating a good service level agreement is a key success factor in the ongoing success of outsourcing and shared services deals. Here are a few tips on how to get it right. I also propose to outline a few of the common pitfalls. So what exactly is an SLA? A Service Level Agreement is exactly what it says it is – an agreement that a particular level of service will be provided by one party to another. Some SLAs are internal and some are external. Obviously there is usually a greater degree of legal formality associated with external SLAs. Historically internal SLAs have tended to be less formal – often being referred to as Operating Level Agreements. This approach has changed recently as organisations start to realise that the more informal the SLA the less likely an organisation is to receive the benefits of an internal shared services model.
The key elements which should be included in all SLAs are
- the main parties to the agreement
- the start date or beginning of the SLA
- the key services being provided
- the level at which services are to be provided
- the key service metrics
- the location at which services are to be provided
- associated costs
This is a high level summary – if you are creating specific HR SLAs, Finance and Accounting SLAs, Recruitment SLAs, Outsourcing SLAs or Shared Services SLAs then get your hands on an SLA template to support your efforts.
The process of creating a service level agreement can be time consuming – it is a precise and detailed process – but the importance of the effort cannot be underestimated. But – bear in mind when you have created the SLA – the next step is effective SLA Management – it is only by ongoing management of the SLA that you will really start to see the benefits and understand when there are issues.
Common pitfalls in the process of creating SLAs include too much of a focus on operational KPIs - try to really focus on business outputs – KPIs that actually matter to your customers. The second major pitfall can be the creation of metrics that cannot really be measured. Thirdly – keep momentum in the process of creating the SLA- it can be boring and time consuming – remember the SLA can be changed at a later date – but trying to introduce the concept of an SLA at a later date will be extremely difficult. Finally – don’t include too many metrics – the ideal number is usually 10 to 15 KPIs.
For lots of information on the process of creating, managing and reviewing SLAs have a look at the free SLA toolkit
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