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Categories of SLA Metrics
The simplest way to approach the many possible metrics of an SLA is to group them into categories, decide which ones in a given category work best for the particular engagement, and then construct the desired metrics. The key factors can be managed through 15 major categories:
- SLA document
- SLA methodology/process
- Process implementation
- SLA measurements
- Resources
- Penalties
- Innovation
- System downtime and availability
- Volume of work
- Standards compliance and quality
- Customer satisfaction
- Sensitivity
- Effectiveness
- SLA implementation
- Outsourcing agreement
The following sections provide some guidelines for working with the metrics in each category.
SLA Document
The SLA document is the legal binding covenant between the outsourcing company and its client. This document must describe the exact services and service levels with precise and straightforward detail about all the services and agreements.
SLA Methodology/Process
The process document must describe what method/process and procedure the outsourcing company will use to support the SLA document. Usually these processes and methodologies are left to the outsourcing company to identify, ensuring that such processes and methodologies can support the SLA agreement. However, it's recommended that the client and the outsourcing company work together during the SLA contract negotiation to eliminate any misunderstanding about the process and method of support as well as management and reporting methods.
Process Implementation
The SLA methodology/process represents the high-level solution for the problem and the best technology to be used to implement the system. The team who are involved throughout the SLA agreement, contract, and cost negotiation must also be involved throughout the process implementation, to make sure that the SLA is not broken by either party.
SLA Measurements
Some type of measurement must be used to ensure that the SLA requirements are met. For example, in help desk outsourcing, data must be collected either manually or automatically for management reporting. Automatic data collection is recommended for comprehensive and less labor-intensive SLA reporting.
Resources
The SLA should consider using external or internal resources dynamically to meet changing business conditions. The object is to use a seamless mix of services, costs, and service providers to market the solution at a competitive rate.
Penalties
Loss of business cannot be measured in dollars and cents. However, it's extremely important to determine and prioritize business functionalities from worst case to best case, measuring those functionalities in dollars and cents. The SLA also must specify penalties that would get the outsourcer's attention.
Innovation
Innovation brings services to market faster. Since much technology improves rapidly over time, service level terms and conditions should be updated periodically to match industry standards.
System Downtime and Availability
In outsourcing, guaranteeing 100% availability of services costs significantly more than guaranteeing 99% or 98%, and not every company or every application needs 100% reliability. The SLA should request service availability to meet specific business needs. To avoid confusion, create a set of definitions for performance-related terms. Indicate how service levels will be tracked, how frequently they will be reported, and how often performance will be reviewed.
Volume of Work
The volume of work sometimes is difficult to define. For example, projects that are billed on a time-and-material basis may discuss volume in terms of number of resources, while a fixed-price project usually specifies number of deliverables. This metric is an important part of the SLA, specifying the exact level of effort to be provided by the service provider within the scope of the project.
Standards Compliance and Quality
Whether your project must comply with Six Sigma, CMMI, existing coding structures, or other industry standards, quality metrics are one of the most important SLA categories, covering the conformance of a variety of documents, work products, and deliverables to those standards. Quality problems arise when the ASP fails to meet these deliverables based on the predefined metrics in the SLA document; it's important to include acceptance criteria for each deliverable to gauge whether quality is acceptable. The best solution is using credible third-party vendors to audit compliance and quality assurance.
Customer Satisfaction
Periodic surveys should be conducted by both internal and external resources to make sure that service provided by the outsourcing company is satisfactory to your customers. Survey results should be checked against the SLA to ensure that the ASP meets the targets satisfactorily.
Sensitivity
Sensitivity metrics measure the amount of time required for an outsource company to handle a request. From the client's point of view, this metric helps to determine the quality of services provided by the ASP. These metrics gauge not only satisfying end customers, but launching new products and services quickly in the market. Another measure of sensitivity is the amount of backlog.
Effectiveness
Effectiveness metrics focus on lowering costs, improving profit, and adjusting business transactions. This category helps to measure the quality of a process and its efficiency. You also need to measure rework rates for specific deliverables and processes.
SLA Implementation
A legal instrument should be created to bind both parties to the final service level agreement. While the final SLA is based on the evaluator's SLA document, it's likely that sections will be added, removed, or adjusted as dictated by negotiations.
Outsourcing Agreement
Outsourcing agreements generally can be terminated for cause upon a material breach, such as insufficient service level. Without clear language in the SLA, the parties might argue about whether a service level failure is sufficiently severe to constitute a material breach. The SLA can provide increased certainty by defining particular events that, without argument, allow termination for cause. You can set minimum service levels that allow termination.