Setting SLAs; Things that can go wrong

• SLAs based on presumptions 

Often times, when drafting the terms of SLAs, the parties think that the expectations are clear but there may be many elements which if not spelled out and jotted down in SLA terms may create conflict. So, leave no scope for assumptions and presumptions and include all minor expectations set. An agreement should be a two-way understanding of the requirements of the business and shared understanding of the delivery expected, not a one-sided declaration. 

• Having too many SLAs 

Having too many SLAs dilutes the impact of each SLA and there may be overlapping or conflicting terms that may result in the breach of contract. For example; if a customer has 55 SLAs and the at-risk amount is only 5% of the invoiced fees in a month, the breach of agreed upon terms in one SLA creates a service credit which is 1/55th of 5%. 

• SLAs that are siloed 

SLAs that give prime focus on infrastructure and uptime of the application component without taking into considering the business outcome and how establishment of service integrations would affect that outcome are faulty. It doesn’t give a clear idea of the teams in the IT ecosystem who is responsible for each business outcome. SLAs should address larger umbrella groups or outcomes. It is better to draft SLA terms from a portfolio and outcome perspective. 

• Too Rigid SLAs 

Too rigid SLAs induce inefficiency in the process as the service provider finds himself in a narrow zone. “When an upfitter has to consistently put overtime in to meet a particular client’s SLA, the costs of the product go up, eventually affecting pricing,” said Joe Brightwell, supply chain, quality and operational excellence manager – service vehicles for Wheels Inc. 

• Inability to measure 

It is necessary to set proper metrics for measurement of each service mentioned in the SLA. Calculating the SLAs and quantifying the goals is must so that your service provider and you know the metrics against which the performance would be measured. If SLA is tied to penalties for missing metrics, there is even a risk of damage of relationship. Your service provider may think that you are taking advantage of him. Moreover, adequate data must be used to validate the metrics and for measuring the SLAs. 

“A shift we’re beginning to see is an increased use of data and process discovery tools to measure SLAs,” says Borowski of West Monroe. “While not pervasive yet, these tools represent an opportunity to identify the most meaningful metrics and objectively measure performance (e.g., cycle time, quality, compliance). When provided by the client, it also eliminates the dependency on provider tools as the source-of-truth for performance data.” 

• Not introducing proper security clauses in SLAs 

You should ask your provider to include security clauses in their SLAs. While providing service there may be chances of disaster, vulnerabilities developing in the infrastructure and data loss. So, you should push your service provider to include clauses for disaster recovery, incident response and vulnerability and threat assessment.