The Right Way to Set SLAs
May 17, 2006
consult on IT Service Management , everyone wants to jump into Service Level
Management and set their Service Level Agreements (SLAs) right away.
SLAs get a lot of press, they are part of the Service Level Management (SLM)
process and we need to step back and discuss how SLAs should be arrived at.
The goal of
SLM is to understand the requirements of the customer and organization, factor
in the capabilities of the supplier(s) and then deliver quality services that
meet those requirements and are subject to constant improvement. The intent of
this is to build a better relationship between IT and its customers.
important to have a solid SLM process as it will affect the overall IT Service
Management (ITSM) initiative. In fact, if your operations environment is not
stable, you should start with Change and Configuration Management first as
setting SLAs that can cause everyone to lose confidence in the ITSM effort.
To start the
journey, IT must designate a Service Level Manager who is empowered to
negotiate with the customers and make commitments that are binding on the IT
organization. This person must be very knowledgeable about IT and the business
and be an excellent communicator with honed negotiation skills.
Level Manager meets with each customer and understands requirements. The
manager then crafts a Service Level Requirements (SLR) document that identifies
in business terms what the customer needs.
Next, the SLM
manager meets with the suppliers who provision the services that the customer
is interested in. These suppliers could be internal, external or a mixture
thereof. These suppliers need to review each service and craft Service
Specification Sheets for each. If the SLR is a customer-facing document, then the
spec sheets can be viewed as the technical underpinning documents outlining how
the business requirements will be met.
Mean Something to Customers
from the customer's requirements set forth in the SLR and the supplier inputs in
the spec sheets, the manager crafts a Service Quality Plan (SQP) that puts
forth key performance indicator metrics and any critical success factors for
monitoring the performance of the service. It is important that the metrics
have value to the customer and IT, not just IT.
communicating with the customer and ensuring requirements are met, it is very
important to be measuring what matters. For example, what value does
availability as a percent really serve if the business lost a painful $2
million during an outage that occurred during the 0.001% of unplanned downtime?
point, the manager needs to negotiate the agreements relating to provisioning.
The Service Catalog documenting what IT can provision must be developed or
refined if it already exists. The Service Level Agreements (SLAs) stating what
IT and the customer will each provide and how the relationship will be managed
must be crafted. The Operational Level Agreements (OLAs) stating how IT will
meet the service levels that are needed and the Underpinning Contracts (UCs)
committing vendors must be set as well.
To be clear,
the OLAs are used with internal groups to ensure they can provide service
levels that enable IT to meet the customer's defined Service Levels. UCs are
used with vendors/third parties to ensure they can meet defined Service Levels.
of these agreements will require repeated sessions of negotiation, creation of
drafts, amendments and reaching a final conclusion for each that commits the
involved parties. This level of negotiation is why the Service Level Manager
must be skilled in both communications and negotiations plus have a solid
understanding of the IT organization and the business.
the aforementioned agreements, always think about how objectives and service
levels can be crafted such that they are "SMART" meaning they must be
specific, measurable, attainable, realistic and timely. One reason for these
attributes is that once the agreements are set performance must be measured
using the critical success factors and key performance indicators set forth in
comment on SLAs - keep them simple. An SLA is not a contract - it is a formal
expression of a relationship. If a SLA is so complicated that nobody can
understand it and therefore gets confused as to what to do when and how then
the results can actually be counterproductive and harm both service levels and
the relationship with the customer. IT exists for the customer - not the other
way around and some careful give-and-take may be needed.
On an ongoing
basis, for example monthly or quarterly, the Service Level Manager should sit
down with the various customers to review the performance of IT relative to the
services provisioned for each customer.
where corrective action is needed, a Service Improvement Plan (SIP) should be
launched and one of the outcomes may be to revise the previously defined
service levels. These Service Review meetings are a great opportunity to not
only discuss performance but also the direction of the customer and IT.
Whenever there is a customer contact point, that opportunity should be used to
understand what is going on with the customer and to update the customer about
what is going on in IT.
The idea is
to build the relationship constantly. If the relationship is lost, then all of
the service level documentation is pretty much pointless.
important things coming from SLM are not voluminous agreements that sit on a
shelf. In other words, the goal is not to simply create documentation. Instead,
the true benefits lie in understanding the needs of the customer, measuring
ITí»s performance against those requirements and then continuously seeking
methods to improve the provisioned service levels. In this manner, IT can
deliver quality services to the organization that enables organizational goals
to be met.
Terms: ITIL has a specialized vocabulary. For reference, please see the OGCí»s
 The IT
Infrastructure Library (ITIL) is about establishing an IT Service Management
culture focused on meeting the needs of the Customer and the business. For the
purpose of this article, we are focusing on ITSM, as it is the overall process
that SLM sits within.
 In ITIL,
í░Customersí▒ specifically refer to the owners of services who typically has the
budgetary responsibility for them and defines their requirements. Users, on the
other hand, are the consumers of the services. In this respect, ITIL allows for
the two groups to be different. For example, a VP of Sales may be the customer
but the field sales team with the PCs using the CRM package would be considered
the users of the CRM service.
understand that ITIL defines roles, not organization. The Service Level Manager
role is what someone must perform – it does not have to be a unique position on
the organizational chart. For example, in smaller organizations, the head of IT
may be the Service Level Manager. In larger teams, this may well be a titled
position reporting to the CIO.
Spafford is an IT consultant and a long-time IT professional. He focuses on
compliance, management and process improvement.