By: Ciopages Staff Writer
Updated on: Feb 25, 2023
SLAs (Service Level Agreements) can feel generous when you’re negotiating a contract, but when you get into the thick of execution, they can easily leave you wanting more. Processes enter a cycle of continual improvement and begin to flow more smoothly, allowing room for optimization of the platform and delivery mechanism. However, your vendor service levels may still be lackadaisical and may or may not be providing the boost that your business needs to stay competitive in the marketplace. Keeping SLAs from driving the wrong business outcomes requires focus and attention.
Service levels may be industry-standard, or they may be negotiated specifically for each new contract based on the needs of the organizations. Service levels are often defined in each distinct category to be as unambiguous as possible and can include a target as well as minimum acceptable levels for each performance level. In the past, SLAs have been a ubiquitous part of any technology contract, but are they still as integral as they have been in the past?
It’s more critical to business growth and innovation that service providers focus on continuously improving their environment than getting to that elusive 0% downtime. While SLAs may drive service providers to the minimum acceptable performance levels, which can be delivered at the lowest possible cost, taking the time to define a more proactive service level can pay off in spades over the life of your agreements. Says Nipa Chakravarti, CIO of Canada’s largest publicly traded provider of renewable energy, “Meeting the SLAs is no longer our concern. A service level agreement contract says the vendor’s performance is good enough when meeting the SLAs. But good enough isn’t what we want to buy. We want to stop the issues from happening in the first place. We want to pay the provider for success in improving our environment.”
Many traditional SLAs will offer consumers a credit towards future charges when service levels do not meet mutually agreed-upon levels, but this doesn’t provide an incentive for service providers to raise the bar on service levels–again, it sends them towards the minimum acceptable standards side of the agreement. Offering your service provider a direct correlation between their ability to deliver results that matter to your business and their future stability as a preferred vendor is increasingly popular, as the concept of credits falls out of favor. The preferred outcome of any deficiency correction is to correct the problem–not to get a credit on future orders. By rewriting the paradigm of the SLA, you’re able to force the resolution that you need to keep your business moving forward.
Think of it this way: SLA penalties are not designed to make you whole. Cloud-based providers will rarely (if ever) sign an SLA that is outside of their standard policies for outages, so what are you gaining with spending days in unnecessary conversations? Very little–as service providers cannot offer you reparation for customer frustration when your website goes down, for instance.
Says Nipa Chakravarti, CIO of Canada’s largest publicly traded provider of renewable energy, “Meeting the SLAs is no longer our concern. A service level agreement contract says the provider’s performance is good enough when meeting the SLAs. But good enough isn’t what we want to buy. We want to stop the issues from happening in the first place. We want to pay the provider for success in improving our environment.”
Focusing on a service level agreements can be a distraction to the broader conversation that organizations should have with their technology service providers–determining how vendors can cross the threshold to become true business partners. When you free business to lead the technology conversation, you’re allowing for a much more flexible journey overall. SLAs that cover massive, multi-year implementations and projects are much less likely to offer real value than smaller projects that last for a fraction of that time. Today, the focus is more on the adaptability of a range of technology solutions to meet the ever-changing needs of business than on creating one overarching solution that will be in place for some years.
While you’re broadening the conversation around service level agreements metrics, it is important to keep in mind that guaranteed service levels are still a part of the mix–they’re just may not be the most important part anymore. Considerations such as how partners will proactively help your business excel while tightly controlling costs will not only make your vendor that much more successful in their engagement with your business, but you’ll be one step closer to building a long-lasting relationship that will benefit both of your organizations.