Guidelines for writing foolproof service level agreements (SLAs)
description
Transcript of Guidelines for writing foolproof service level agreements (SLAs)
© 2012 Wellesley Information Services. All rights reserved.
Guidelines for writing foolproof service level
agreements (SLAs)
Dr. BergComerit Inc.
3
In This Session …
Learn how to write effective service level agreements (SLAs) that cement expectations between your company and your partner.
Examine what needs to be included in an outsourcing SLA, such as performance targets, system availability, query performance, penalties for non-compliance, termination clauses, upgrade expectations, staffing requirements, and help desk performance criteria.
Learn how to create objective measures for performance and compliance.
See real examples of successes and failures in outsourcing relationships and understand what a company should expect from its SLA manager.
Learn how to include issue resolution, non-compliance escalation processes, and performance bonuses and penalties in your SLA.
Identify which KPIs must be included monthly status reports and see real-life examples of SLA reports.
Understand what reasonable outsourcing costs are for small, mid-size, and large organizations and explore the different pricing models that exist.
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
5
The Goal of the SLA
The goal of the SLA is to provide disciplined approach is to establish performance measurement against specific criteria. This include
Procedures Tools People
As part of the SLA you have to make sure that you have measures for each of these areas.
The SLA is not indented to only measure people performance. It could be that the procedures are not
appropriate or that the tools are inadequate
6
The Internal Assessment
Before you start formalizing an SLA should do an internal assessment of the current IT processes and see what you would like to achieve.
The SLA should be used to improve the current state of affairs, not merely moving support outside the organization
You may want to consider a neutral third party to setup the SLA and do the internal assessment before
you start. This is normally a 2-6 weeks effort.
7
SLA Roles and Responsibilities
You can buy detailed templates for SLA roles and responsibilities on-line. There are several vendors who provide this.
For example ejobdescriptions.com let you download generalSLA job descriptions that you can customize to yourorganization. These include:
VP Administration VP Strategy and Architecture Director IT Management and Control Manager Contracts and Pricing Manager Controller Manager Metrics Manager Outsourcing Manager Service Level Reporting Metrics Measurement Analyst Quality Measurement Analyst System Administrator Unix System Administrator Windows Source: ejobdescriptions.com, 2011
8
The Customer also has Responsibilities under the SLA
The customer should also have specific responsibilities under the SLA. These should be spelled out in detail. This include:
All employees must read and sign a formal corporate security policy and enterprise computer usage rules.
Employees will use only specified telephone numbers, web site and email addresses to request support.
Each employee must attend a 2 hours ERP/BI training sessions before receiving a workstation.
Each employee must attend a specific training session on BPC, ER, Xcelsius, SD, MM, FI, WebI (each software package used).
It is in both companies best interest in having clearly defined customer responsibilities.
9
The SLA Main Sections
The SLA sections should include: Duration of SLAParty definitionsCommunication channelsRoles and ResponsibilitiesLegal obligations & jurisdictionFinancial obligation & payment termsService level definitions
Systems and priorities Users and priorities Processes and priorities
Security requirementsReporting and EscalationsTermination clausesContact lists for operations
Source: The SLA Toolkit, 2011
10
Generic SLA Templates are Available from Many On-Line Vendors
Some vendors provide complete toolkits for generic SLA agreements that you can use to ‘fill-in the blanks” Prices typically range from $199 to $999
Source: www.service-level-agreement.net , 2011
Source: www.sla-world.com/check.htm , 2011
There are even detailed checklists to assure that you don’t forget to include critical items in your SLA such as legal remedies, jurisdictions, intellectual property rights etc.
Simpler, free templates can be also downloaded on-line at: www.continuityplantemplates.com/files/it-service-level-agreement-templates.docx
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
12
Selecting Objective Measures
Measures drives behavior, so be careful when selecting them. They should be: Simple to understand and easy
to calculate Meaningful and drive the
behavior you want to encourage
Controllable and immune to manipulations
Instruments that collect measures must be consistent overtime and as automated as possible
Sites such as the free on-line “KPI-Library” as over 6,000 standard measure definitions based on the SEC, API, ISO, FASB, GAAP, IEEE and other organizations
13
Standardize SLA Performance Measures – Some to Consider
Standard measures exists for SLAs. These include
First-Level Call Resolution (FLCR) Average Call Answer Time (ACAT) Percentage Calls Re-opened within Two weeks (PCRT) Percentage of Training Type Calls (PTTC) Number of Tickets Escalated to level-2 support (NTE2) Percent of Tickets Escalated to level-2 support (PTE2) Number of Tickets per Service Employees (NTSE) Number of Service Employees per User (NSEU) Average Service Employees Training Level (ASET) Percent Service Employees Certified (PSEC) Turnover Rate of Service Employees (TRSE) End User Satisfaction Score (EUSS) Number of System Failures (NOSF) Number of Critical System Failures (NOCF)
14
Standardize SLA Performance Measures – 25 to Consider
Additional measures include
These are a some of the measures you should consider.
Pick 10-12 of these initially and add more as the SLA model matures
Mean Time between Failures (MTBF) Mean Time between Critical Failures (MTCF) Mean time to Provision (MTTP) Mean time to Repair (MTTR) Percent Up-time Per System (PUPS) Percent Down-Time Per System (PDPS) Percent Call-back to Customers (PCBC) Cost per Service Ticket (CPST) Cost per Service Employee (CPSE) Cost per Serviced System (CPSS) SLA Operating Efficiency (SLAOE) SLA Operating Effectiveness (SLAOF) Employee Turnover Rate (EMTR)
15
Support Packages and Different Measures
Not all business users, or units need the same level of support or performance measures
You can segment the support level by critical processes, organizations and tools. This can result in significant savings
Source: supportdesknow.com, 2011
An SLA can be flexible, and support levels can be tailored into different support packages
16
Formalize SLA Measures in a Tool
SLA performance measures are normally recorded automatically in a tool.
In your SLA you should be very specific on how the measures are
Software: SysAid, 2011
The ability to change performance measures should be spelled out in the SLA
calculated, what are the performance targets and what actions are triggered if the service level is not achieved.
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
18
The Service Tickets
Service tickets are the primary source of SLA performance information.
Your SLA need to include When will service tickets be monitored / reviewed? What are the categories and who will resolve them? What are the resolution process and timelines? How are customer and support satisfaction measured?
Almost 75% of all issues in system support is due to changes in the environment.
Change control and testing is critical!
19
Defined Response Times under the SLA
Response times should be defined for each of the service level priorities. Examples include:
The issue diagnosis time can be reduced significantly when the IT asset and existing system configuration is known at the helpdesk.
The support team has to consists of highly trained individuals.
Priority Issue Response Resolution1 Critical component outage 15 min Immediately2 Critical component degraded 30 min 4 hours3 Non-critical issue 30 min 8 hours4 Other questions & requests 4 hours 24 hours
20
Include in SLA - The Number of End-Users per Support Staff
The number of end user per support staff has increased over time. In 1998, each IT support staff had 35.4 users to support (Source: Anderson Consulting, Information Center Resources Mgmt,1998)
As employees has become more versed in IT, the number of support staff has
decreased by 9.6%
However, there are significant differences in support within organizations. In a survey of 16 organizations that use SAP we found:
0
10
20
30
40
50
60
70
80
90
100
110
High Support (top-25%) Average Low Support (bottom 25%)
4.2
27.1
52.1
10.6
38.9
102.1
8.6
26.4
79.3
Small Companies
Medium Sized Companies
Large Companies
In 2010, each IT support staff had on average 38.8 users to support
Outsourced Support Vs. Projects
You need to separate the SLA Support operations from project work Normally, we find the outsourced support organization under the CIO
Without a formal separation between support and projects, there is a risk that future efforts are delayed sincethe support team also has to be engaged on project activities
Online Help SystemsThe use of an on-line help system is a must for successful outsourcing of a system.
You can require the vendor to tailor-make a system, by simply saving Microsoft Word docs as .htm files and then pick them up in a Web page.
If you don’t include this in your SLA, the vendor is unlikely to build and maintain this system.
Include an On-Line Help Systems in the SLA
Online Help Systems — Animations In the SLA you can also require the outsourcing partner to build and maintain an interactive ‘demo system’. The vendor can buy cheap software like Snag-it and Camtasia and create demos that show how users can accomplish complex tasks
The development & maintenance of the online help system belongs in the outsourced support organization.
This is not a one-time task, but a “living” system that is updated based on user feedback, issues, and new development.
SLA and the On-Line Help System (a real example)
SLA and Computer Based Online TrainingIn the SLA you can demand the development and maintenance of an on-line training can be delivered on-demand
Over time, this is the best way of delivering casual user training and reduce the number of service tickets.
The trick to being successful here is to provide interactivity and common tasks scenarios.
Hint: Work with outsourcing partner and use a ‘storyboard’ to develop your on-line training.
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
26
ServicePacks and Fixes
In the SLA you should also include:
How should software fixes be applied?Who can approve changes to the system?When will service packs, SAP Notes, and fixes be applied?Who pays for it?Who is responsible for testing them?Who overseas impacts other modules (BOBJ, portal, security etc.)
The SLA is for the overall system performance. This periodic enhancements and fixes aligned with SAP’s release strategy
TrainingProject Stack
Break fix and Production stack
Splitting Projects & Outsourced Support Environments
By Introducing a Break-Fix (ERB) environment, the support team can correct break-fixes and move code into the Testing environment (ERQ) and Production environment (ERP) without impacting the project team
Transports can be captured in the buffer and moved to the Development environment (ERD) on a periodic basis
ERD
ERSERT
ERB ERQ ERPThe Break-Fix and production stack as well as the training environment is owned by the outsourced support team.
The company project teams own the development & sandbox environments (ERS & ERD)
28
System Upgrades
Remember to include in the SLA:When will the system be upgradedHow is the pricing determined?Who can approve an upgrade?Who pays for it and who is responsible for testing?How long can the system be off-line?What are backup rules and procedures?Who approved shadow systems and switchbacks?
SLAs should spell out any how upgrades and compatibility issues should be handled.
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
30
The Issue log and Audit Trail in the SLA
All SLAs should require that an Issue log is kept to monitored performance and to identify areas that can be improved upon.
Critical questions should be answered such as:What issues must be logged? Who owns the log? Do you have access?
The Audit TrialCan entries be updated, or must an audit trail be preserved?Do we track who changed the log and when it occurred?Do we have automatic action items included when nothing happens?
31
The Issue log – Using Microsoft projects
The Issue log can be tied to the workplan and each task using Microsoft projects through a custom view
The benefit of this is tight alignment with the workplans and easy access. The drawback is the complexity of adding issues.
Source: george-treasures.blogspot.com , 2011
32
The Issue log – Using SAP Solution Manager
The Issue log can also be kept is SAP Solution manager. This provides close integration with vendor support tickets. The SAP terminology is Messages for internal SLA tracking and Issues for items between the outsourcing provider and support group at the SAP company. The interface is the same.
33
The Tracking Tool
Service Tickets needs to be aligned to the service level agreement.
There are a substantial number of tools that can do this for you.
You should specify what tools are to be used to log issues in your SLA
Example: Managing Engine –
ServiceDesk Plus
Many vendors provide software to track the SLA performance.
For instance LiveTime providean operational tracking toolto map performance to SLA Contracts.
Most advanced tools also take Into consideration how many users are impacted and what business processes are affected.
Taking sales orders right now, may be more important than scheduling shipments next month
34
More SLA Software Tracking Tools for Issues
When writing the SLA, you should consider how many are impacted by an issue and operationalize this through the use of service desk tools
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
36
Escalation Priorities – Low (4) and Important (3)
A priority four service ticket is defined as LOWA general usage question or recommendation for a future product
enhancement or modification. There is no impact on the quality, performance or functionality of the product.
A priority three service ticket is defined as IMPORTANTA medium-to-low impact problem which involves partial non-critical functionality
loss. One which impairs some operations but allows the client to continue to function.
This may be a minor issue with limited loss or no loss of functionality or impact to the client's operation and issues in which there is an easy circumvention or avoidance by the end user. This includes documentation errors.
37
Escalation Priorities – High (2) and Urgent (1)
A priority two service ticket is defined as HIGHAn issue where the client's system is functioning but in a severely
reduced capacity. The situation is causing significant impact to portions of the client's business operations and productivity. The system is exposed to potential loss or interruption of service.
A priority one service ticket is defined as URGENTA catastrophic production problem which may severely impact the client's
production systems, or in which client's production systems are down or not functioning; loss of production data and no procedural work around exists
Make sure you have formal ticket classifications and definitions in your SLA
Excellent
Average
Minimal
Poor
Customer Service
38
The Levels Of Escalation
Not all items can be fixed by the helpdesk. Sometimes you have to involve other parties. We refer to this as Escalation levels (different than service ticket priorities).
The most common escalation levels are:
Level - 1 Escalation – Standard HelpdeskLevel - 2 Escalation – Subject Matter Expert (SME)Level - 3 Escalation – Software or Hardware Vendor Involvement
Spell out all details of all responsibility levels in your SLA and make sure that it is backed up with formal
procedures that triggers action
39
Escalation process
What will happened if an issue cannot be resolved by the Internal IT department/vendor and your Business SLA manager?
What are the steps needed to terminate the SLA contract and are there any payments/fault payments or budget recourse?
The more details you put into the contract up front, the easier it will be to measure and the more likely
you are to have a successful relationship
40
SLA Service Termination
You need to formally define the actions if you cancel the SLA. The key questions to address include:
Who owns the data and service history? If you switch vendors, who owns the log data?How will you get access to the data? Do you get full insights to all?Who, of the vendor’s employees, gets access to your data? Can
they share it with your competitor?
You should write this part of the SLA as if the relationship is ‘doomed-to-failure’ and you
want to shield your organization.
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
42
Performance Monitoring Dashboards can be Required in an SLA
SLA performance measures should not be collected monthly.
Interactive dashboards can tell how the services are being performed on a daily basis
Source: Metricus Enterprise Software, 2011
Access to the same service performance data makes the relationship easier to manage.
However, you have to request this in your SLA.
43
Performance Penalties
Performance penalties should be clearly defined and assigned to each measurable offence. Examples include:
95% of all calls should be answered within 60 seconds. Every service call that are late after this is charged $3
Every service ticket should get call-back within 30 minutesEvery calls not performed in this time frame is charged $10
Every system should have a 99% up-time per monthEvery 0.1% below this is charged $5,000 unless pre-approved
Building in performance penalties can help motivate the right behaviors of your partner, but only if the
penalties are significant
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and Maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
45
What to Include in a BI SLA between IT support & the Business
1. When must data stores be loaded by (time) What will happened if a persistent problem occurs (“swat” teams)? Who is responsible for fixing process chains and who pays? Do you get a discount for each DataStore that is not loaded in time?
2. How should software fixes be applied When will service packs, SAP Notes, and fixes be applied? Who pays for it? Who is responsible for testing them?
3. When will the system be upgraded When will upgrades occur, how is the pricing determined? Who pays for it and who is responsible for testing? How long can the system be off-line?
4. Minimum uptime and target uptime What is uptime defined as (data store loaded vs. queries available vs.
security fixes applied vs. portal uptime vs. third-party reporting tool uptime vs. network uptime, etc.)?
What are the penalties (money) for missing the uptime requirements?
46
What to Include in a BI SLA (cont.)5. Issues log
What issues must be logged? Who owns the log? Do you have access? Can entries be updated, or must an audit trail be preserved?
6. Backup and disaster recovery What is included in the backup and when is it taken? When will restore abilities be tested? How fast must restore occur, and what data stores and users will first have
access (priority list)?7. Who owns the data
If you switch vendors, who owns the data? How will you get access to the data? Do you get full insights to all? Who, of the vendor’s employees, gets access to your data? Can they share
it with your competitor?8. Service tickets
When will service tickets be monitored? What are the categories and who will resolve them?
What are the resolution process and timelines? How are customer and support satisfaction measured?
47
What to Include in a BI SLA (cont.)9. Escalation process
Male sure that there is a formal process and approvals at each step of the way
Include resolution processes, review meetings and actions that can be taken at each step of the way. Finally, include a legal remedy clause.
The more details you put into the contract up front, the easier it will be to measure and the more likely you are to have a successful outsourcing relationship
Reasonable BI and DW SLA Performance
Some examples of reasonable performance include:
90% of all queries run under 20 seconds System is available 98% of the time Data loads are available at 8am — 99% of the time User support tickets are answered within 30 minutes
(first response) User support tickets are closed within 48 hours — 95% of the time. System is never unavailable for more than 72 hrs — including upgrades, service
packs, and disaster recovery Delta backups are done each 24 cycle and system backups are done every
weekend
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
50
Outsourcing Pricing Models – Fixed Fee
Some outsourcing deals are structured around a fixed fee for specified services. In your outsourcing contract, you can specify:
Fixed fee per ERP end-user supported per month (i.e. $150 per user) Fixed fee per ERP Power-user supported per month (i.e. $190 per user) Fixed fee per BI end-user supported per month (i.e. $199) Fixed fee per BI Power-user supported per month (i.e. $299) Fixed fee per Dashboard supported per month (i.e. $249) Fixed fee per ERP System supported per year (i.e. $450,000) Fixed fee per BI System supported per year (i.e. $275,000) Fixed fee per Organizational Unit per year (i.e. $250,000 for Sales) Fixed fee per Module supported per month (i.e. $2,350,000 for SCM)
Fixed fee pricing models are very popular, but there is an incentive for the outsourcing partner to skimp on support staff,
so SLA measures has to be aligned to this strategy
51
Outsourcing Pricing Models – Variable Fees
Variable fees has also been used. While it sounds good to charge per service issue, there are significant problems with this. This include:
Department discourage opening help tickets and productivity suffers.
There is an incentive for the service partner not to fix systematic issues, but instead fix it for each user.
Upgrades and support packs get applied often and may cause business disruption
Variable fees should only be used as exceptions for non-standard business processes such as disaster-recovery, new conversion, roll-out to new users (i.e. security setup)
52
What We’ll Cover …
• Background• Creating Objective Measures• The role of the Helpdesk and the SLA manager• System upgrades and maintenance• The Issue log• The Escalation Process• Performance Penalties• Examples of SLA Measures• Outsourcing Pricing Models• Wrap up
53
Resources
• Service Level Agreements: A Legal and Practical Guide by Jimmy Desai 120 pages, (Sept. 2010) ISBN-10: 184928069X
Service Level Agreement Best Practices - Templates, Documents and Examples of SLA's in the Public Domain
238 pages, (April, 2010) ISBN-10: 1742443060
• Service Level Agreement: What you Need to Know For It Operations Management by Michael Johnson 244 pages (May, 2011) ISBN-10: 1743042124
• Service Level Agreement 100 Success Secrets: SLA, Service Level Agreements, Service Level Management and Much More by Gerard Blokdijk 176 pages (Jan. 2008) ISBN-10: 0980471613
54
7 points to take home
• Separate your support and your project organization• Size your outsourced support team according to best
practice benchmarks and include this in the SLA• Measure Support team turnover to assure stability• Leverage online training and online help systems to
reduce support costs• Create a formal SLA process with the business
community with realistic performance targets• Make sure you have identified environment owners –
consider a break-fix environment• Require your outsourcing partner to provide career
tracks for the support staff
55
Your Turn!
How to contact me:Dr. Berg
Continue the conversation! Post your questions in the HR Forum on Insider Learning Network*
*bit.ly/HR-Forum
56
DisclaimerSAP, R/3, mySAP, mySAP.com, SAP NetWeaver®, Duet™®, PartnerEdge, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by SAP.