Why Service Level Agreements Fail and What Steps Will Help Yours Succeed

by Daryl Eicher
VP, Industry Solutions

Is there ever a reason to believe that unmonitored SLAs are worth the paper they’re written on?

Is there ever a reason to believe that unmonitored SLAs are worth the paper they’re written on?

Why do service level agreements (SLAs) fail? There are three big reasons why SLAs don’t work out the way people expect them to. For starters, too often, SLAs just aren’t detailed enough. They don’t focus on specific expectations for the parties involved. There are too many ways around SLAs like that, because too much is open to interpretation.

The second big reason SLAs don’t work out is lack of clarity around incentives. It’s critical to make sure there are consequences. Unless there are financial consequences for non-performance (i.e., you don’t get paid as much, you don’t get paid at all, etc.), it’s unlikely, just based on human nature, that you’re going to get the level of service you’re looking for. There are two camps here: one’s more pejorative and Draconian, the other is a little looser. But you always get what you measure. And an SLA needs to be considered a binding, contractually valid commitment between two parties about a service that’s being delivered and about what the quality of that service needs to be in order to warrant full payment.

Finally, SLAs that are not effectively monitored tend to have more issues with quality of service than those with automated mechanisms for continuous, fact-based evaluation.

While these fundamentals are pretty basic, it’s surprising how difficult it is to actually get business partners, customers, suppliers and agencies aligned on what is most important to their working relationships. What are the rules of engagement? Since that is often vague or unenforceable, there may not be mechanisms to automatically monitor performance against that service level. If you’re missing either one of these keys —if you don’t have enough detail or a mechanism for monitoring it—you’re not going to get full SLA compliance. Period.

That’s why SLAs fail. So what can you do to avoid these common pitfalls?

First, think about what is important to you as the provider or the buyer in terms of quality of service. You have to negotiate and adequately document performance expectations. Next, you have to make sure there is an automated, fact-based way to monitor compliance. Periodic audits and anecdotal problem escalations are often used to give indications of compliance, but they’re expensive, disruptive and sporadic. Make sure that compliance is financially lucrative for the provider. If they perform as expected, then they get an upside from it, or, conversely, a financial penalty for non-performance.

Second, realize that automatic monitoring depends on a level of confidence in the data about the service. Since many services are delivered in the cloud or from a third party, the data about quality of service is often self-reported by the provider. This is another thing you’ve got to be careful about. You’ve got to be very explicit about the quality of that data. Everything—definitions, calculations, how it’s collected, when it’s reported and what to do when there are problems in the data—needs to be in writing. In fact, the quality of data about the service is an important part of the service. So include data quality as a key metric in the SLA and tie it to financial incentives.

Remember, if you can’t trust the numbers, you don’t know what you’re looking at, and you won’t have effective performance monitoring. Without that data, how will you ever know whether you’re truly getting what you pay for?

What do you think? Is there ever a reason to believe that unmonitored SLAs are worth the paper they’re written on?

(Photo by Andyrob: http://www.flickr.com/photos/aroberts/ / CC BY 2.0)

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