Steve Downton, Downton Service Management Consultants Ltd, Noventum Group
You probably know the cost of failing an SLA, but do you know the true cost of achieving an SLA? This article will consider how hard it is today to manage a complex business through exception reporting and the need instead to have detailed measures that consider the real trade-offs.
5 to 10 years ago (depending upon the sector) most service operations ran on the basis of "Best Endeavours"; Service Level Agreements (SLAs) or guarantees were avoided like the plague. Service was still considered as after sales support and about repairing faulty equipment in an environment where the prices of service was almost cost plus in other words a percentage of the price of the equipment. The contracts were loosely based and the pressure on service levels relatively relaxed. Today in contrast many companies now have as much as 80% of their client base under contract, with strict SLAs in place. Initially, (out of ignorance) these SLAs had little importance placed in them and were often either arbitrary, or represented what could be measured, consequently they were either too generous or too draconian, but certainly not very representative of the true situation. Research indicates that over the last 5 years, customers and suppliers alike are taking SLAs much more seriously and customers are increasingly invoking the penalties.
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