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How do you define clear and realistic SLAs for IT outsourcing?

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IT outsourcing can bring many benefits to your business, such as cost savings, access to skilled talent, and increased efficiency. However, it also comes with some challenges, such as managing expectations, ensuring quality, and resolving issues. That's why you need to define clear and realistic SLAs (service level agreements) for your IT outsourcing projects. SLAs are contracts that specify the scope, deliverables, performance standards, and responsibilities of both parties. In this article, we'll show you how to create SLAs that work for you and your IT outsourcing provider.

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1 Understand your needs

Before you start negotiating with your IT outsourcing provider, you need to have a clear idea of what you want to achieve, what your requirements are, and what your budget is. You should also identify your key performance indicators (KPIs) and metrics that will help you measure the success of the project. For example, you might want to track the availability, reliability, security, and responsiveness of the IT service. You should also consider the risks and contingencies that might affect the project, and how to mitigate them.

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Terry Bundlie

Supply Chain Program Management. Specializes in Vendor On-Boarding, Contract Administration, Agile Processes & IT Business Operations
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One important point companies don't consider is culture. You company has a unique way of doing things. How do you make decisions? What are your business priorities? How do you communicate? What is your management style? All these things need to be considered in addition to KPI's. You want to make sure you and the outsourcer are a good fit. This will help down the line when issues pop up.

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Roman Rim?a

Member of The Management Board @ Sigli | Digital Product Development, Digital Transformation
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When we first began as an IT services provider, we encountered a client enthusiastic about upgrading their systems but uncertain about specifics. We encouraged them to pinpoint their exact needs. They revisited their objectives, budget, and crucial KPIs. Together, we outlined metrics like service reliability and responsiveness. They also brainstormed potential risks, enabling us to create mitigation plans. This groundwork not only streamlined our negotiations but led to a more successful project outcome. The lesson? Thorough preparation makes all the difference in IT outsourcing.

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2 Communicate with your provider

Once you have defined your needs, you should communicate them clearly and transparently with your IT outsourcing provider. You should also listen to their feedback and suggestions, and try to understand their perspective and capabilities. You should aim to establish a collaborative and trusting relationship with your provider, and avoid unrealistic or vague expectations. You should also agree on the communication channels, frequency, and escalation procedures that will be used throughout the project.

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Terry Bundlie

Supply Chain Program Management. Specializes in Vendor On-Boarding, Contract Administration, Agile Processes & IT Business Operations
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This is a very important area. A well-designed Governance process is essential to your success. It not only for IT but your business units and support organizations. They need to buy into your IT strategy and be part of the reviews. Clear measurable goals need to be agreed upon and reported. Both parties need to know when something goes wrong how is it going to be fixed and how fast.

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3 Define the SLA terms

Once you have reached a mutual understanding with your provider, it is essential to define the Service Level Agreement (SLA) terms in writing. This should include the scope of the IT service, the deliverables, and the timelines that will be followed. Additionally, the SLA should set out KPIs and metrics to evaluate the quality and efficiency of the service, as well as assign roles and duties for both parties. Furthermore, it should specify consequences and penalties for failing to meet terms, as well as procedures for resolving disputes and complaints. Lastly, it should establish a process for monitoring and reporting IT service performance, as well as revising and updating the SLA terms if needed.

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Terry Bundlie

Supply Chain Program Management. Specializes in Vendor On-Boarding, Contract Administration, Agile Processes & IT Business Operations
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Well defined SLA's should be measurable and realistic. Everyone in the company need to understand these inside and outside of IT. Your outsourcer should be considered you partner and not just a vendor. This takes constant work but in the long haul it is worth it.

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Terry Bundlie

Supply Chain Program Management. Specializes in Vendor On-Boarding, Contract Administration, Agile Processes & IT Business Operations
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This process needs to be collaborative so both sides know who has the responsibility for what action. Monthly meeting should be set up to review the results and follow up actions. Financial penalties should be set up for key SLA's to unsure the right behavior.

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4 Implement and manage the SLA

Once you have signed the SLA with your provider, you should implement and manage it effectively. This includes tracking and measuring IT service performance regularly to ensure it meets the SLA terms, as well as communicating and collaborating with your provider frequently. It is also important to address and resolve any issues or problems promptly, and escalate them if necessary. Lastly, you should review and update the SLA periodically in order to reflect any changes or improvements.

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Terry Bundlie

Supply Chain Program Management. Specializes in Vendor On-Boarding, Contract Administration, Agile Processes & IT Business Operations
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Any deviation for the SLA's should be communicated immediately to the right stakeholders. There will always be issues, but you want to make sure that there are no surprises. This is especially true during key projects or financial closes. (Business Outcomes)

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5 Learn and improve from the SLA

Finally, you should learn and improve from the SLA experience by analyzing and evaluating the results and outcomes of the IT service, and identifying the strengths and weaknesses. Collecting and documenting the lessons learned and best practices from the SLA process, as well as sharing them with your team and provider, can also help. Utilizing the insights and knowledge gained from the SLA can lead to improved future IT outsourcing projects.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you define clear and realistic SLAs for IT outsourcing?

1

2

3

4

5

6

1 Understand your needs

2 Communicate with your provider

3 Define the SLA terms

4 Implement and manage the SLA

5 Learn and improve from the SLA

6 Here’s what else to consider

IT Outsourcing

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How do you define clear and realistic SLAs for IT outsourcing?

1

2

3

4

5

6

1 Understand your needs

2 Communicate with your provider

3 Define the SLA terms

4 Implement and manage the SLA

5 Learn and improve from the SLA

6 Here’s what else to consider

IT Outsourcing

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