Transcript Session Title

0
Guidelines for writing
foolproof service level
agreements (SLAs)
Dr. Berg
Comerit Inc.
© 2011 Wellesley Information Services. All rights reserved.
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.
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What We’ll Cover …
•
•
•
•
•
•
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•
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•
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
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
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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.
5
SLA Roles and Responsibilities
You can buy detailed templates for SLA roles and responsibilities online. There are several vendors who provide this.
For example ejobdescriptions.com let you download general
SLA job descriptions that you can customize to your
organization. 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
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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.
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The SLA Main Sections
The SLA sections should include:
 Duration of SLA
Party definitions
Communication channels
Roles and Responsibilities
Legal obligations & jurisdiction
Financial obligation & payment terms
Service level definitions
Systems and priorities
Users and priorities
Processes and priorities
Security requirements
Reporting and Escalations
Termination clauses
Contact lists for operations
Source: The SLA Toolkit, 2011
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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-levelagreement.net , 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:
Source: www.sla-world.com/check.htm , 2011
 www.continuityplantemplates.com/files/it-service-level-agreement-templates.docx
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What We’ll Cover …
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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
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
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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)
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Standardize SLA Performance Measures – 25 to Consider
Additional measures include
 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)
These are a some of the measures
 Cost per Service Employee (CPSE)
you should consider.
 Cost per Serviced System (CPSS)
 SLA Operating Efficiency (SLAOE)
 SLA Operating Effectiveness (SLAOF) Pick 10-12 of these initially and add
 Employee Turnover Rate (EMTR)
more as the SLA model matures
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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
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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
calculated, what are the performance targets and what actions are
triggered if the service level is not achieved.
Software: SysAid, 2011
The ability to change performance measures
should be spelled out in the SLA
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What We’ll Cover …
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•
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
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!
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Defined Response Times under the SLA
Response times should be defined for each of the service level
priorities. Examples include:
Priority Issue
1
Critical component outage
2
Critical component degraded
3
Non-critical issue
4
Other questions & requests
Response
15 min
30 min
30 min
4 hours
Resolution
Immediately
4 hours
8 hours
24 hours
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.
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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)
However, there are significant differences in support within
organizations. In a survey of 16 organizations that use SAP we found:
 In 2010, each IT
support staff had on
average 38.8 users to
support
102.1
110
100
79.3
90
80
70
52.1
60
As employees has
become more versed
in IT, the number of
support staff has
decreased by 9.6%
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27.1
30
10.6
20
10
4.2
Medium
Sized
Companies
Large
Companies
38.9
50
Small
Companies
26.4
8.6
0
High Support (top-25%)
Average
Low Support (bottom 25%)
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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 since
the support team
also has to be
engaged on
project activities
Include an On-Line Help Systems in the SLA
Online Help Systems
The 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.
SLA and the On-Line Help System (a real example)
In the SLA you can
Online Help Systems — Animations
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
The development & maintenance of the online help system
belongs in the outsourced support organization.
can accomplish
This is not a one-time task, but a “living” system that is updated complex tasks
based on user feedback, issues, and new development.
SLA and Computer Based Online Training
In 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 …
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•
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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
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
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Splitting Projects & Outsourced Support Environments
Break fix and Production stack
ERB
Project Stack
ERD
ERS
ERQ
ERP
Training
ERT
The 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)
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
System Upgrades
Remember to include in the SLA:
When will the system be upgraded
How 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.
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What We’ll Cover …
•
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•
•
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
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 Trial
Can 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?
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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
Source: george-treasures.blogspot.com , 2011
The benefit of this is tight alignment with the workplans and
easy access. The drawback is the complexity of adding issues.
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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.
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The Tracking Tool
Service Tickets
needs to be aligned
to the service level
agreement.
Example: Managing
Engine –
ServiceDesk Plus
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
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More SLA Software Tracking Tools for Issues
Many vendors provide software to track the SLA performance.
For instance LiveTime provide
an operational tracking tool
to 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
When writing the SLA, you should consider how many are impacted by
an issue and operationalize this through the use of service desk tools
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What We’ll Cover …
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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
Escalation Priorities – Low (4) and Important (3)
A priority four service ticket is defined as LOW
 A 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 IMPORTANT
 A 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.
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Escalation Priorities – High (2) and Urgent (1)
A priority two service ticket is defined as HIGH
 An 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.
Customer Service
Excellent
Average
Minimal
Poor
A priority one service ticket is defined as URGENT
 A 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
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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 Helpdesk
Level - 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
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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
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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.
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What We’ll Cover …
•
•
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•
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•
•
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
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.
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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 minutes
Every calls not performed in this time frame is charged $10
Every system should have a 99% up-time per month
Every 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
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What We’ll Cover …
•
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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
What to Include in a BI SLA between IT support & the Business
1.
2.
3.
4.
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?
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?
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?
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?
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What to Include in a BI SLA (cont.)
5.
6.
7.
8.
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?
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)?
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?
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?
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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
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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 …
•
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•
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
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
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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 nonstandard business processes such as disaster-recovery,
new conversion, roll-out to new users (i.e. security setup)
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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
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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
•
Service Level Agreement: What you Need to Know For It Operations
Management by Michael Johnson

•
pages, (April, 2010) ISBN-10: 1742443060
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
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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
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Your Turn!
How to contact me:
Dr. Berg
[email protected]
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