What is SLA (Service Level Agreement) in BPO Industry?
Service Level Agreement (SLA) is a key part of IT Service Management (ITSM). SLA agreements define targets for suppliers and provide regular information on how the services are delivered on these expectations. SLA can support effective working relationships between IT and the business.
Example of Service Level Agreements
SLAs are used both in contractual relations between companies as well as in service relations within the same organization. An example of SLA between companies would be an agreement of 99.5% availability of the internet. Whereas in internal agreement between areas of organization would be business critical systems availability that can never be interrupted, system that impacts the sales of a company such as CRM or an e-commerce platform.
Let’s understand the top 5 metrics for measuring SLA:
1. Resolution time
The time taken to solve a problem or provide service once it has been flagged up.
2. Waiting time for support
How long will the customer have to wait if the issue has been escalated to a third party. When this happens, customer needs a reassurance that they don’t have to wait too long.
3. Time to first response
The time it takes to respond to a service.
4. Uptime guarantee
Customer needs a reassurance about the uptime that they can expect.
5. Security and Transparency
Security is crucial to protect customer data and being transparent on how this security will be protected is even more important.
SLA — Service Level Agreement Monitoring & Reporting
SLA monitoring process is done by using several statistics like systematic process of collecting the data, analyzing the data, and monitoring the data that derive higher value to the business. SLA monitoring and reporting tools always help to meet the agreement for business applications and provide the ultimate performance.
SLA monitoring and reporting tools help to analyze the business applications by providing valuable insights and provide impressive performance reports to meet the client requirements within a stipulated time.
Why we need SLA?
· To establish clear and measurable benchmarks — It helps to ensure that client and service provider are on the same page. The agreement reduces the obligations between the client and the service provider by setting clear and measurable benchmarks.
· Unmet obligations are accountable — If service provider fails to meet their obligations, they should provide compensation for the consequences occurred. SLA helps to document the consequences if service provider does not meet the standards.
· Peace of mind — The contract provides detailed information and provider accountability to the client. If any issue occurs then it goes to the provider, so the client has a peace of mind at the end.
Advantages of an SLA
1. Promotes guarantees
It provides security for both client and service provider. For example, a client may impose penalty on the IT company that does not guarantee the minimum quality for the service defined in the contract. As for the vendor, they are protected from excessive demands from such clients.
Once the document is in place, both need to follow what has been agreed upon so that neither party can keep unnecessary expectations.
2. Creates transparency
Having signed contracts ensures transparency in the relationship among companies. For example, if a company sells in cloud computing sets a contract with minimum availability of 99% of the platform operating time, the client will have a clear metric to measure the performance.
3. Higher credibility
Relations among contracting parties and service providers generate more credibility. Moreover, it positively affects the IT companies’ reputation by adding important values related to trust and professionalism.
4. Suitable for companies of all sizes
SLA is important to get quality results especially for small and medium enterprises.
What is the difference between SLAs and KPIs?
Both SLA and KPI provide useful information. SLA set baseline performance expectations with clearly described targets, time duration, penalties when service expectations are not met. On the other hand, KPIs, are metrics that describe qualitative results on set expectations.
KPIs help in evaluating the decisions, tracking progress on a goal, and monitoring the business goal performance. To monitor service level performance, it is important to define metrics and KPIs that the organization needs to meet.
Conclusion:
The SLA content should be written in an easily understandable style. It is crucial that all people involved in setting, agreeing, and managing service levels completely understand how the service level is defined.
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