Originally published in BLG's Technology Law Review, Summer 2007
Even the most dazzling of sales pitches will be little more than an empty promise if the service levels provided aren’t up to scratch. For a customer, making sure a supplier’s performance matches their pitch requires foresight, careful research and detailed drafting from the outset.
Unless your deal is aligned to the performance standards sold to you during the supplier's sales pitch then it will be practically impossible to get your supplier to deliver on its promises once your deal is up and running. Put simply, lay the groundwork up-front on service levels or lose your deal.
Line in the sand
Good service levels are easily and objectively measurable and align to the customer's desired business drivers. In addition to establishing service quality, service levels help increase the supplier's accountability by helping to determine the price of the contracted service - a key lever for the customer in any key commercial arrangement.
What's on the agenda?
The quality of your existing service should be the baseline for comparison with the supplier's new offering. In addition, in comparing your current and projected costs to a supplier's new price, you must understand clearly the quality of the service to which the price or proposed cost applies.
Making it happen
The importance of early data gathering cannot be over-emphasised. Understanding the current service level quality can be a time consuming process because documenting the existing environment may require new reporting and recording processes.
In addition, you will need to compile at least four to six months of data to establish meaningful historical baselines. Where historic service level data does not currently exist, you should immediately begin to track and document the existing service level environment. Often, a sufficient level of data can be identified during the tender process to serve as a basis for your service level requirements.
Identify the important stuff
You must define your service levels clearly. Not every supplier function should be the subject of a service level - just the service levels that you most value in your business.
Be aware that there is an administrative cost to the management, measurement and reporting of service levels. Too many service levels and supplier performance becomes difficult to manage effectively, and will ultimately dilute any remedies in the event of non-performance.
Measure the right things
The calculation for determining a supplier's compliance with a service level must be clear and unambiguous. Establishing such clarity is less straightforward than one might think.
Assuming, for example, that system "availability" constitutes a service level: is the system deemed "unavailable" for service level purposes when anything less than full functionality is available to anything less than all users? Or when no functionality is available to any user? Or something in between?
You must, therefore, define your service levels carefully to avoid any misinterpretation or creative avoidance by the supplier.
Good service levels are simple and few
Customers can have a tendency to over-kill and have two or three measures that all say the same thing. You should focus on what matters.
For example, metrics for desk side support that cover both "time to respond" and "time to fix" really should be rolled into a single resolution time metric. After all, do you really care about how fast an engineer can walk to your desk? Put simply, focus on the real point - which is fixing the problem.
Monitor and adjust constantly
Your supplier should be required to collect and provide service level performance data to you on a regular and frequent basis, and these statistics should be studied carefully to ensure that performance stays on track.
There is no point agreeing a complex set of service levels if you do not have the information and resources to monitor and enforce them.
Check the temperature
In the end, service levels are like a thermometer enabling you to measure your supplier's performance. They are not designed to drive improvements in quality or to reduce costs but, used effectively, they "health-check" the services and help to ensure that, as the customer, you're getting what you've paid for.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
