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Service-level agreements can be simple when viewed in isolation. However, in IT environments with multiple service providers, where there may be a hybrid of internal and external services delivered, the service landscape can be daunting.
The services that IT organizations provide to customers are underpinned by many agreements, typically consisting of internal ones with other functional units and external ones with commercial service providers. Each agreement usually sets an expectation for service-level performance.
While the components of business service provision are important, they often attract little interest from the business itself, as it is typically more focused on the overall service provision.
This leads to a fundamental question: How can IT leaders develop IT service management (ITSM) service-level agreements (SLAs) that satisfy business expectations and commitments? Here are five key steps for developing ITSM SLAs that work in an environment with multiple service providers.
1. Catalog all business services
Start by cataloging the business services and how the component ITSM SLAs map to support these services. As an example, for a business application service, an organization may have an external network provider, an end-user support provider and a data center provider working in concert with an internal application support team to collectively deliver the service.
2. Analyze SLA alignment
For the purposes of integrating the business service provisions of multiple service providers and to prevent any weak links in the supply chain delivering these business services, IT organizations should collate all ITSM SLAs and operational-level agreements (OLAs). They should also look for common issues with commercial service contracts. For example, service overlaps can exist where the organization is paying more than once for the services. Additionally, service gaps may be identified that can be expensive to address in the time required. IT organizations should also include requirements that ensure the service provider contributes to delivering the overall business service in a collaborative and integrated way with other service providers.
3. Address issues with triage strategies
Once key issues are documented, IT organizations can apply various strategies to address them. One option is to simply monitor the situation. ITSM SLAs in an environment with multiple service providers may not be perfectly aligned, but the actual service performance may not be a material issue for the business. For this reason, it is critical to avoid assessing contractual SLA commitments in isolation of actual performance and business experience, as teams may end up spending time and money in an area that is not likely to yield a materially positive improvement.
Another option is to renegotiate with external service providers midterm, provided there are sufficient levers and justification for addressing service weak links. Organizations can also establish a schedule of the contract review dates and maintain associated service provider performance while maintaining service integration requirements so that there is a timely and thorough approach to contract renewal or for establishing new contracts.
4. Include service provider integration and performance requirements
To drive real-world alignment of service performance, IT organizations should consider including the following contract requirements of their multiple service providers:
- Define common terms and agreement format for all tower service providers and the service integrator (the entity responsible for managing all service providers).
- Identify services that are both in scope and out of scope.
- Establish common definitions and metrics, service performance targets, and service penalty/credit regime,g., Severity 1, Severity 2, Severity 3.
- Adopt industry-established terminology (e.g., incident vs. service request problem vs. ticket).
- Utilize common compensation structures and invoicing requirements.
- Ensure intellectual property rights for all customer organization data is retained by the customer organization.
- Ensure adherence and conformance to standard policies and strategies -- for example, security and enterprise architecture.
- Establish a commitment to collaboration and a Service Integration and Management model by agreement to cross-vendor procedures.
Additionally, CIOs with multiple service providers should consider the following operational requirements for effective ITSM SLAs:
- Define centralized ITSM tooling with mandated integration and aggregation.
- Establish common ITSM processes at the key touch points between providers.
- Ensure that the customer organization determines the "systems of record" (e.g., for SLA measures).
- Ensure tight coordination between the service desk and other vendors on ITSM areas, e.g., incident management, request fulfillment and major incident management.
- Establish clear knowledge management obligations for all vendors and tracking of knowledge efficacy.
- Define common configuration discovery and mapping obligations.
Lastly, the following IT governance mechanisms, which are typically owned by the retained IT organization or its nominee, are highly recommended in environments with multiple service providers:
- Establish multivendor management meetings (i.e., a service management integration group) typically led by the ITSM office.
- Emphasize problem management performance and problem resolution trends to reduce service outages and associated costs.
- Ensure OLAs are approved by the customer organization and set clear expectations for integration, service improvement and innovation (e.g., to facilitate confidential data exchange, issue resolution, arbitration and so on).
5. Clearly establish a service integrator capability
The service integrator (SI) role should be defined by the IT organization, as this capability delivers the ability to assess the performance of the service providers against business customer SLAs, promote a common understanding of ITSM SLAs throughout the supply chain, and recommend continual improvements to processes and methodologies to enable the service to continue to meet future business requirements. The objective of the SI is to bring together all service providers, whether internal or external, to provide a holistic, seamless service to the business.
The SI should perform specific and targeted service management activities. For example, as each tower service provider has its own methods of collecting and reporting on service performance, the service integrator needs to specify a common integration capability. SIs also collaborate with the tower service providers to audit data that is being used to report performance and influence service performance improvement actions. By staying up to date on customer organization strategies, they act as a trusted advisor, suggesting how industry trends may improve the service delivery and performance.
Other roles of the SI include proposing changes to ITSM SLAs to ensure that they properly reflect business needs while balancing cost, proactively analyzing opportunities to improve performance levels, troubleshooting performance issues and resolving problems that span across tower service providers. Additionally, the SI regularly identifies opportunities for innovation, discussing these opportunities with the retained IT organization during governance meetings, consolidating opportunities for improvement and innovation from service tower providers, and coordinating impact assessments in order to deliver on these opportunities.
To strengthen an enterprise's IT service supply chain, it is critical to approach ITSM SLAs through the lens of the business need. This means mapping the business service landscape including service dependencies, identifying the criticality of those services to the business and maintaining a view of the associated service performance and trends. IT organizations should also triage ITSM SLAs and OLAs to ensure the right focus is placed on addressing identified issues and confirm a defined service management capability to maintain a strong integration of their multiple service providers and aggregation of service data.