SLA Confidential

Service level agreements between resellers and clients are becoming increasingly popular as a business foundation. But, as Annie Gurton reports, they're no easy option.

A service level agreement (SLA) can be one of the most effective waysncreasingly popular as a business foundation. But, as Annie Gurton reports, they're no easy option. to counterbalance any insecurities in your client relationships.

A typical SLA will define the level of service that the reseller guarantees to the client, from the number of products and upgrades per year to the response time, set against an agreed fee.

'SLAs bring a level of comfort as well as commitment to both parties,' says Shane Gallagher, managing director of reseller First Stop Computer Group. 'And they benefit all parties.'

At Ultracomp, David Wheeldon has helped develop standard SLAs for the Central Computer and Telecommunications Agency. He says: 'The agreement can specify the level of support the reseller makes available, the hours when support is realistically available and the minimum response times.

It can also be specific to the system and detail the level of data throughput, the batch turnaround times and general functionality. And system security can also be covered by an SLA. SLAs also give both sides a clearer view of the requirements and responsibilities, which makes the relationship calmer and easier to manage.'

John Lane, a director at Pagoda Consulting, says SLAs are fine for defining the relationship but useless if either party reneges on the spirit of the deal. 'There is rarely cause for enforcement or penalty, so in many ways they are superficial sales tools,' he says.

Nevertheless, SLAs are on the increase. In many organisations they top the agenda because of the amount of support which is outsourced. SLAs are the only real way to keep track of who is supposed to be doing what.

SLAs are part of a wider IT strategy called service level management (SLM), whose function is to ensure that businesses take full advantage of their IT investment and supply full support to it. The problem comes with providing consistent, timely, high-quality services.

Traditionally, the responsibility of making sure that what has been paid for is also received and required, has rested with the client. But, that duty has now shifted to the supplier, and in our case the reseller.

IT AIN'T WHAT YOU DO ...

Lane comments: 'Many SLAs focus on the "what" of support but don't put sufficient effort into the "how", or they fail to describe in enough detail how the service will be delivered.'

He believes that resellers and their contacts within client organisations need to think through agreements in greater detail. 'There needs to be a technique for the measurement and monitoring of service, but it is usually missing,' Lane says.

A poor SLA or reseller which does not stick to the agreement can create more work for the client, who then has to make sure the supplier delivers.

Gallagher agrees that many SLAs are little more than a framework for the relationship and are far from watertight. 'But they give comfort to the supplier as it then knows the client is committed to purchasing a certain volume of products over a year, and they give comfort to the client, who has assurance of a certain level of support. They give a stability to the relationship and are definitely becoming the norm among both resellers and their clients,' he says.

According to Lane, SLAs will enjoy better takeup and respect if the reseller can include a system to monitor and report performance, and hence allow the client to track the SLA without any effort, a situation which is becoming increasingly frequent.

MADE TO MEASURE

Meaningful SLA reporting can be difficult without good measurement parameters, but Lane believes a general increase in the number of demanding corporate customers is having an impact on SLAs.

'Clients today make their requirements clear and the service providers and resellers are getting better at delivering what they want. Clients demand support monitoring with the result that SLAs are getting more effective.'

These days, SLAs are replacing price as the key selection parameter in the minds of corporate customers. Gallagher says: 'Now that the prices of products and systems are so similar, resellers are differentiating themselves on the basis of their SLAs.' Lane adds: 'Until you have measurement and reporting in place, with penalties, the SLA is nonsense.'

The consensus is that SLAs have an important role in defining the relationship so everyone knows what should happen, but no one expects them to stand up if there are problems. Lane says: 'The resellers know that if they don't perform according to the SLA the client simply won't renew.'

OFFSIDE PENALTY

A typical SLA contract lasts two or three years, the latest generation carries a financial penalty if the supplier fails to deliver.

According to Lane: 'The contract in which Railtrack is penalised is a typical new generation SLA, but in the IT industry, such action has been hard to impose because it has been so difficult to extract monitoring and reporting data about what is actually happening in the relationship.'

Wheeldon says that common difficulties include measurement and a lack of effective penalties. 'There needs to be a serious commitment to make SLAs work.' This can really only be achieved, he says, when there is a realistic awareness by both reseller and client of the resources and effort required to thrash out a workable agreement.

'Both sides have to ensure that the proposed service targets are what is wanted, what is achievable, and can also be appraised before the agreement is signed. If a non-workable agreement is signed, the customers lose faith and the SLA can turn into a negative prospect rather than a positive tool.'

CONTRACT SPORT

Gallagher adds: 'SLAs have been around for years. There is nothing new in them, but corporates are now recognising their value as a way of ensuring a balanced service delivery. Based on a philosophy of defining, achieving and maintaining required levels of service, they offer an excellent and key strategy for resellers to find some form of differentiation.'

Steve Smith, technical director at reseller and consultancy Elcom Technical Services, disagrees that clients are receptive to SLAs and says that he sometimes has to persuade them to take advantage of agreements.

'Ultimately, it is better for us if the customer knows clearly what we are supposed to be doing and can see we are measuring what we do,' Smith says. 'If there are any problems, it helps to have the framework of an SLA to help work things out. We have a great desire to do well, but sometimes we initially have to drive the client into using an SLA. Once they have tried them, they see their value. Their benefit to the customer relationship is immeasurable.'

Smith sees SLAs working best when the onus is on the supplier to monitor and measure, but the client has to collate and sign off any service reports.

'There have to be targets and objectives,' he says, 'and some element of punishment and reward alongside.'

He admits it can be hard to develop an SLA which does not have an element of personal interpretation, but Smith also points out that SLAs are an indication of a good working relationship, so interpretation should not be a problem. 'SLAs require a spirit of goodwill, and if they are the basis of a legal wrangle then obviously the relationship has long since broken down.'

Smith says he would also like to see SLAs offering benefits and rewards as well as penalties. 'It is fair enough to be penalised if we don't achieve the criteria agreed, but it would also be nice if the SLA delivered some tangible bonus if our service helps clients improve their business in a quantifiable and measurable way. We are prepared to suffer if we foul up, but it would be nice if we could benefit when we excel.'

FEELING THE BENEFITS

According to Ultracomp, the main benefits of SLAs are:

Both sides have a clearer view of requirements and responsibilities

The logistics built into a good SLA provide a useful target

SLAs allow better forward planning, for example, improved capacity planning

SLAs provide essential measurement criteria where facilities management agreements exist - they should be included as part of the formal contract

They provide demonstrable performance indicators

They can give early indication of weak areas

They can ensure higher quality IT services

SLO MOTION

It is usually necessary to prepare a unique SLA for each customer, and possibly multiple SLAs for each customer according to the areas of support, such as human resources, internet access and email. It is rarely effective to combine multiple applications in a single SLA, and one of the challenges facing resellers is creating manageable SLA clauses.

One starting point is to define the service level objectives (SLOs) required by each client for each application. From this come the logistics needed to collect, monitor, store, report and determine whether the SLA is being met by the supplier. Advanced SLAs, especially those which monitor network services, are by far the most complex and require acute attention to detail.

Unsurprisingly, the area is ripe for computerisation, and software for monitoring SLA compliance is now reaching the market. Utopia, for example, produces software which records events and then generates reports based on this real data. Smith says the Utopia software used by the company makes it far easier to discuss with clients how exactly the SLA is working.

Micromuse has added a module to its Netcool family called Netcool Reporter, which generates reports on the availability of applications, business systems and network services by using 'criteria filters'. The product allows operators to custom-define agreed service levels, and the software produces availability data in a wide range of graphical formats, including spreadsheets, charts and billing forms.

Micromuse software is primarily aimed at those employing network services in leased bandwidth situations, but can also be used in many other situations and applications.

CONTACTS

Elcom Technical Services

01753 777841

First Stop Computer Group

0181 688 4432

Micromuse

0181 875 9500

Pagoda Consulting

0171 436 9464

Ultracomp

01344 779333

Utopia

01628 620001.