The Reality Behind Green SLAs: Are We Getting What We Want and Pay For?
In today's fast-paced world, many companies continue to heavily outsource their IT services, seeking cost-efficient yet high-quality partners. With small internal IT teams, customers rely more on outsourcing partners to deliver contracted services and report how well they have met the contractual obligations. But is this trust truly justified?
At first glance, everything might seem perfect. Service Level Agreement (SLA) metrics are consistently green, suggesting all is well. However, persistent complaints within the customer organization raise a critical question: Can we trust that our outsourcing partners are truly delivering the SLAs we expect? Are the SLAs really reflecting the priorities and needs of the customer organization?
The illusion of Green SLAs
SLAs are designed to provide a clear measure of service performance. When these metrics are always green, the reality might be totally different. This phenomenon is called the “watermelon effect” – SLA dashboards (outside of the watermelon) are all green, while users remain dissatisfied (inside of the watermelon is red).
SLA targets often measure only technical performance such as uptime and resolution times, missing customer priorities (e.g., business impact or speed of service) entirely as highlighted in this thesis. This discrepancy can sometimes be traced back to the initial sourcing process and contract negotiations where customer expectations only reflect those of the customer IT organization and not the entire customer organization. In practice, the contract “customer” (e.g., IT, the CIO, or contract sponsor) may be satisfied by low cost or by SLAs being met, whereas the actual end-users care about fast, quality service.
Experience Level Agreements (XLAs)
A growing trend is formalizing Experience Level Agreements. XLAs specify service quality in terms users feel – for example, first-contact resolution from the customer’s view, ease of using self-service tools, or overall business uptime. These could complement traditional SLAs with measures that align with what customers actually value – not just what IT can easily report on.
The importance of independent Monitoring and SLA development
In a fast-changing environment, it's crucial to review and update SLAs regularly. Have we configured the required meters correctly? It's not enough to agree on something in the contract; it requires active responsibility from the customer to keep everything up to date. It's an illusion to think outsourcing partners will propose changes to SLAs, especially if it risks turning green metrics into something else.
Given this potential discrepancy, should we rely solely on our outsourcing partners for service performance monitoring and its development? At least two viable alternatives come to mind:
In-House Monitoring: Establishing an internal team to monitor and report on service performance can provide a more accurate picture. This team should be responsible for SLA monitoring, ensuring issues with the outsourcing partner are directly addressed. This internal team would also be responsible for continuous development of the SLAs to ensure they reflect the current priorities of the whole customer organization.
Third-Party Monitoring: Engaging an independent third party for service performance monitoring can help identify discrepancies and ensure the outsourcing partner meets contractual obligations.
Despite the advantages, many customers see these as additional costs and are reluctant to adopt them. However, consider the potential impacts when critical incidents result in monetary losses or poor IT service causes general inefficiency or deteriorating employee morale.
Even though SLAs are green, this doesn't necessarily reflect true performance. Often, ticket resolutions are delayed, and tickets are put on hold to stop the SLA clock, masking actual issues. Can we blame the outsourcing partner for these discrepancies? The responsibility lies with us, the customers, to maintain active diligence in monitoring and developing SLAs.
Conclusion
While outsourcing IT services offers significant benefits, it's essential to maintain a vigilant approach to service performance monitoring. Whether through in-house teams or third parties, independent verification and development ensure that services delivered truly meet needs. This proactive approach fosters trust and collaboration, leading to better outcomes for both customers and their outsourcing partners.
A decade of insights at Wiima Partners
From our two-decade-long experience working primarily for customers, our curiosity and desire for facts often uncover discrepancies. Addressing these issues has led to positive outcomes. By working collaboratively with outsourcing partners, we can transform potential mistrust into a win-win scenario, ultimately reducing the workload for both parties.
Interested in learning more or assessing your current service performance?
If this sparks your interest, or if you’re wondering whether your “green” SLAs truly reflect the service your organization receives, we’re here to help. Whether you’re looking for a health check, a deeper dive into SLA alignment, or a second opinion on your current monitoring setup, don’t hesitate to reach out to us Gunilla Marno & Esa Alapuranen