Best practices dictates that a good agreement between a buyer and seller should include a service level agreement (SLA) as part of that agreement.
First let’s define what a SLA is. A well-thought-out SLA sets the tone for how the relationship between parties should be governed. What are the elements that are important to the project success?
The building blocks of the SLAs should consist of key metrics that should be tracked in order for both parties to achieve the desired results. Think of the three “M’s” when creating SLAs: is the metric meaningful, measurable and modifiable?
Meaningful
It is very easy to fall into the trap of tracking too may metrics where the end result is too much information that does not focus on the key elements that are core to the agreement. Of course, you can have multiple program metrics to track, but make sure that these key areas roll up to a summary score or metric.
Measurable
Can the metric be quantified and measured? For example, asking if the seller provided good customer service is not a measurable result. Instead, asking if the seller’s customer service representatives scored a minimum of 3.5 out of 5 points on the annual customer service client survey as submitted by the client is something tangible to point to as a reference.
Modifiable
Can the SLAs be modified as appropriate? A SLA that was important upon a program launch, may diminish in importance as the relationship between both parties mature. As such, the SLAs should be updated as appropriate or recreated if the metric has been fulfilled. For example, an SLA for sales training in advance of a product launch may no longer be meaningful after that product launch. New SLAs may need to be drafted to reflect operational efficiencies such as technical and customer service support.
As previously mentioned, the SLA helps govern the relationship after the ink is dry on the contract to prove mile-markers and what the ramifications are, if the program does indeed veer off course. More often than not, these SLAs spell out what the penalties should be for underperforming, but consideration should also be given for sharing rearwards for over performing by the seller such as delivering a project under budget or ahead of schedule.
Who is responsible for creation of the SLAs? The buyer should draft the initial SLA; however. this is a collaborative effort between both parties. The selling organization will have direct input of these SLAs based upon their experience level, as well as their existing client base. It is this very process of creating and finalizing the SLAs though discussion and negotiation that both parties will have a more complete understanding of the expectations for what, when and how the project components should be fulfilled.
When contemplating your agreements, take the time to determine well-crafted service levels using the “3-M’s” as part of the upfront process rather than after the fact when a problem does indeed occur. Similar to when we prepare for a road trip, the time to check that spare tire is before you pull out of the driveway and not on the highway when you get a flat tire.
