SLAve to convention

Conventional FM wisdom tells us that we should manage our client/supplier relationships with SLAs, but maybe some of us would be better off ditching them altogether.

Service Level Agreements (SLAs for short) are an agreement between the customer and supplier about the extent, the quality or the speed with which a service is provided; 90% callout within 4-hours is a commonly used example.

In theory, SLAs are a way for the customer to make it clear to the supplier what standards they expect (that’s the Service Level part) and for the supplier to confirm that those standards can be delivered (that’s the Agreement part).  Measuring how well the SLA is achieved enables both parties to be clear about whether the service being provided is meeting expectations; this in turn helps the supplier to prioritise resources and actions to help ensure the customer gets what they wanted. That’s the theory anyway.

The trouble is; I don’t really buy into it. 

Stick to carrots

One of the big issues I have with SLAs is that they are often written into service agreements; effectively they become glorified “get out” clauses, to enable customers to terminate suppliers who fail to meet the mark.

Of course I’m not saying that having the flexibility to break of relations with a supplier who is seriously underperforming is a bad thing, but I wonder if the approach is a little short-sighted: human nature dictates that if you are going to give someone a stick to beat you with, you make that stick as small as possible. 

Does the use of SLAs actually encourage us to strive for mediocrity rather than success?  Remember that agreement part of the SLA?  Well it often seems to me that suppliers are reluctant to agree to SLAs that they couldn’t easily meet. For example, let’s go back to the 90% callout within 4-hours example cited at the beginning of this blog.  I work in Berkshire. I’d happily place a wager on the fact that in 4 hours, I could be in Swansea, Manchester, or maybe even France, but the SLA would have me believe that just getting to my office from their's (which probably isn't in Manchester by the way) in the same timeframe is some kind of indicator of successful service provision.........  So does that really drive performance in the way I’d like it to?

Not that suppliers get all the blame here.  Realistically, the service provider could probably manage 90% callout in 2-hours, but if the price of failure is losing the contract, you can’t really be suprised if they choose to play it safe. Perhaps the better approach is to prefer the carrot to the stick.  I suspect we prefered incentives to penalties, then service providers would be more willing to accept  challenging targets and this would drive better service.   

Sample size

One of the other concerns I have with SLAs is sample size.  SLA achievement data is supposed to be representative of the service performance, but for statistical data to be useful, it needs to come from a decent sized sample.

My career to date has always been in client-side (in-house) FM; I’m generally a buyer, rather than provider, of services. The supplier relationships I’ve had have been small in comparison to say, for example, large TFM relationships. The truth is, that in my area of operations, many of the standard issue SLAs fall down as a result of scale.

Let’s say, for example, my vending contractor offers me that 90% callout in 4-hours SLA.  Each month they report 100% success and everyone is happy because they get here so quickly?  Well not quite.

You see the reality is that the machines are quite new. The 100% success rate is actually telling me that they rarely break down, not that the supplier responds quickly. If the machines only break down once a month or so and the SLA is reported every month, there’s really only two ways it can go: 0% success or 100% success. Simply put, the volume of transactions is just too low for the SLA to be a useful indicator of success. Perhaps reporting it over a longer period (say a year) might be better, but I suspect that it would only really work over a much larger contract.

The other thing I really need to ask myself is, if they always get here in 4-hours anyway, should I really be focussing my energies on an element of the service that has room for improvement?

Choose wisely

Despite my opening statement, I’m not actually suggesting we all dispense with our SLAs, but I do think that both customers and suppliers need to give much more careful consideration to what their SLAs are doing for them if they want them to be effective.  Measure what is important to the relationship: use SLAs to drive positive success by measure the areas you want to improve. Don’t just measure what everyone else is measuring; don’t just be a SLAve to convention.