SLAs In BPO Agreements
Service Level Agreements
Contract and Performance
Management
CORE: Nov. 2011
Intellectual Property of the Centre for Outsourcing Research and
Education (CORE). May be used with permission of CORE.
Agenda – Service Levels for BPO
Preliminary Matters
Use of Weighting Factors
Use of Severity Levels
Use of the Balanced Scorecard
CORE: Nov. 2011
Service Level Agreements
2
Preliminary Matters for All BPOs
Precisely define the services to be provided (the
“Services”)
Since not practical to measure performance for all
Services, carefully identify which of the Services are most important to the business and should be measured (“Measured Services”)
Determine whether Measured Services are currently being internally tracked and calculated
If they are, determine whether existing performance levels (“Service Levels”) meet the needs of the business or whether they require improvement
If so, determine whether level of improvements is required If not, determine what Service Levels are required to meet the needs of the business
CORE: Nov. 2011
Service Level Agreements
3
Use of the Service Level Agreement (the “SLA”)
Used to document with service provider the
Measured Service Levels required
Use to document with service provider the amounts payable (the “Service Level Credits”) for failure to achieve the Measured Service Levels
Use to permit customer to terminate Master
Agreement
When significant or on-going failures to achieve Service
Levels (“Service Level Failures”)
Will discuss further in “Termination Service Levels” below CORE: Nov. 2011
Service Level Agreements
4
Prioritizing Measured Services
First step is to prioritize the importance of the
Measured Services
Two frequently used approaches
A. Weighting Factors (Mathematical)
B. Severity Levels (Non-Mathematical)
CORE: Nov. 2011
Service Level Agreements
5
A. - Using Weighting Factors
Weighting Factors
Based on importance of portion of Service (“Service
Element”) being measured
Examples of Weighting
Contract and Performance
Management
CORE: Nov. 2011
Intellectual Property of the Centre for Outsourcing Research and
Education (CORE). May be used with permission of CORE.
Agenda – Service Levels for BPO
Preliminary Matters
Use of Weighting Factors
Use of Severity Levels
Use of the Balanced Scorecard
CORE: Nov. 2011
Service Level Agreements
2
Preliminary Matters for All BPOs
Precisely define the services to be provided (the
“Services”)
Since not practical to measure performance for all
Services, carefully identify which of the Services are most important to the business and should be measured (“Measured Services”)
Determine whether Measured Services are currently being internally tracked and calculated
If they are, determine whether existing performance levels (“Service Levels”) meet the needs of the business or whether they require improvement
If so, determine whether level of improvements is required If not, determine what Service Levels are required to meet the needs of the business
CORE: Nov. 2011
Service Level Agreements
3
Use of the Service Level Agreement (the “SLA”)
Used to document with service provider the
Measured Service Levels required
Use to document with service provider the amounts payable (the “Service Level Credits”) for failure to achieve the Measured Service Levels
Use to permit customer to terminate Master
Agreement
When significant or on-going failures to achieve Service
Levels (“Service Level Failures”)
Will discuss further in “Termination Service Levels” below CORE: Nov. 2011
Service Level Agreements
4
Prioritizing Measured Services
First step is to prioritize the importance of the
Measured Services
Two frequently used approaches
A. Weighting Factors (Mathematical)
B. Severity Levels (Non-Mathematical)
CORE: Nov. 2011
Service Level Agreements
5
A. - Using Weighting Factors
Weighting Factors
Based on importance of portion of Service (“Service
Element”) being measured
Examples of Weighting