Why SLAs fall short – and what can be done about it? (Part 1 of 2)

A recent survey conducted by Accenture and the Shared Services & Outsourcing Network found that 2/3rds of respondents believe conversations with customers and providers about IT performance focus too much on SLAs, and not enough on business outcomes. No news here…after all, the industry has only been talking about managing to business outcomes for oh, the last twenty years or so. Why do things never change? Service providers naturally focus on SLAs – it’s the way they quantify and measure the performance of their services. And let’s face it, much of the ranks of IT leadership have their roots in service delivery, so they tend share the same IT-centric perspective. So we end up with a closed-loop feedback mechanism that keeps us speaking only in terms of, well… SLAs.. The way to escape this “deadly embrace” is to break the mold, and that involves changing mindsets. Let’s look at how this can be done.

First, the demand side. Clearly, a Business Analyst who engages his/her customer in a discussion of Severity 2 Incident Response Times (or substitute your favorite SLA) deserves the glassy-eyed stare s/he gets. But even a more business-focused discussion may not get the IT department much further. For example, take my candidate for the most often-cited and over-used business outcome of the new millennium: “Agility”. So, what does being agile really mean? The ability of IT operations to respond to fluctuations in processing demand? Or perhaps the capacity to quickly resource and deliver IT projects to support new business requirements? How about the capability to act as a business enabler by proactively evaluating emerging technologies and their potential to drive new offerings? And while we’re on the topic… does “agility” mean the same thing to the Chief Sales Officer as it does to the SVP of Supply Chain, or to the CFO? No wonder it’s not easy managing customer expectations! The view, however, is worth the climb, and here are a few practices I’ve found useful in getting there:

1. Make it personal. Find out how your customer’s performance is measured. If the relationship allows, try to discuss what is personally important to your customer (i.e., what outcomes drive his/her compensation, standings amongst peers, chances for promotion, etc.) There’s no better way to cement a business relationship than by showing a genuine interest in helping your colleague attain his or her personal success.
2. Sweat the details. Next , understand the value chain that drives your customer’s business outcomes. What are the key processes? How are those processes measured? What factors have the greatest influence on the performance of those processes? Be detailed and specific. Then go back to your customer and demonstrate that you really understand the nuts and bolts of what makes the business tick.
3. Focus on the “Vital 3”. Get agreement on the few key metrics that will truly make a difference in business outcomes. If it’s more than three, push back. There are too many constituents for IT to be all things to all people. Get your customer to prioritize, so you can too.
4. Show me the Money. Once you’ve figured out how your organization contributes to the attainment of the Vital 3, describe the capabilities you need to deliver to support your customer’s success. Set expectations about your current ability to perform those functions. Discuss any action plans that you need to / are doing to improve your performance, including required investment, access to customer resources, etc. And then make it visible. Report both your customer’s performance of the Vital 3 and your linked KPIs.

Follow these steps and you will find yourself earning a seat at the business table. The next question is: how then, do you keep it? We will examine the supply side in Part 2 of this discussion.