Establishing SLAs for Internal IT Services

Service Level Agreements (SLAs) are standard for measuring performance of an outsourced service.

But what happens when an IT service is managed internally? How are expectations set? How is performance measured?

When IT services are insourced, there should still be SLAs in place in order to sustain internal customer satisfaction and alignment with business priorities.

Without SLAs, the business resorts to a subjective assessment, often concluding that IT services are overpriced, slow, or inadequate, without the information needed to evaluate the real value of the team.

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To create a comprehensive performance measurement plan for IT services, consider the following recommendations:

1. Outline the reasons for insourcing the service

When drafting SLAs, it’s important to consider the factors involved in choosing to insource an IT service in the first place—factors that go beyond simple cost. Organizations choose to insource services for a variety of reasons, including reduced security risk, compliance, proprietary IT architecture, and control over core competencies.

Many companies choose to internalize an IT service because it supports a competitive advantage. Let’s say an organization makes a choice to use a homegrown CRM application as opposed to a cloud solution, such as Salesforce. The good old CRM system fits their workflow like a glove, making their business process more effective. By externalizing the service with Salesforce, the organization will lose key features and risk losing revenue. Insourcing maintenance and support for the CRM system is therefore more effective and creates more opportunity for business growth.

2. Model SLAs after 3rd party service providers’ contracts

To create an effective IT service SLA, leverage information gathered from external service providers for similar functions.

Such information is typically available from experienced industry consultants and should not cost much, if anything, to obtain. You might even choose to vet quotes from a variety of third party providers, gaining useful information from each meeting. You can then use this information to custom-build a system of performance metrics tailored to your organization’s business objectives and demonstrate to the business that your internal service is comparable in effectiveness and cost to outsourced options.

3. Establish a continuous improvement program

A continuous improvement program will monitor performance, make periodic adjustments to ensure services are improving, and ensure alignment between IT performance measures and business needs, i.e. measuring the right things at the right time.

If we measured IT help desk performance by the number of tickets they close, the help desk team would then be incentivized to open and close as many tickets as possible. Choosing the right performance measure to match the business goal is crucial to success.

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A continuous improvement process will highlight any mismatched performance measures or, at the least, keep adjusting the measures to outrun behavior.

4. Connect IT service measures to strategic business objectives

While it’s important to measure the day-to-day health of business operations it’s just as important to link the performance of IT services to strategic business objectives.

While the daily performance metrics facilitate efficient and effective workflow, the correct alignment of strategic business objectives with IT services facilitates future business growth.

Strategic performance measures are aligned to pre-defined, proactive, ‘big picture’ business objectives. If, for example, an organization chooses to increase its market share through mergers and acquisitions, IT services related to M&A need to be measured explicitly to ensure alignment.

5. Avoid analysis paralysis

Thanks to continuously improving technology we can measure anything and everything. It’s easy to be seduced by information overload, but be wary of the analysis paralysis trap.

It’s better to focus on three most critical SLAs than dozens of somewhat important, perhaps redundant, or complicated performance metrics.

Conclusion

Successful organizations use SLAs as tools to clarify, connect, and create effective and efficient IT services. To maximize the benefit of your SLAs:

  1. understand the resourcing rationale
  2. leverage information provided by external service providers
  3. establish a continuous improvement program
  4. align metrics with strategic business goals
  5. streamline a core set of performance measures

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