5 Rules For Choosing SLA Metrics
Failed outsourcing deals litter the business landscape.
Just ask any consultant or service provider.
How many exactly is hard to tell. Businesses hate to announce failures.
But one IT executive estimates that about 25%—and maybe more than half—of all outsourcing projects fail.
How do you produce a successful outsourcing project?
You craft a well thought out SLA or Service-Level Agreement.
An SLA measures your relationship with a service provider. It also defines key activities. Creates expectations and objectives. And accurately measures performance.
At the heart of an SLA is its set of metrics. They translate an SLA into something that can be measured and managed. So choosing the right metrics for an outsourcing project is paramount.
But doing that is often a challenge. With so many metrics out there, managers are hard pressed to decide on the right ones.
If you’re like most managers, you’re open to any tips on to choose the right metrics. The five tips below help you do that:
Rule 1: Choose metrics that motivate behavior
It’s not enough for metrics to motivate. They must motivate the right behavior. This can be a chore when both parties are trying to optimize actions to meet SLA objectives. Nevertheless, realism must prevail here.
When choosing metrics, focus on factors critical to your business. Then pick a set of metrics that relate to these factors. You also must decide which factors you’ll trade for performance improvements in another area.
Action Point: Define all the key factors critical to your success. Then develop a list of metrics that tells you if you’re achieving these objectives.
Rule 2: Choose metrics easy to measure
You don’t want teammates spending hours collecting metrics manually. Instead, you want metrics that are easy to calculate. Ideally, you want a cost-effective system that collects metrics automatically. So try to use metrics readily available.
If the required data isn’t easily obtainable, you may have to compromise. Or you may have to devise other ways of collecting the data. A third option is using a commercially available metric analysis tool.
Rule 3: Keep it simple
Some managers like to gather reams of information. Keep it simple. You have enough information being thrown at you already. Instead, choose a select group of metrics. Make sure they provide data easily analyzed and digested.
Rule 4: Set metrics to reasonable, attainable goals
This can be a challenge if the service provider lacks a historical record of meeting these metrics. If not, establish initial baselines. Then readjust them at a future date. Also, include built-in realistic tolerance levels.
Rule 5: Ensure factors are within the provider’s control
This is key. The factors affecting the metrics must be under the service provider’s control. Otherwise, the metrics just cause unnecessary problems.
Make sure metrics are double-sided where necessary. If the provider’s ability to do something depends on you, have a metric that measures your performance. And avoid choosing metrics that dictate how service providers do their jobs.
These five rules help you choose the right outsourcing metrics. They’ll form the basis of developing an effective SLA—one that helps you forge a partnership with your service provider, set project expectations, and accurately assess performance.
Action Point: Review the metrics in an existing SLA. Do they follow these rules? If not, how can you change them to bring them in line with the rules.
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