Strategic CIO // IT Strategy
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6/15/2011
03:25 PM
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The Dreaded SLA: Expert Fix-It Advice

Service-level agreements. We all get them, but do you believe in them, read them, negotiate them--or doubt they're worth the paper they're printed on?

Every day, our businesses depend on services. From accessing email to making calls, we expect a certain level of availability and quality. Underlying that expectation is a chain of promises that begins with a provider delivering--or not--a well-defined service to a customer. Service-level agreements are how we make sure we're getting our money's worth--and they're even more important as we move a wider variety of IT functions to outside providers.

To find out how external SLAs are being defined, managed, monitored, acted on, and fought over, InformationWeek Analytics surveyed both providers of IT services and those writing the checks. Of 562 respondents, 360 are buyers of IT services, and companies with 10,000 or more employees make up the top demographic.

We got an earful about the impact SLAs have on service quality today.

"I believe large-scale IT customers define too many SLA reports," says a project manager from a major service provider. "Some of our customers require over 200 SLA reports. I think once you get into that realm, you're looking at the law of diminishing returns." A VP and COO from another provider weighed in that SLAs, in the server- or application-availability sense, don't really tell much about how well a company is meeting its users' needs.

Match that against what we heard from the buyers of services: Just 16% classify SLAs as generally very effective. Most, 52%, rate effectiveness a 3 or lower on a scale where 1 is "very ineffective" and 5 is "generally very effective." Hardly a ringing endorsement. A miniscule 4% of SLAs achieved 100% attainment over the past 12 months.

"Most SLAs are not worth the paper they're written on, even when they're well negotiated," says one respondent. "This is because the cost to our business for a violation far outweighs the compensation provided by the SLA. Also, when trying to recoup money, the difficulties and time invested in proving a violation isn't worth the compensation." He uses SLAs mainly for comparison shopping for a provider.

Sure, we'd all like to return to an idyllic (and, let's face it, mythical) time when a handshake sealed a promise between vendor and consumer. The reality is that we need SLAs, so we might as well focus on making them better.

Promises, Promises: A Not -So-New SLA Model

Become an InformationWeek Analytics subscriber and get our full report on SLAs.

This report includes 36 pages of action-oriented analysis packed with 20 charts. What you'll find:
  • Rundown of 7 top tools for automated SLA monitoring
  • Exclusive view from the provider side of the fence
Get This And All Our Reports


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