ESSEN­TIALS OF SER­VICE LEVEL AGREE­MENTS

Libertatem Magazine - - Igniting Minds -

Ser­vice Level Agree­ment (SLA) is noth­ing but legally bind­ing con­tract be­tween the owner and the ser­vice provider, to de­liver a ser­vice with a par­tic­u­larly ser­vice qual­ity in an agreed price. It spec­i­fies what a customer wants and what the sup­plier is com­mit­ting to pro­vide. Hence ser­vice level agree­ment is not only a legally bind­ing agree­ment but also in­cor­po­rates the as­pi­ra­tions, re­quire­ments and the dreams of the owner along with the cor­re­spond­ing strate­gies and tech­ni­cal so­lu­tions guar­an­teed by the ser­vice provider. There are two ma­jor types of SLAS:

(i) B2C (ii) B2B

B2C: B2C ser­vice level agree­ments are the an­nounce­ments made by var­i­ous tele­com, IT, ISPS and non-tech­nol­ogy ser­vice providers an­nounc­ing the ser­vice lev­els guar­an­teed by their com­pa­nies to the pub­lic, in­clud­ing their cus­tomers. Th­ese com­pa­nies make SLAS to tell their prospec­tive and present cus­tomers, what is the level of ser­vice they are able to guar­an­tee and if they fail to main­tain their guar­an­teed ser­vice level what kind of com­pen­sa­tion they give to their customer, who ended up in a lesser level of ser­vice than the guar­an­teed one. Th­ese SLAS are not ne­go­ti­ated and signed be­tween the par­ties. They vol­un­tar­ily ad­here to the penal­ties in case of fail­ure. Ex­am­ple:” Pizza de­liv­ery in 45 min­utes, if we de­liver it later you need not have to pay the bill” etc,

B2B: Th­ese are the agree­ments be­tween two busi­ness houses i.e. the ser­vice provider and the com­mer­cial customer and the ser­vice are ob­tained to use in the course of busi­ness of the customer. Th­ese SLAS have nor­mally an im­pact on the busi­ness of the customer in case of any breach by the ser­vice provider. Th­ese SLAS are re­quired to be legally bind­ing and en­force­able con­tracts. Be­cause of their com­plex na­ture they need to be ne­go­ti­ated, signed be­tween the par­ties and if nec­es­sary reg­is­tered also.

FUN­DA­MEN­TALS OF DRAFT­ING SLAS : 1.FI­NAL­I­SA­TION OF RE­QUIRE­MENTS BY THE CUSTOMER:

The customer or owner has to fi­nal­ize the re­quire­ments be­fore start­ing the process of call­ing of pro­pos­als from the ser­vice providers. If the cus­tomers are not fully sure of tech­ni­cal re­quire­ments they may pre­pare a wish list which de­scribes the “ex­pected user ex­pe­ri­ence’ achieved by the con­tract. This nor­mally hap­pens be­cause the tech­nol­ogy is

chang­ing each and ev­ery day. The pro­pos­als sug­gested by the ser­vice providers to the customer ac­cord­ing to their re­quire­ments are like so­lu­tion to the prob­lem.

2.PREPA­RA­TION OF THE PRO­POS­ALS BY SER­VICE PROVIDER:

Ser­vice provider has to pro­pose the op­tions of im­ple­ment­ing the agree­ment as soon as the wish list or ex­pec­ta­tions of customer, any re­stric­tion made by the customer in terms of bud­get, im­ple­men­ta­tion pe­riod af­ter ser­vice bank up cost, in­fra­struc­ture, scope of ex­pan­sion, re­quire­ment of hu­man re­sources are nar­rated to the provider. The op­tions should cover the as­pects like so­lu­tions to the is­sues, cost ef­fec­tive­ness, re­quire­ment of man­power, im­ple­men­ta­tion pe­riod, re­view meet­ings, mean­ing­ful met­rics, re­port­ing sys­tem, train­ing to the customer, af­ter ser­vice model and cost.

3.AP­POINT­MENT OF A NE­GO­TI­A­TION TEAM:

In SLAS there are cer­tain tech­ni­cal and le­gal as­pects and in this sit­u­a­tion alone owner can­not take ef­fec­tive ne­go­ti­at­ing deals and hence it is de­sir­able to form a ne­go­ti­a­tion team who are well-equipped with the tech­ni­cal knowl­edge , customer as­pi­ra­tions, fu­ture de­vel­op­ment etc. The team must com­prises of :

(i) Au­tho­rized sig­na­tory (ii) Project leader (iii) Le­gal ad­viser.

4.NE­GO­TI­A­TIONS:

Ne­go­ti­a­tions be­tween the par­ties are nor­mally con­fined to the pro­posal of­fered by the ser­vice provider. One of the mem­bers of ne­go­ti­a­tion team must be present while ne­go­ti­at­ing as he is aware about all the as­pects of and re­lated to the de­sired agree­ment. It is al­ways good to minute the meet­ing so that ear­lier meet­ings need not have to be looked into again, even if the team mem­bers change due to un­avoid­able rea­sons.

5.FI­NAL­IZE THE DE­SIRED SER­VICE LEVEL:

Fi­nal­iz­ing the ser­vice level hap­pens on the ba­sis of the real customer re­quire­ments also tak­ing into ac­count the cost re­quire­ment

6.FI­NAL­IZE THE TOL­ER­ANCE LIM­ITS OF THE SER­VICES:

Tol­er­ance lim­its ex­hibits the min­i­mum and max­i­mum level of the ex­pected ser­vice level in ev­ery level in ev­ery com­po­nent of the ser­vices. The min­i­mum level shows the low­est ex­pec­ta­tion of the customer, be­low which the customer will start los­ing the rev­enue or customer trust or both. The max­i­mum ser­vice level is the in­di­ca­tor of the up­per limit prefer­able cost.

7.FI­NAL­I­SA­TION OF OBLI­GA­TIONS:

Ev­ery con­tract con­tain obli­ga­tions to be per­formed by both the par­ties, SLAS are not in any way ex­empted from that gen­eral rule. Obli­ga­tions are to be per­formed by both the par­ties in the se­quence stated in SLA and within the spec­i­fied time pe­riod. The obli­ga­tions can be clas­si­fied as:

• In­de­pen­dent obli­ga­tions • In­ter­de­pen­dent obli­ga­tions • Con­di­tional obli­ga­tions • Cir­cum­stan­tial obli­ga­tions.

8.FI­NALISE RE­PORT­ING AND MON­I­TOR­ING SYS­TEMS:

There are pro­fes­sional mon­i­tor­ing or re­port col­lect­ing com­pa­nies in ISP and tele­com ser­vices etc., oth­er­wise par­ties can them­selves de­cide the re­port­ing model, re­spon­si­bil­ity and fre­quency of re­ports. The Mon­i­tor­ing au­thor­ity is to keep read­ing the re­ports and mon­i­tor­ing the progress of the agree­ment and re­ports to the con­cerned per­son ac­cord­ingly.

9.FI­NALISE RE­WARDS AND PENAL­TIES:

The ob­jec­tive of penalty is not only to com­pen­sate the other party due to the loss caused but it is also a means by which both the par­ties re­main cau­tious of their obli­ga­tions. As spec­i­fied ear­lier in B2C ser­vices penalty is self-im­posed and un­der B2B ser­vices it has to be laid down un­der the agree­ment and hence un­der this com­pen­sa­tion is pro­vided keep­ing the liq­ui­dated dam­ages in the mind.

10.DIS­PUTE RES­O­LU­TION CLAUSE:

It spec­i­fies the process of re­solv­ing the dis­putes, in case of any dis­pute arises be­tween the par­ties. Ar­bi­tra­tion and lit­i­ga­tion must be the last step for res­o­lu­tion of dis­putes and some other way must be spec­i­fied in agree­ment for re­solv­ing the dis­putes am­i­ca­bly. The fol­low­ing steps are rec­om­mended:

• Ref­er­ence to a Joint Com­mit­tee • Ex­pert Opin­ion •Me­di­a­tion • Ar­bi­tra­tion

11.ANNEXURES:

All the im­por­tant doc­u­ments men­tioned in the SLA must be laid down in the in­dex and should be at­tached un­der the annexures.

12.AU­THO­RISED SIG­NA­TO­RIES AND COM­MU­NI­CA­TION OF­FI­CERS:

It is es­sen­tial to spec­ify the au­tho­rized sig­na­to­ries and the mode of com­mu­ni­ca­tion along with the com­mu­ni­ca­tion points.

13.TER­MI­NA­TION CLAUSE:

It is ad­vis­able to in­sert a ter­mi­na­tion clause with post ter­mi­na­tion fi­nan­cial con­se­quences to avoid heavy costs etc.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.