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How to build better SLAs for more strategic applications outsourcing

Stephanie Overby | Aug. 24, 2015
Service-level agreements need to not only look good on paper, the must deliver business results in real life. Here’s how to create more effective SLAs for application development and maintenance.

What should customers keep in mind in order to develop a strategic set of SLAs that take into account the complexities of application development and maintenance (ADM)?
Kirz: Customers need to keep in mind that ADM services are on a continuing path away from staff augmentation and are moving towards outcome-based solutions (or managed services). With this comes a need to move to a portfolio of service-level metrics that align with the service delivery model. This may mean redefining metrics and adjusting priorities. Customers should be prepared for this and drive these conversations with their service providers so that they can deliver the increasing demands of internal stakeholders.

First, SLAs that can and should apply to staff augmentation work. Any provider-controlled staff augmentation can and should have an SLA (for example, time to onboard resources or turnover).

Second, SLAs for maintenance are very different from those in development. Each area of work should have its own set of SLAs, amount at risk, and credit point pool.

Third, SLAs must continuously improve over time. Customers either don’t include clauses that ensure SLAs continuously improve or allow providers to dictate the statistical methodology that allows for only minor improvements year over year. Instead, customers should include language that ensures SLAs will improve every year.

What are some effective ADM SLAs that IT leaders should consider?
Kirz: In staff augmentation, metrics-centric SLAs that focus on staff onboarding, attrition, productivity and coding quality tend to work well. For managed services, we like to see metrics that align with expected outcomes—for example, ticket resolution timeframe, batch process effectiveness, application availability and customer satisfaction. More importantly, customers should recognize that most deals have both managed services and staff augmentation components so a comprehensive metric portfolio is key.

In application development—beyond the standard SLAs—customers should also consider including SLAs that manage change management compliance, functional specification compliance, and how far in advance of release are all defects resolved.

In application maintenance, beyond the standard SLAs, customers should also consider including SLAs that manage the speed of root cause analysis, synthetic transaction time, and number of re-opened tickets.


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