SLAs, While Necessary, Can Have Evil Results

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"You can't manage what you can't measure," like many cliches, got to be a cliche in the first place because of the inherent truth in the statement.


This particular cliche goes a long way toward explaining the popularity of the service-level agreement, or SLA, in managing relationships with outsourcing providers.


Yet as much sense as this seems to make, companies have a tendency to rely too heavily on SLAs and to use them as a substitute for other tried-and-true management techniques, such as communicating early and often with providers.


The potential for unintended consequences with SLAs also looms large. For instance, customer service representatives working under an SLA that places strict time restrictions on help-desk calls could end up being too abrupt with customers.


"Massive" SLAs drive up outsourcing complexity and costs, says the head of IT Advisory for KPMG -- and resentment on one or both sides of an outsourcing relationship, we'd add.


KPMG recently released a survey in which 60 percent of respondents said outsourcing problems were related to people. These problems, not surprisingly, often emanate from poor relationship management, says the KPMG exec.


In an interview with IT Business Edge, the CTO of managed hosting provider Rackspace says that while SLAs are still a necessary tool, "they really shouldn't be." He likens SLAs to a pre-nuptial agreement -- used only "if something goes terribly wrong and emotions begin to cloud everyone's judgment."


That said, he recommends establishing appropriate service-level targets -- a process that can be tricky, especially in new outsourcing relationships -- and making sure SLAs are written in English rather than legal-ese so that both parties understand the agreement.