IT solutions are either utilized as a service or procured from third-party vendors by organizations of all types and sizes. This enables organizations to gain access to reliable IT technologies without having to internally build, operate, or manage the underlying systems.
As a result of this, both the organization and the solutions provider sign a service-level agreement (SLA), which commits the vendor to deliver services that meet the established performance requirements. Vendors are reprimanded if they fail to meet SLA requirements because it impacts the end-user experience of IT services and the overall business of the organization.
What is a Service-Level Agreement (SLA)?
A service-level agreement (SLA) is a written contract between a service provider and an organization that describes the level of service, including the metrics that will be used to measure, and in the event of a problem how long it will take to restore the service based on their category and priority.
If the vendor fails to comply with the agreed-upon service standards, generally there is a penalty that is levied on the vendor and if possible, the SLA is revised with improved service commitments and implemented with immediate effect. The vendor generally reviews the incident metrics and end-user complaints in-order to assess SLA compliance.
Even if SLA compliance does not explicitly contribute to the expected end-user experience, it enables the service desk team of the vendor to recognize elements for change. From a business standpoint, measuring SLA compliance assists in determining whether the SLA commitments are realistic or not.
What is SLA compliance ratio?
SLA compliance is a service desk metric that is used to determine the impact of an IT service on end-user experience. So how do you actually measure it?
That’s where the SLA compliance ratio, better known as the SLA success rate, comes into play! An SLA compliance ratio is the percentage of total service issues resolved within the agreed-upon SLA criteria and conditions like priority, cost, time, etc.
SLA compliance ratio =
No. of IT incidents resolved in line with SLA compliance / Total no. of IT incidents
All specifications and conditions related to resolving the relevant service issues must be taken into consideration to get a precise SLA compliance ratio and to get a true idea of performance accordance with the SLA agreement.
The SLA compliance ratio is one of the many metrics that service desk teams use to track their performance, but it comes with its own set of limitations.
To understand more about which other key metrics are measured by service desk teams, read our blog: 7 Important Service Desk Metrics to Measure
Limitations of the SLA compliance ratio
As mentioned earlier there are a couple of challenges in creating a comprehensive SLA compliance ratio.
To significantly contribute to the achievement of business goals, organizations should ensure that outlined SLA metrics are thoroughly aligned with the end-user experience and the IT service performance.
Next, organizations should understand that there is no absolute concept of effective or successful incident response. Resolving a high-priority incident with just a few minutes of SLA time left may not be regarded as effective as resolving a low-priority incident with hours of SLA time to spare. However, when the SLA compliance ratio is calculated, both the incident responses can be considered equally effective.
This shows that relying on the SLA compliance ratio may not always offer a comprehensive picture of how effectively the service provider resolves identified service issues. As a result, the gap between IT incident resolution and end-user satisfaction may continue to exist. So to get around these limitations, let’s look at some of the SLA best practices.
5 SLA Best Practices
Here are five best practices for developing and implementing service related SLAs to achieve service management success in the ITSM ecosystem.
- Make sure that everyone comprehends the purpose of SLAs:
It is highly important that all stakeholders involved in establishing, negotiating, implementing, managing, and using the SLAs fully understand how they are defined, what is their purpose, and how their success can be measured.
- Establish realistic and achievable SLAs:
SLAs should be defined in a way that they are realistic and achievable but are still able to push performance improvements. The basic idea is that the service desk teams should believe in the concept because setting impossible SLA targets will make IT teams completely ignore them.
- Review and update SLA targets regularly:
Organizations who fail to review and update their SLAs periodically are at risk of setting misplaced service level targets leading too non-compliance issues and as a result of SLA non-compliance, could end up with penalties and lose their end-users. So if there are changes in a particular service in terms of availability, uptime, service hours, closure, or response time, SLAs should be reviewed and updated with immediate effect.
- Map SLAs with end-user expectations:
Often, service providers meet the SLA metrics like service uptime but fail to support the end-user’s goals because they lack context. So, service providers should aim to identify what end-customer wants and then define the SLA according to that goal. This will not only affect how the service provider manages the end-users’ services but also enable them to understand the service levels better.
- Develop individual SLAs for each service that needs to be measured:
Each service has its own processing and delivery time and authorization schedule. So rather than developing a common SLA and specifying that all service requests must be tracked in a single way, establish different SLAs for each service in your service catalog.
If you need to recognize or reexamine your ITSM capabilities, measuring SLA compliance can indicate the effect of your organization’s ITSM processes.
So, while defining an SLA, consider each service level from the standpoints of both IT and end-users. Also, gain clarity on how the SLAs should be defined and used, and understand their impact within your organization to realize better business outcomes.