SLAs and Service Specifications
SLAs and Service Specifications
specifications
Written by The Society
CPD
Published: 16 September 2014
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Ensuring that a client organisation receives the most appropriate type and
level of service is an act of intention, not one of faith. Specifying services to
reflect the client organisations real needs, those of its customers and other
interested parties is not a trivial matter and must be adequately addressed.
This article reviews the need for service specifications and service level
agreements (SLAs) arising from the requirements of stakeholders. The
purpose of each and the ways in which they are expected to contribute to the
effective management of services provision are identified. Performance
monitoring and quality assurance are also discussed.
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Keywords
facilities management, service specification, service level, service level
agreement, SLA, performance measurement, critical success factor, key
performance indicator
Time equivalence: 30 minutes (article only); 2 hours (article and exercises).
Learning objectives
1. Define a service specification and a service level agreement (SLA)
and describe their respective functions.
2. Explain why service specifications and SLAs are essential tools in
facilities management.
3. Describe the use of critical success factors and key performance
indicators in assessing the performance of service providers.
4. Identify means of collecting and assessing performance data.
5. Discuss the correct use of rewards and penalties as part of incentive
systems for improved performance.
6. Describe the use of service specifications and SLAs as the basis for
continual improvement and their relationship with contractual
arrangements with service providers.
Introduction
Specifying the actual services required and the performance expected of the
service provider are key aspects of any facilities management arrangement
(Atkin and Brooks, 2009). Accordingly, this article demonstrates how the
service requirements of stakeholders can be formalised in service
specifications and service level agreements (SLAs). We see that these are
essential tools in facilities management irrespective of whether services are
outsourced or retained in-house. These formal documents emphasise the
standards of service required rather than the processes involved. The typical
points which each should address are itemised and examples given, drawing
on guidance in Atkin and Brooks (2009). Performance measurement is then
considered in terms of critical success factors and key performance
indicators, which ensure that performance aims are directly related to the
client organisations business objectives. Various means of performance
monitoring are considered and, finally, the role of quality assurance systems
is reviewed.
Involving stakeholders
Identified stakeholders should be involved in specifying their requirements
and the level of performance that will be acceptable. This means:
Organisations may find that they are defining and specifying their
requirements for the first time. In such cases, there is a risk that they might
unknowingly specify a higher level of service than was received in the past
and that, consequently, bids may be higher than forecast. Value
management, a technique for ensuring that real needs are addressed, can be
used to guard against over-specification, whilst allowing standards to be
raised over time.
Service specifications
A service specification is a document that quantifies the minimum
acceptable (technical) standard of service required by the customer and will
generally form a part of the contract with the service provider. The
production of the service specification is a prerequisite in the negotiation
and drafting of SLAs and should set out the following.
The extent of detail in the specification will depend on the importance and
complexity of the service or asset item. The following is an example outline
of sections and contents.
Part 1. Terminology
1.1 Definition of terms
Part 2. Areas, items and services
2.1 Scope of areas, items and services covered by specification
Part 3. External standards
3.1 Legal/regulatory requirements
3.2 Manufacturers' recommendations
3.3 Industry accepted best practice
Part 4. Internal standards
4.1 Corporate/departmental requirements
4.2 Established standards/codes
Part 5. Categorisation of areas, items and services
5.1 Procedures for each category
5.2 Frequency of procedures for each category
In the case of a cleaning contract, for example, the specification could
describe the standard of cleanliness to be achieved in terms of the maximum
amount of dust or debris which is permitted to remain following cleaning.
Another example would be a service specification for cleaning, showing,
first, prescriptive specifications and, second, performance requirements.
time-related targets
resources required:
change procedures.
The SLA can contain details and targets relating to all or some of the items
listed earlier. In principle, the document should identify those measures that
the customer will use to judge the level of service received from the service
provider. These measures will generally fall under the following aspects of
the service: quality, performance, delivery time, charges for services and the
nature of the interaction with the service provider. The SLA can also set out
the procedure for incorporating any changes that occur in these targets.
Definitions
Critical success factors
are those actions that must be performed well in order for the objectives or
goals established by an organisation to be met satisfactorily.
Key performance indicators (KPIs)
enable management to understand, measure and control progress in each of
the CSFs
Within each CSF will be one or more key performance indicators (KPI).
KPIs enable management to understand, measure and control progress in
each of the CSFs. For example, an organisation may have set a goal of
providing the highest-quality service that ensures each internal customer
receives best value. A CSF in achieving that goal would be agreed SLAs.
Here, a KPI might be published service levels to show clearly what has to be
achieved and then, subsequently, to say what has been achieved.
In another example, an internal perspective on productivity, a CSF, would
lead to KPIs that highlighted abortive work, backlog and ability (or
inability) to perform tasks concurrently. Measures of productivity could
include:
There are many CSFs and KPIs that interact and combine to bring about a
culture and methods that aim to achieve best practice. Performing at the top
end of these measures would bring an organisation to the point of achieving
best practice and, with that, best value in the management of its services and
facilities.
Performance measurement
The customers view of the quality of a service or product is based on
tangible and intangible factors, both of which are important. Tangible
factors are those which can be objectively measured, such as the time taken
to deliver an item, the charge made and the level of operational
performance.
Intangible factors include those which are more subjective in nature and,
therefore, more difficult to measure; for example, the utility of the item to
the customer, its adaptability and advantages over other types or merely the
courtesy of the service providers employees. The difficulty of quantifying
some factors should not preclude their measurement as they can be as
important as those that are easily measured.
Organisations should not, however, impose too many or overly demanding
performance measurements and excessive monitoring on service providers
as this could become counter-productive. A sensible approach is to
concentrate on KPIs.
Before performance measurements can be put in place, output specifications
must be established. For this, a good understanding of the organisations
requirements is essential, and this constitutes part of the informed client
function (ICF) see article on Strategy is the key to successful FM. The
approach of establishing output specifications and then corresponding
measurement systems can result in quantifiable business improvements and
reinforces the link between the facilities management plan and the
organisations overall business objectives. If output specifications are
correctly set up, the system for measuring them should reflect contractual
arrangements.
Service providers can gain competitive advantage by taking on much of the
performance measurement and by identifying the means for adding value.
The hard measurements reported, as based on the output specification, can
be supplemented by the identification of soft benefits, which exceed
contract requirements. This type of relationship between service provider
and client organisation is encouraged and formalised in partnering
arrangements see articles on partnering.
In practice, the overall performance of a service provider can be determined
by monitoring adherence to standards and targets under the following
headings:
expenditure targets;
Conclusions
Service specifications are an integral part of the process and work with
SLAs to define the quality and/or performance required from a service. Both
they and SLAs are fundamental to the business of effective facilities
management, irrespective of whether the service is outsourced or retained
in-house. Time spent preparing tightly written service specifications and
SLAs will be repaid amply in the future since contracts will be easier to
manage and less prone to misinterpretation. Quality assurance systems
should be adopted by organisations as a necessary part of facilities
management and used to support the work of managers and service
providers alike. This ensures, as an absolute minimum, that a consistent set
of standards is applied as a basis for seeking continual improvement.
Exercises
1. How would you go about ensuring that stakeholders did not goldplate their requirements?
2. How would you ensure that your organisation was fully aware of
current legislation in regard to health and safety?
3. How would you differentiate between the information provided
within a service specification and that within an SLA?
4. Choose a service (other than cleaning) and then write down the
headings under which details of the service could be specified
adequately.
5. Identify the special features of the SLA for the outsourcing of
information technology by an insurance company.
6. Write down the CSFs and their associated KPIs covering the
business objective of competitive prices.