1
How to secure deliveries with SLA
Agne Lindberg
2
Today’s agenda
•
•
•
Challenges – what creates disputes?
Service Levels
• Traditional
• Proactive
• Some examples
Sanctions
3
Challenges – Why do Disputes Occur?
•
•
•
•
•
No 1 – Scope
No 2 – Price model
No 3 – SLA/KPI
No 4 – Market developments not reflected in contract and deliveries
No 5 – Cloud: need for supplier to have ONE solution for all customers
4
Scope of Services
•
•
•
Traditional service deliveries/outsourcing:
• Specification
• Change Control
• Scope Sweepers?
Cloud:
• Reference to web/user manual
• Right for customer to exit
• Need for a basic level of functionality – compare SaaS!
Crucial points for a Cloud contract:
• Service Levels
• Secure customer enhancements
• Exit
5
Service Levels / KPI:s
•
•
Quality measurement: SLA
• Specified
• Avoid ”dynamic clauses”
Need to regulate:
• Time period
• Methods of measurement
• Documentation requirements/Reports
• Consequences for non-delivery
6
Some examples – ADM/Cloud
•
•
Step 1: How to order Development
• Confirmation of order
• Provide offer
• Capacity: Provide resources at each level of competence. Connected to ”forecast process”
Step 2: Development – customer enhancements
• Delivery on time
• Connect to Milestone and acceptance test
• Quality:
• Density of errors (system testing + acceptance testing)
• Function points: SLA or price model?
• Priorities – need for clear definition + definition rights.
7
Examples, cont.
•
•
Availabiltiy
• SaaS: Needs to be for the complete solution
• Service Downtime – keep control!
• Interfaces
• Needs to be complemented with ”incident management”
Incident and problem management in the contract
• Incident prioritization
• Incident Response time
• Incident Resolution time
• ”Stop the clock” regulation
• What is the meaning with ”objective”, ”TRT” etc.
• Needs to be complemented with number of Incidents
8
More examples of KPI:s
•
•
•
•
Update of documentation
Reporting (SLA reporting, report generated from system)
New Releases
• Content requirements?
• Frequency
Proactive SLA:s
• Density of errors in the Development work
• Staff turnover
• Tied to action plan rather than a penalty regime
9
Consequences of KPI breach
•
•
Consequences:
• Service Level Penalties = predetermined levels of compensation/reduction of price
• Advantage: No need to prove any damage!
• Focus on KPI:s that are critical!
• Discussion topic No. 1: Exclusive OR parallel sanctions?
• Incentives
• Is there a need for a better Service Level? Earn back?
Penalty calculation:
• What ”makes the clock tick”:
• ”Every incident in excess of the Service Level” / ”Every week” / ”% of inaccessibility”
• Amount: % of what? A fixed amount? A lump sump or escalating?
• Maximum level – a cap is required!
10
Alternative consequences
•
•
•
•
•
•
Service Level Penalties only!?
Damages
• Direct/Indirect losses. Loss of Data
• Cap
• Carve outs
”Step-in”
Third party observation
Retention of fees – Should the delivery continue? Regulatory Requirements?
Termination of Contract – Not a realistic option when dealing with complex service deliveries
11
Dispute Resolutions
•
•
•
Escalation (within the framework of the co-operation model)
A dispute can be devastating to the parties relations and to the delivery
In most cases - Arbitration (maybe with the exception of unpaid fees) – No publicly established
practice
• Advantages: Speedy procedure. An opportunity to select experts.
Avoiding the public eye.
• Disadvantages: Expensive. One shot. Avoiding the public eye.
12
Agne Lindberg/ Partner / Head of Sourcing
Practice Group
Phone +46 8 677 54 15
Mobile +46 709 25 25 25
agne.lindberg@delphi.se
Advokatfirman Delphi
Regeringsgatan 30–32 / P.O. Box 1432 / SE-111 84 Stockholm / Sweden
Phone + 46 8 677 54 00 / Fax +46 8 20 18 84 / www.delphi.se