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Service Level Agreements for Shared Services – When and Why to Use Them

Service Level Agreements (“SLAs”) can be an excellent vehicle to assist in building relationships and setting expectations between Shared Services and its customers. SLAs can also become unnecessarily bureaucratic, and burdensome and yield unintended negative consequences. Proper attention and evolution of SLAs can be a great benefit to Shared Services leaders as their services and results mature.

A Peeriosity PeercastTM in the Shared Services Leadership research area featured a company that aligns its SLAs to its current objectives by the customer and by service. They view the SLA as a tool to build stronger relationships with their customers and realize they must change over time.

As with all Peeriosity PeercastsTM, participants answered iPolling® questions that helped frame the discussion:

usage of Service Level Agreements ipolling peeriosity

The poll results indicate the varying prevalence of SLAs, which are impacted by many variables, including the level of maturity of services, company culture, as well as customer expectations.

The feature company discussed its objectives and content for its SLAs at different phases of maturity and a summary of the discussion is below:

Phase 1: Inception of Shared Services:

  • Clearly define service delivery requirements for both customer and Shared Services
  • Create transparency of results
  • Lots of data; volumes, cost, quality, cycle time
  • Reporting primarily variances from the target
  • Included explanation of chargeback methodology (predetermined – results did not impact)
  • Monthly reporting

Phase 2: Building Stronger Relationships (Trust) with Customers:

  • Less frequent (quarterly) reporting
  • “Pick up the phone” conversations replace frequent reporting
  • Opportunity (new services, areas of improvement) related to reporting/communication

Phase 3: Business Partner Relationships with Customers:

  • Formal SLAs moved from quarterly reporting to annual review
  • Most metrics were removed from the report (but internally monitored)
  • Collaborative Process Improvement Targets
  • Joint initiatives that will positively impact costs/chargebacks
  • New services include Decision Support and Analytics

The discussion continued with a number of insights and perspectives shared by participants, including representative comments below:

  • “SLAs are part of a process to achieve better service and it’s important to remember to start at the beginning whenever there is a new customer or service being added. It’s for everyone’s benefit.”
  • “Customers need to be segmented and not put in cookie-cutter SLAs. Shared Services needs to be flexible and pragmatic, otherwise, it adds no value and becomes a barrier to honest communication.”
  • “We use SLAs for new customers and new services. Over time, they are eliminated or used internally only. However, when issues arise, we reinstitute formal SLAs to assist with clarifying expectations for the area or service where there is a problem.”
  • “When done right, the SLA process helps build trust, transparency, and solid relationships. If not, the opposite is true and it’s an uphill battle for Shared Services.”
  • “When we started Shared Services, SLAs were a critical tool in gaining credibility with our customers. We have been operating and growing our Shared Services for a few years now and haven’t referenced SLAs or reported against one for years. They are never mentioned. Relationships with our customers are excellent and we communicate often. The SLAs helped us get to this point, but they are no longer needed.”
  • “Our customers really don’t want to see or hear about SLAs. They want us to know their business well enough to be a proactive and responsive partner so they can be more competitive in their markets. SLAs, or what they have evolved to, are for our use within Shared Services and if used with a customer, referenced to help clarify expectations.”

How relevant are your SLAs to your team and your customers?

Who are your peers and how are you collaborating with them?

1 “PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.

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