SLA vs KPI…What Truly Drives Performance Improvement

SLA

While reviewing a proposal request this week I started thinking about areas that drive success for our customers. I mean true measurable performance based outcomes that translate to system utilization improvements, end user satisfaction, and true return on investment. An industry trend continues to be a focus on Service Line Agreements (SLAs). To me, that’s a minimum standard of services and doesn’t really drive success, it simply meets the minimum requirement. As a consultant, we are always striving to exceed expectations, so why don’t we showcase Key Performance Indicators (KPIs) vs SLAs?

Let’s back up and first define the difference between the two.

Service Line Agreements (SLAs) – According to Wikipedia, a SLA is a contract between a consulting firm and their customer that documents what services the firm will furnish and defines the service standards the firm is obligated to meet. In the case of the proposal, SLAs are agreements on response times to answer calls, resolution times to complete tickets, and ticket request approval/escalation process agreements.

Key Performance Indicators (KPIs) – According to Oxford Dictionary, KPIs are a quantifiable measures used to evaluate the success of an organization, employee, etc. in meeting objectives for performance. To me, KPIs provide a way to measure how well client and/or projects are performing in relation to their strategic goals and objectives.
With those definitions I think it’s clear to say that SLAs define requirements on delivery and KPIs are measures to show improvement over time on the delivery.

As a consultant you should be aware of the SLAs. These are contractual agreements on the services to perform. We should not stop there. We should then take it to the next level and ask if we are also providing KPI trackers to showcase improvements and ROI for the customer…and if not, work with the client in showing the value of also creating KPIs.

When working with a client on creating KPIs, remember that the operative word in KPI is “key,” because every KPI should be related to a specific business outcome with a performance measure. KPIs are often confused with business metrics. Although often used in parallel, KPIs need to be defined according to critical or core business objectives with ability to show actual return on investment (ROI).

While sales may sometimes lead this effort as part of a proposal, I find more often we only provide SLAs in the contract. Here is a huge opportunity as a consultant to add value to the efforts we are providing.

Areas to consider when creating KPIs:

  • What is the client’s desired outcome?
  • Why does this outcome matter to them?
  • How are you going to measure progress?
  • What resources are needed to achieve the outcome?
  • How will you know you’ve achieved the intended outcome for your client?
  • How often will you review progress towards the outcome?

As an example, let’s say your objective is to decrease wait times on your Epic Help Desk tickets post go-live. You’re going to call this your Help Desk KPI.

From here agreements would include:

  • To decrease ticket resolution time by 20%
  • Progress will be measured as an assignments of ticket type, “Tier 1 or Tier 2” and the amount of time spent to resolve the issue
  • By hiring an outsourced company (your firm) there is an expectation of a reduction of escalated tickets to the application team. We can measure this as well.
  • Outcomes can be reviewed on a weekly, monthly, or quarterly basis.

Now the client will have a contract with SLAs that show the minimum requirements to cover help desk calls, plus they will have KPIs that show improvements in ticket management and resolution. It’s truly a winning combo to provide both to clients.

Have you worked with clients in creating KPIs in addition to already agreed on SLAs? Share your thoughts and comments below.

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