What’s Green on the Outside and Red on the Inside? Service level agreements and watermelons.

By Dave Brown, Principal, KPMG LLP Advisory

An odd comparison to be sure, but too often, we have found that executives see only the green on the outside of a service relationship while everyone else closer to the middle of it sees red.  I call it the “watermelon effect.”

All sourcing arrangements have some kind of reporting, dashboard and/or service level agreements (SLAs) designed to keep things on track and the relationship in good standing. But more often than not, SLAs are seen through nonobjective eyes of executives who receive excellent, personal service as a result of their position.  Their eyes see green.  At the same time, many lower-level staff members are frustrated by the lack of service and/or care they receive when it comes to their mission-critical support.  Those folks, who are in the middle, see red.

Here are a few clues that your SLAs might just be watermelons:

  • Your sales and marketing departments continue to make IT workarounds
  • Your customer satisfaction surveys measure fixes rather than loyalty
  • You have to renegotiate your contract when your business changes
  • You begin to think of service-level penalties as a revenue stream
  • Your finance team continues to rely on Excel® spreadsheets

Any of those sound familiar?  If so, chances are your SLAs were defined and negotiated with sales, purchasing, and lawyers at the table, not actual users.  As a result, the SLAs are measurable, but they are also transactional rather than value-based, flexible, and accretive to your business objectives. 

If you, or especially those who depend on a service provider, are looking for refreshingly transformational SLAs that can lead to better value, shared success, flexibility toward the future, and the ever-elusive innovation, you’ll need different skills and organizational knowledge to pull up a chair.

We’ll be discussing better approaches to SLAs in upcoming papers and blogs.  For more insights, read The Service Level Agreement Conundrum on the Shared Services and Outsourcing Institute.



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