In recent times, many organizations have found that in spite of their IT departments meeting requisite service levels as stated in IT service level agreements (IT SLAs), business units are still dissatisfied with the standard of IT support.
This phenomenon is due to the fact that IT SLAs poorly reflect business operations. Not only do they not support cost-reduction efforts, the agreements also do not consciously strengthen the organization’s position in the market.
Today, companies are looking at ways to address this challenge. One solution is to draw up business-centric SLAs.
Business-centric SLAs reflect actual business operations and as a result, easily demonstrate IT’s contribution to business performance improvement and cost-reduction undertakings.
How do we establish business-centric SLAs? The following serves as a guide:
Establish IT SLAs that support business service levels so that they become an integral part of business operations.
1. Align IT SLAs with business service levels
Establish IT SLAs that support business service levels so that they become an integral part of business operations. This ensures that the company is measuring (and complying with) metrics that are directly visible from the business user perspective.
2. Focus IT SLAs on business workload
IT organizations (ITOs) need to ensure that capacity is in line with demand. This can be done by implementing application load and volume-testing practices to correlate infrastructure resources with business transactions. This will set a strong foundation for establishing business-centric SLAs.
3. Link IT SLAs to business key performance indicators (KPIs)
ITOs should also link business and IT measures by associating certain organizational key performance indicators (KPIs) with enabling IT systems. For example, instead of merely measuring the uptime for the server that is processing a critical billing batch process, stipulate that IT is responsible for ensuring the batch process is completed within a certain timeframe which may in turn affect key financial ratios such as liquidity ratios.
There are also software tools in the market that can assist organizations in this area, more importantly though, companies need to look at changing mindset and the way IT is managed within their environment.
A retail bank, for example, may have certain IT SLAs in place that could include network availability, server uptime, and so on. However, having its IT department commit to a 99.9 percent server uptime will not make a lot of sense to the business user who may not be tech-savvy. As such, business service levels will need to be established.
For instance, if the retail banker wishes to commit to a 24-hour turnaround time in processing and approving car loans for customers, it will need to fine-tune and align IT SLAS accordingly to support this requirement. If a component which is needed to process the loan request involves a batch process that currently takes 24 hours to complete, the bank then knows this process must be improved. Otherwise, it would be detrimental for the company to commit to such a business service level.
For organizations that do not have established business service levels, they can adopt the following process:
Define a business process model – this should include identifying the constituents in the business process, key activities that take place as well as the inter-constituent relationships. The model enables better communications between business units and facilitates the process of establishing business-centric SLAs.
Understand customer requirements and identify key activities – business service levels revolve around responsiveness, problem resolution, service availability, and customer satisfaction. Small and medium businesses (SMBs) have a good chance of leapfrogging their larger counterparts, in terms of service level management, by adopting business-centric SLAs.
Many large organizations already have deeply-ingrained IT SLAs and will need to manage a major change in mindset as well as acceptance from employees.
SMBs do not have the same baggage as most are unlikely to have established basic IT SLAs. They can then employ business-centric SLAs to ensure that organizational goals are met and that the promise of IT is fulfilled.
Damien Wong is vice president and general manager of META Group Singapore, a technology research firm. He is also a member of the CNETAsia SMB Advisory Board.