An opinion article by Abubakr Hattas, Group Business Improvement Specialist.
In yesteryear, a man’s (person’s) word was sacred and could be relied on, as it was based upon the honour of the parties for its fulfilment, rather than being in any way enforceable. The act of shaking hands and what is called, a ‘gentleman’s agreement’, was a way of sealing a deal, without cumbersome paperwork or a formal contract.
Today though, service level agreements are at the heart of a relationship, as they set out the (agreed) criteria for the product, or the quality of service you want to achieve. It usually deals with measurement of activities or services. In legal terms, they are worth the paper it is written on, but we all know that a perfect execution is not a realistic measure of an activity.
In getting to a point where a Service Level Agreement (SLA) is more personable, negotiation of it involves a compromise between two or more parties. In the case of a client-service provider relationship, the client’s ideal list of needs should be offset against the service provider’s ability to prioritise these, in terms of what is realistically achievable. A balance needs to be effected, so that the desired levels of performance can be achieved. Despite the agreement, conversely, this ‘meeting of the minds’ often impede innovation, in the form of better solutions, to meet requirements or existing needs.
Facilities management in southern Africa is largely managed by procurement, which usually determines the ultimate benefits, for the least amount of money. Whilst this is the natural order of business, you should not impose restrictions on the service provider that are so tight, that they inhibit the development of a creative and effective working partnership.
Imposing punitive service level agreements often have service providers operating within the boundaries of the contract and aim to meet only its minimum requirements, i.e. doing the job it gets paid to do. Translated differently, anything that is done out of scope, directly impacts the profitability of the contract, as it then costs the client and has an adverse impact on the relationship with the service provider. All in all, it makes for an awkward conversation between the affected parties.
Further to this, innovation opportunities, such as streamlining processes, lowering the cost of doing business, and enhancing the overall delivery of services, are lost due to the conventional nature of service provider management.
In giving further reason to this, in an input SLA, the client determines how the service provider (SP) manages its resources and what those resources are for the contract, which leaves the service provider with very little room for improvement. Conversely, when you look at an output SLA, it gives you a requirement for service levels in respect of the quality standard defined by itself and one is then able to engineer the input, which gives the SP room to become innovative in their approach, in managing the contract. The cost of doing that business can then become cheaper, based on the innovative solutions one puts together.
In conclusion, the agreement then is, however you are able to efficiently manage that contract, the savings is passed to both client and the service provider.