Spend Outsourcing Time on Outcomes, Not SLAs

If you’ve been involved with outsourcing long enough, and if you’ve paid attention to the basic message of Vested Outsourcing, then then you probably know that service level agreements—SLAs—are somewhat lacking when it comes to forging collaborative and transformative relationships.

That’s mainly because task-oriented SLAs generally are too one-sided in favor of the company outsourcing.

There’s growing recognition that SLAs are too one-dimensional and not an optimum way to gauge real outsourcing success. A CIO Magazine article last month by Stephanie Overby notes that business strategy gets short shrift in outsourcing relationships when “outsourcing customers and providers focus excessively on basic service level agreements (SLAs), according to a recent survey conducted by Accenture and the Shared Services and Outsourcing Network.”

Stephanie writes that of 600 survey respondents, 42 percent said they spend too much time “discussing SLAs and not enough time agreeing on business outcomes, while another 25 percent said they devoted a lot of time to SLAs but that it was decreasing.”

She quotes Tom Petit, Accenture’s managing director of North America business process outsourcing, who says that while tight SLAs are critical to IT and BPO deals, they can distract customers and providers from larger transformation opportunities in their relationships.

“SLAs are an important part of any managed service engagement,” Petit says. “They set expectations and necessary service performance targets. However, the overwhelming majority of SLAs are focused on measuring process inputs, rather than business outcomes.”

In other words they are too task-oriented and focused on the specific service metrics that a service provider must meet, rather than the collaborative achievement of Desired Outcomes.

The Vested Outsourcing Manual, which will be published later this month by Palgrave Macmillan, can  solve the problem  Stephanie described by providing a roadmap to crafting sustainable, outcome-based Vested relationships that gets to the win-win.

Among many other things, the manual’s shared value approach enables value-based decisions, and provides tools and instruction on what to include when structuring a Vested agreement, such as a Requirements Roadmap.

In an excellent pre-publication review of the manual, Kathleen Goolsby, senior writer for the Outsourcing Center, says that the book addresses the SLA problem by describing “how to create a performance statement, a three-tiered hierarchy of performance metrics and a Quality Assurance Plan for managing performance (these aren’t the typical KPIs and SLAs in outsourcing).”

(Kathleen is a respected expert on outsourcing and a great friend of Vested—she really gets it—and I thank her for the great review!)

Another takeaway from survey as outlined by Stephanie was that more than half of the respondents said they had “a long way to go” with their outsourcing operating performance and strategy.

A good way to shorten that journey is to move to Vested and beyond the task- and transaction-oriented SLA.

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