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This is the 2nd part of a series of articles on Shared Service Centres (SSCs).

In the first part of the series, we discussed that one of the major benefits of a SSC is the improvement in quality of service delivered to its customers - namely to the business unit. So, what will happen in the event of any disputes between the parties involved pertaining to the right level of services? Henceforth comes the necessity of having a proper well constructed Service Level Agreement (SLA).

A Service Level Agreement (SLA) is a contract that binds the customer and the service provider (SSC). It is fundamental to both the provider and the recipient of a service. It defines the terms of appointment or engagement or the rules that will govern the relationship and hopefully to prevent problems from arising.

For obvious reasons, we see the advantages of having an SLA as follows:

• It tracks performance level of the services being rendered. The service(s) render can be relating to the setting up of an IT infrastructure, application development or business process outsourcing services,
• It creates harmony between the parties involved and prevent disputes. In the SLA, clauses can be included to quantify the minimum acceptable service levels from the customer and the service provider’s perspectives,
• It helps to justify investment and the “right” quality of services.

Possible well structured features of an SLA should have the following:

1. as detailed as possible, the more detailed, the better it is,
2. it should focus on the needs of the customer’s business not just the present but the future,
3. the language used in an SLA should be precise and written in clear and plain English,
4. the construction of the SLA should includes as many relevant parties as possible namely legal, all stakeholders like senior management, IT and others who are ultimately responsible for the executing and complying with the SLA,
5. Lastly, the clauses or terms and conditions in the SLA should at least include the following:
   • service definition and the precise scope of services and levels,
   • roles & responsibilities of the service provider and customer,
   • change management process, fees and expenses and the mode of payment,
   • problem management and contingency planning,
   • security, uptime and downtime for critical infrastructure and applications, scalability and network performance (IT infrastructure SLA),
   • warranties and remedies,
   • exit procedures

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Related Entries

• Shared Service Centres: Concepts, Characteristics and Advantages (Part A)
• TOPICS COVERED UNDER THE HEADING OF SHARED SERVICED CENTRE
• Outsourcing: Introduction, the Pros & Cons and Planning Ahead
• Type Or Structure Of Shared Service Centre
• Survey-Type of Services, Reasons, Selecting Site & Success Factors