Service Level Agreements (SLAs)

The SLA describes the targeted service levels by type of service, what gets measured, how they are measured, penalties exacted for not meeting defined service levels, and the assumptions on which they are based. The SLA complements the contractual agreement by providing the services levels required to satisfy the terms of the agreement. The SLA and the contractual agreement must be developed in parallel, as they are complementary documents.

The definition and measurement of Service Levels must be unambiguous, and targets must be linked to work processes and be achievable. This requires accurate, reliable information, and should only be done after assessment of existing service levels and volumes. This information is contained in the work products produced during due diligence and is supplemented with data gathered during implementation.

A common mistake is to cover too many metrics and include literally hundreds of service levels, which often add little or no value to the deal and are indeed overly burdensome on both the client (who is forced to track them) and the supplier (who will have to divert resources from service delivery to service monitoring and thus increase cost). Alsbridge can assist your organization to develop practical SLAs that ensure that the client is getting the full benefit of the contracted for services without any undue detriment.

Contract Negotiation

Our consultants have past experience selling outsourced services for the majority of the major supplier organizations. Thus, we are in a unique position to provide you with valuable insight into their sales tactics and negotiation strategies.

There is a consistent pattern of adversarial negotiations in the outsourcing industry, driven by distrust of suppliers and arms-length dealing on the part of clients. In a destructive cycle, this both leads to, and is born out of, over-selling by suppliers and unrealistic expectations by clients. It results in positional negotiation and loss of trust. Huge amounts of time (and legal fees) are wasted negotiating common clauses and terms or trying to shift risk to the side where it does not reasonably lie.
 
And, in the worst case, the adversarial negotiations are carried out by an advisor on the client’s behalf. Far from protecting the relationship, this combination can result in a deal done by intermediaries where the principals have failed to establish a strong working relationship through the period of their courtship and engagement – then when the marriage hits a difficult patch, the whole thing breaks down.

Alsbridge will guide you through the process of contract negotiations and obtain the most favorable terms possible at a fair and workable price, thus creating a sustainable relationship with a partner willing to go the extra mile. By giving an extra three percentage points of profit to the supplier, you may well get 10 times the output from them.