Service management - Do we have all the answers?

Clients often outsource service management to vendors to increase the value without assuming ownership for costs and risks. The value capture for the clients by outsourcing service management can be understood from several perspectives: cost, improved service to lines of business and so on (we would not dvelve into details of value management here). The only way the client can ensure utility and warranty of service (scalability, consistency, reliability, security, accuracy etc.) of the service from an outsourcing supplier is by imposing strict service level measures through the Service Level Agreement (SLA). The non-compliance to the SLA often results in business impacts on the lines of business, and the client often impose strict penalty on non-compliance of the SLA.

The intent of a service provider is to sign-up for a SLA limiting itself to controllable risk and manageable cost while making sustainable margin. But it not as easy as it sounds due to several reasons. To understand these reasons every service provider should start asking itself the following questions:

1. Does the client & service provider understand all the problems faced in operationalzing a SLA?
2. What analytical models/techniques one can use to ensure the SLA problem and the solution is well understood and factored in the overall solution?
3. When, Why and how should such a model be applied and not applied for a SLA?


Any thoughts...