Inquiry Insight: Creative Ways to Get SLA Performance Back on Track
During an ITO services negotiation, a client organization proposed the novel approach of being allowed to delay payment for 30 days if the service provider missed service level agreement (SLA) commitments. Is this a creative and effective way to correct service, or a misguided approach to the problem? ISG advisors polled came out strongly against the approach – but suggested other creative techniques that can get SLA performance on track without being highly punitive.
Service credits are not perfect for enforcing service level agreements (SLAs), but in an imperfect world they remain among the most widely used and most effective tools. Service credits are penalties paid by the service provider when it does not meet critical metrics specified in the SLA. When service credits are used as a stick, contracts also typically include a carrot in the form of earn backs, which give service providers the opportunity to “earn back” the...
 
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Table of Contents
  • Inquiry Insight: Creative Ways to Get SLA Performance Back on Track
    • Summary & Key Insight
    • Perspective 
    • Guidance
    • Associated Insights