Using SLM to Improve Your Company's Bottom Line

In the last two engagements where I implemented service level management (SLM) as a practice, I was asked by the customer to find ways to cut the cost of the project. As one of them told me “I don’t want to show you my balance sheet, I just can’t spend money like I used to.” But, on the other hand, he urged me to start with the execution of the project; understanding the effectiveness of the process and its ability to improve efficiency and to reduce long-term cost of services.

SLM is the primary process defined by ITIL that provides overall control and governance of IT services. Traditionally, SLM was a process that was responsible for reporting on services that are documented in the SLA. Today, the scope of SLM has expanded to other areas of the service management lifecycle mainly because the process is expected to achieve much more than the production of compliance reports.

This article will demonstrate how SLM, as part of an overall IT service management (ITSM) program, assists companies in lower their expenditures. I will suggest implementing low cost activities that possess high impact, identifying “low hanging fruit” activities and those that require special attention.

Increasing SLM's Scope

The basic definition of SLM is “The process that documents, negotiates and reports on the quality of services”. Many SLM managers will point out that the process includes steps beyond the above three tasks. However, more experienced and skilled SLM managers will agree that the above three phases―documenting, negotiating and reporting―tell the story of the process ... with one exception, an additional essential phase: Service Improvement.

Experience shows that a primary objective of service managers is Service Improvement, which the first three phases will facilitate. Therefore it is imperative to include Service Improvement as a fourth phase in the SLM process, redefining SLM as “ ... documenting, negotiating and reporting on services to enable improvement of service quality and customer perception."

The four phases of the process are cyclical and feed off each other. We begin by documenting the process, and then negotiating the contract details resulting in the SLA. The SLA is being monitored in the reporting phase, and those services which were breached will be dealt with in Service Improvement.

Let’s break down those four phases and suggest activities that are low-cost, that impact positively and improve our service environment.

Documenting

Consulting groups live off this phase, by billing hours and wasting your budget advising you to generate documents on top of documents that, in worst case, will not be read, and best case, read once and never used again. When deciding to develop a document for SLM, make sure the document is useful for you and for your reader. Ensure the document can easily be related to other documents, making it easy to maintain.

The following is the suggested list of documents that assist in the maintenance of SLM:

Process:

1. Charter
2. Process Plan, Communication Plan, Stakeholders and Risk Management, Service Improvement Plan, Process Design.

Operational:

1. Service List, Service Cataloge
2. Service Level Management
3. Service Improvement Plan

The process documents basically stay static and unless fundamental transformation occurs in the environment, no changes will be needed. Conversely, the operational documents are as dynamic as the environment and will require frequent changes to ensure it reflects accurate presentation of the service environment.

Negotiating

Negotiating includes the act of the customer and the provider agreeing on and signing the SLA. Negotiating is also an ongoing act of maintaining good relations with the service provider, and particularly with the customer. Remember, it does not cost anything to listen.

As a service relation manager or SLM manager, one of your most important responsibilities is also the most inexpensive one―listening. Communicating with your customer via phone calls and hallway small talk will reveal much more than the most sophisticated and colorful report ever will.

Reporting

It is challenging to execute the reporting phase without excessive spending. Today, you will find companies spending more and more funds on reporting. Funds are either spent on hiring or outsourcing personnel for the development of reports or on software that includes licenses and professional services. It seems as if we lose either way. So, what can we do to improve our efficiency when it comes to reporting? The answer can be found in two different aspects of the reporting phase: Critical Success Factors and Customer Satisfaction.

Critical Success Factors (CSF) – You don’t need to report on everything. When your budget is tight, be selective. Your operations, customer and service provider will come with a long list of reporting requirements. At this point you need to learn to push back and find those reports that can satisfy the business as well as the customer.

Start with CSFs that are the few key factors that organizations should focus on to be successful. For example, if your business is providing Internet connectivity, find one or two metrics that reflect the level of the quality of the service. If the company relies heavily on support activity, find one or two metrics that reflect the ability to respond to events and resolve the events.

Customer Satisfaction – Let me say this bluntly: even if your scorecard shows 100% for all your key performance measurements, but your customer survey results are failing, you are failing. ITIL rightfully focuses on customer perception because even if you have the most professional and advanced help desk, your customer might disapprove of their speed to answer or their response time. This feedback will only be uncovered through customer satisfaction surveys.