Service Level Management: ITIL Intermediate SOA Tutorial

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4.1 Service Level Management

Learning Unit 4 introduces the service level management (SLM) process and how it contributes to SOA. It provides a complete overview of the objectives, scope and the importance of SLM as a process to generate business value. IT SLM policies, principles, concepts, activities, methods and techniques are explained in relation to SOA practices, including SLA structures and determining service level requirements. Efficient use of SLM metrics are reviewed in this unit along with monitoring of service performance against SLAs (as well as OLAs).

4.2 Service Level Management

SLM is a vital process for every IT service provider organization in that it is responsible for agreeing and documenting service level targets and responsibilities within SLAs and service level requirements (SLRs) for every service and related activity within IT. If these targets are appropriate and accurately reflect the requirements of the business, then the service delivered by the service providers will align with business requirements and meet the expectations of the customers and users in terms of service quality. If the targets are not aligned with business needs, then service provider activities and service levels will not be aligned with business expectations and problems will develop. The SLA is effectively a level of assurance or warranty with regard to the level of service quality delivered by the service provider for each of the services delivered to the business. The success of SLM is very dependent on the quality of the service portfolio and the service catalogue and their contents because they provide the necessary information on the services to be managed within the SLM process. Let us discuss the Objectives of Service Level Management In the next slide.

4.3 Purpose and Objectives of Service Level Management

The purpose of the SLM process is to ensure that all current and planned IT services are delivered to agreed achievable targets. This is accomplished through a constant cycle of negotiating, agreeing, monitoring, reporting on and reviewing IT service targets and achievements, and through instigation of actions to correct or improve the level of service delivered. The objectives of SLM are to: ¦¦ Define, document, agree, monitor, measure, report and review the level of IT services provided and instigate corrective measures whenever appropriate ¦¦ Provide and improve the relationship and communication with the business and customers in conjunction with business relationship management ¦¦ Ensure that specific and measurable targets are developed for all IT services ¦¦ Monitor and improve customer satisfaction with the quality of service delivered ¦¦ Ensure that IT and the customers have a clear and unambiguous expectation of the level of service to be delivered ¦¦ Ensure that even when all agreed targets are met, the levels of service delivered are subject to proactive, cost-effective continual improvement. In the next slide, we will understand the Scope of Service Level Management as well as what should and should not include in SLM process.

4.4 Scope of Service Level Management

SLM should provide a point of regular contact and communication to the customers and business managers of an organization in relation to service levels. In this context, it should represent the IT service provider to the business, and the business to the IT service provider. This activity should encompass both the use of existing services and the potential future requirements for new or changed services. SLM needs to manage the expectation and perception of the business, customers and users and ensure that the quality (warranty) of service delivered by the service provider is matched to those expectations and needs. In order to do this effectively, SLM should establish and maintain SLAs for all current live services and manage the level of service provided to meet the targets and quality measurements contained within the SLAs. SLM should also produce and agree SLRs for all planned new or changed services that document warranty requirements. This will enable SLM to ensure that all the services and components are designed and delivered to meet their targets in terms of business needs. The SLM process should include: ¦¦ Cooperation with the business relationship management process: this includes development of relationships with the business as needed to achieve the SLM process objectives ¦¦ Negotiation and agreement of future service level requirements and targets, and the documentation and management of SLRs for all proposed new or changed services ¦¦ Negotiation and agreement of current service level requirements and targets, and the documentation and management of SLAs for all operational services ¦¦ Development and management of appropriate OLAs to ensure that targets are aligned with SLA targets ¦¦ Review of all supplier agreements and underpinning contracts with supplier management to ensure that targets are aligned with SLA targets ¦¦ Proactive prevention of service failures, reduction of service risks and improvement in the quality of service, in conjunction with all other processes ¦¦ Reporting and management of all service level achievements and review of all SLA breaches ¦¦ Periodic review, renewal and/or revision of SLAs, service scope and OLAs as appropriate ¦¦ Identifying improvement opportunities for inclusion in the CSI register ¦¦ Reviewing and prioritizing improvements in the CSI register ¦¦ Instigating and coordinating SIPs for the management, planning and implementation of service and process improvements. The SLM process does not include: ¦¦ Negotiation and agreement of requirements for service functionality (utility), except to the degree functionality influences a service level requirement or target. SLAs typically describe key elements of the service’s utility as part of the service description, but SLM activity does not include agreeing what the utility will be. ¦¦ Detailed attention to the activities are necessary to deliver service levels that are accounted for in other processes such as availability management and capacity management. ¦¦ Negotiation of underpinning supplier contracts and agreements. This is part of the supplier management process to which SLM provides critical input and consultation. Let us now discuss what Service Level Management provides to the business.

4.5 Value to the Business

SLM provides a consistent interface to the business for all service-level-related issues. It provides the business with the agreed service targets and the required management information to ensure that those targets have been met. Where targets are breached, SLM provides feedback on the cause of the breach and details of the actions taken to prevent the breach from recurring. Thus SLM provides a reliable communication channel and a trusted relationship with the appropriate customers and business representatives at a tactical level. Let us learn what the main activities within the SLM process should include.

4.6 Process Activities

The key activities within the SLM process should include: ¦¦ Determining, negotiating, documenting and agreeing requirements for new or changed services in SLRs, and managing and reviewing them through the service lifecycle into SLAs for operational services ¦¦ Monitoring and measuring service performance achievements of all operational services against targets within SLAs ¦¦ Producing service reports ¦¦ Conducting service reviews, identifying improvement opportunities for inclusion in the CSI register, and managing appropriate SIPs ¦¦ Collating, measuring and improving customer satisfaction, in cooperation with business relationship management ¦¦ Reviewing and revising SLAs, service scope, and OLAs ¦¦ Assisting supplier management to review and revise underpinning contracts or agreements ¦¦ Developing and documenting contacts and relationships with the business, customers and other stakeholders, in cooperation with the business relationship management process ¦¦ Logging and managing complaints and compliments, in cooperation with business relationship management ¦¦ Providing appropriate management information to aid performance management and demonstrating service achievement. Let us now discuss about the triggers as well as the process inputs and outputs of the service Level management process, in the next slide.

4.7 Triggers, Inputs and Outputs

There are many triggers that instigate SLM activity. These include: ¦¦ Changes in the service portfolio, such as new or changed business requirements or new or changed services ¦¦ New or changed agreements, SLRs, SLAs, OLAs or contracts ¦¦ Service review meetings and actions ¦¦ Service breaches or threatened breaches ¦¦ Compliments and complaints ¦¦ Periodic activities such as reviewing, reporting and customer satisfaction surveys ¦¦ Changes in strategy or policy. Inputs A number of sources of information are relevant to the SLM process. These include: ¦¦ Business information: from the organization’s business strategy, plans and financial plans, and information on its current and future requirements ¦¦ BIA: providing information on the impact, priority, risk and number of users associated with each service ¦¦ Business requirements: details of any agreed, new or changed business requirements ¦¦ The strategies, policies and constraints from service strategy ¦¦ The service portfolio and service catalogue ¦¦ Change information, including RFCs: from the change management process with a change schedule and a need to assess all changes for their impact on all services ¦¦ CMS: containing information on the relationships between the business services, the supporting services and the technology ¦¦ Customer and user feedback, complaints and compliments ¦¦ Improvement opportunities from the CSI register ¦¦ Other inputs: including advice, information and input from any of the other processes (e.g. incident management, capacity management and availability management), together with the existing SLAs, SLRs and OLAs and past service reports on the quality of service delivered. Outputs The outputs of SLM should include: ¦¦ Service reports: providing details of the service levels achieved in relation to the targets contained within SLAs. These reports should contain details of all aspects of the service and its delivery, including current and historical performance, breaches and weaknesses, major events, changes planned, current and predicted workloads, customer feedback, and improvement plans and activities ¦¦ Service improvement opportunities for inclusion in the CSI register and for later review and prioritization in conjunction with the CSI manager ¦¦ SIP: an overall programme or plan of prioritized improvement actions, encompassing appropriate services and processes, together with associated impacts and risks ¦¦ The service quality plan: documenting and planning the overall improvement of service quality ¦¦ Document templates: standard document templates, format and content for SLAs, SLRs and OLAs, aligned with corporate standards: ?¦ SLAs: a set of targets and responsibilities should be documented and agreed within an SLA for each operational service ?¦ SLRs: a set of targets and responsibilities should be documented and agreed within an SLR for each proposed new or changed service ?¦ OLAs: a set of targets and responsibilities should be documented and agreed within an OLA for each internal support team ¦¦ Reports on OLAs and underpinning contracts ¦¦ Service review meeting minutes and actions: all meetings should be scheduled on a regular basis, with planned agendas and their discussions and actions recorded and progressed ¦¦ SLA review and service scope review meeting minutes: summarizing agreed actions and revisions to SLAs and service scope ¦¦ Updated change information, including updates to RFCs ¦¦ Revised requirements for underpinning contracts: changes to SLAs or new SLRs may require existing underpinning contracts to be changed, or new contracts to be negotiated and agreed. Let us now understand what the most critical interfaces for the SLM process are.

4.8 Service Level Management Process

Before proceeding to learn about the interfaces of the SLM, let us look at the diagram on the slide to understand the SLM process. This Diagram shows the relationship between the business and its processes and the services, and the associated technology, supporting services, teams and suppliers required to meet their needs. It demonstrates how important the SLAs, OLAs and contracts are in defining and achieving the level of service required by the business. Now let us understand the interfaces in the next slide.

4.9 Interfaces

The most critical interfaces for the SLM process include: ¦¦ Business relationship management This process ensures that the service provider has a full understanding of the needs and priorities of the business and that customers are appropriately involved/represented in the work of service level management. ¦¦ Service catalogue management This process provides accurate information about services and their interfaces and dependencies to support determining the SLA framework, identifying customers/business units that need to be engaged by SLM and to assist SLM in communicating with customers regarding services provided. ¦¦ Incident management This process provides critical data to SLM to demonstrate performance against many SLA targets, as well as operating with the fulfilment of SLA targets as a CSF. SLM negotiates support-related targets such as target restoration times and then the fulfilment of those targets is embedded into the operation of the incident management process. ¦¦ Supplier management This process works collaboratively with SLM to define, negotiate, document and agree terms of service with suppliers to support the achievement of commitments made by the service provider in SLAs. Supplier management also manages the performance of suppliers and contracts against these terms of service to ensure related SLA targets are met. ¦¦ Availability, capacity, IT service continuity and information security management These processes contribute to SLM by helping to define service level targets that relate to their area of responsibility and to validate that the targets are realistic. Once targets are agreed, the day-to-day operation of each process ensures achievements match targets. ¦¦ Financial management for IT services This process works with SLM to validate the predicted cost of delivering the service levels required by the customer to inform their decision-making process and to ensure that actual costs are compared with predicted costs as part of the overall management of the cost effectiveness of the service. ¦¦ Design coordination During the service design stage, this process is responsible for ensuring that the overall service design activities are completed successfully. SLM plays a critical role in this through the development of agreed SLRs and the associated service targets which the new or changed service must be designed to achieve. Let us now learn what Service Level Agreements are and how many types of agreements exist in SLA.

4.10 Designing SLA Framework

Using the service catalogue as an aid, SLM must design the most appropriate SLA structure to ensure that all services and all customers are covered in a manner best suited to the organization’s needs. There are a number of potential options, including the following. Service-based SLA This is where an SLA covers one service, for all the customers of that service – for example, an SLA may be established for an organization’s email service, covering all the customers of that service. This may appear fairly straightforward. However, difficulties may arise if the specific requirements of different customers vary for the same service, or if characteristics of the infrastructure mean that different service levels are inevitable (e.g. head office staff may be connected via a high speed LAN, while local offices may have to use a lower-speed WAN line). In such cases, separate targets may be needed within the one agreement. Difficulties may also arise in determining who should be the signatories to such an agreement. However, where common levels of service are provided across all areas of the business (for example, email or telephony), the service-based SLA can be an efficient approach to use. Multiple classes of service (for example, gold, silver and bronze) can also be used to increase the effectiveness of service-based SLAs. Customer-based SLA This is an agreement with an individual customer group, covering all the services they use. For example, agreements may be reached with an organization’s finance department covering, say, the finance system, the accounting system, the payroll system, the billing system, the procurement Customers often prefer such an agreement, as all of their requirements are covered in a single document. Only one signatory is normally required, which simplifies this issue. Multi-level SLAs Some organizations have chosen to adopt a multilevel SLA structure. For example, a three-layer structure might look as follows: ¦¦ Corporate level This will cover all the generic SLM issues appropriate to every customer throughout the organization. These issues are likely to be less volatile, so updates are less frequently required. ¦¦ Customer level This will cover all SLM issues relevant to the particular customer group or business unit, regardless of the service being used. ¦¦ Service level This will cover all SLM issues relevant to the specific service, in relation to a specific customer group (one for each service covered by the SLA).

4.11 Designing SLA Framework

The SLM process starts with the list of business service definitions that come from the service catalog process. The next step is determining and documenting the exact quality requirements from the customer for existing and new services to produce SLRs. Based on this input, SLM has to design the best possible SLA, so that all services can be provided and clients can be serviced in a manner that meets mutual needs. To ease this process, typically the service provider introduces various forms, questionnaires, checklists, and document standards (SLR and SLA templates). These form the SLA framework to make the process more efficient and repeatable. Often SLA categories are introduced as well, to offer one and the same service in different qualities and cost (i.e. Gold, Silver, and Bronze). This allows for further standardization of services and formalization of the process. Lastly, reviews and improvement initiations must be carried out within overall SIP and logging and management of all complaints and compliments is very essential. In the next slide let us understand information management for SLM process.

4.12 Information Management

• SLM provides key information on all operational services – their expected targets and – service achievements and breaches • It assists Service Catalogue Management with the management of the Service Catalogue • It provides the information and trends on customer satisfaction, including complaints and compliments. • SLM is crucial in providing information on – the quality of IT service provided to customer, and – information on the customer’s expectation and perception of that quality of service. Let us now move on to learn about the Critical success factors and Key performance indicators in the next two slides.

4.13 CSFs and KPIs

The following list includes some sample CSFs for SLM. Each organization should identify appropriate CSFs based on its objectives for the process. Each sample CSF is followed by a small number of typical KPIs that support the CSF. These KPIs should not be adopted without careful consideration. Each organization should develop KPIs that are appropriate for its level of maturity, its CSFs and its particular circumstances. Achievement against KPIs should be monitored and used to identify opportunities for improvement, which should be logged in the CSI register for evaluation and possible implementation. Let us take the first CSF as Managing the overall quality of IT services required both in the number and level of services provided and managed Corresponding KPIs for the CSF would be Percentage reduction in SLA targets threatened, Percentage increase in customer perception and satisfaction of SLA achievements, via service reviews and customer satisfaction survey responses, Percentage reduction in SLA breaches caused because of third-party support contracts (underpinning contracts), Percentage reduction in SLA breaches caused because of internal OLAs.

4.14 CSFs and KPIs

Let us now discuss the KPI for managing business interface. Next CSF would be to deliver the service as previously agreed at affordable costs. Corresponding KPIS would be Total number and percentage increase in fully documented SLAs in place, Percentage increase in SLAs agreed against operational services being run, Percentage reduction in the costs associated with service provision, Percentage reduction in the cost of monitoring and reporting of SLAs, Percentage increase in the speed and of developing and agreeing appropriate SLAs, KPI Frequency of service review meetings. Let us consider one more CSF as Manage the interface with the business and users Corresponding KPIs would be Increased percentage of services covered by SLAs, Documented and agreed SLM processes and procedures are in place, Reduction in the time taken to respond to and implement SLA requests, Increased percentage of SLA reviews completed on time, Reduction in the percentage of outstanding SLAs for annual renegotiation, Reduction in the percentage of SLAs requiring corrective changes (for example, targets not attainable; changes in usage levels)

4.15 Challenges

challenges One challenge faced by SLM is that of identifying suitable customer representatives with whom to negotiate. Who ‘owns’ the service on the customer side? In some cases, this may be obvious, and a single customer manager is willing to act as the signatory to the agreement. In other cases, it may take quite a bit of negotiating or cajoling to find a representative ‘volunteer’ (beware that volunteers often want to express their own personal view rather than represent a general consensus), or it may be necessary to get all customers to sign. If customer representatives exist who are able genuinely to represent the views of the customer community, because they frequently meet with a wide selection of customers, this is ideal. Unfortunately, all too often representatives are head-office based and seldom come into contact with genuine service customers. In the worst case, the service level manager may have to perform their own programme of discussions and meetings with customers to ensure true requirements are identified. Another challenge may arise if there has been no previous experience of SLM. In these cases, it is advisable to start with a draft SLA. A decision should be made on which service or customers are to be used for the draft. It is helpful if the selected customer is enthusiastic and wishes to participate – perhaps because they are anxious to see improvements in service quality. The results of an initial customer perception survey may give pointers to a suitable initial draft SLA. One difficulty sometimes encountered is that staff at different levels within the customer community may have different objectives and perceptions. For example, a senior manager may rarely use a service and may be more interested in issues such as value for money and output, whereas a junior member of staff may use the service throughout the day, and may be more interested in issues such as responsiveness, usability and reliability. It is important that all of the appropriate and relevant business requirements, at all levels, are identified and incorporated in SLAs. Some organizations use focus groups from different levels from within the customer community to help ensure that all issues have been correctly addressed. This takes additional resources, but can be well worth the effort. The other group of people that has to be consulted during the whole of this process is the appropriate representatives from within the IT provider side (whether internal or from an external supplier or partner). They need to agree that targets are realistic, achievable and affordable. If they are not, further negotiations are needed until a compromise acceptable to all parties is agreed. The views of suppliers should also be sought, and any contractual implications should be taken into account during the negotiation stages. Where no past monitored data is available, it is advisable to leave the agreement in draft format for an initial period, until monitoring can confirm that initial targets are achievable. Targets may have to be re-negotiated in some cases. Many organizations negotiate an agreed timeframe for IT to negotiate and create a baseline for establishing realistic service targets. When targets and timeframes have been confirmed, the SLAs must be signed. Once the initial SLA has been completed, and any early difficulties overcome, then move on and gradually introduce SLAs for other services/customers. If it is decided from the outset to go for a multi-level structure, it is likely that the corporate-level issues have to be covered for all customers at the time of the initial SLA. It is also worth trialling the corporate issues during this initial phase. Let us discuss some of the risks associated with service level management in the next slide.

4.16 Risks

Some of the risks associated with service level management are: ¦¦ A lack of accurate input, involvement and commitment from the business and customers ¦¦ Lack of appropriate tools and resources required to agree, document, monitor, report and review agreements and service levels ¦¦ The process becomes a bureaucratic, administrative process, rather than an active and proactive process delivering measurable benefit to the business ¦¦ Access to and support of appropriate and up-to date CMS and SKMS ¦¦ Bypassing the use of the SLM processes ¦¦ Business and customer measurements are too difficult to measure and improve, so are not recorded ¦¦ Inappropriate business and customer contacts and relationships are developed ¦¦ High customer expectations and low perception ¦¦ Poor and inappropriate communication is achieved with the business and customers.

4.17 Content of SLAs and OLAs

The sample contents of an SLA are listed here. It is not recommended that every SLA should necessarily contain all the contents mentioned here or limited to this. They should only be considered as indicative guidelines or checklists. Service description section may include key business functions, deliverables and relevant information to describe the service Scope of agreement includes, what is in scope and out of the scope of the agreement? Service hour’s section contains the description of hours of service availability like 24\7 service or only week days etc. Service targets section encompasses the targets for the provision of the support service and the reporting and reviewing processes and frequency. Service availability includes the target availability levels within the agreed services hour which is normally expressed in percentages (e.g.99.5%). Reliability encompasses the maximum breaks that can be tolerated with in an agreed period. Service continuity section may incorporate a brief mention of the organization’s service continuity plans together with details of how the SLA might be affected, should a disaster situation occur. Describing of the organization’s security policies covering issues such as password controls, security violations, unauthorized software usage etc. Customer support section may include the details of how to contact Service desk, what to do outside the support hours, details of incident response targets, Service Level targets, response and resolution time, incident impact and priority codes, classification of incidents etc. Contact points and escalation may contain the details of the contact within each of the parties and escalation processes and escalation matrix etc. Responsibilities of the various parties like service provider, customer and the users involved in the service Charging includes details of commercials involved for the provision of services, charging policies, charging periods, invoicing procedures and payment conditions etc. Service reporting section may contain the content, frequency, timing and distribution of service reports and the frequency of service review meetings Next, let’s discuss the sample content of OLA.

4.18 Content of SLAs and OLAs

The sample contents of an OLA are listed here. It is not recommended that every OLA should necessarily contain all the contents mentioned here or limited to this as the requirements and situations may vary. They should only be considered as indicative guidelines or checklists. Support service description section may contain comprehensive explanation and details of the support service being provided. Scope of agreement covers the scope within the agreement and what is excluded. Service hours include the description of the hours for which the support service is provided. Service target section encompasses the targets for provision of the support service and the reporting and reviewing processes and frequency. Contact points and escalation may contain the details of the contact within each of the parties and escalation processes and escalation matrix. The responsibilities and targets agreed for implementation of various ITSM processes like Incident management, Problem management, Release management, Service Asset and configuration management, Information security management, Availability management etc. With this we have come to the end of this learning unit, next let’s look at an exercise.


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