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Breakout Session # 204

Jon Maxim, President, Maxelerate

April 15, 2008

10:45 – 11:45 AM

Why Service LevelsDon't Work

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Why Service Levels Are Needed

• Get what you negotiated

• Get more than you negotiated

• Create long term success

• Avoid issues

• Resolve issues

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Why Service Levels Don't Work

• Poor Structure

• Poorly Thought Out

• Weasel Words

• Guns Without Bullets

• Not managed

• No SLAs

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Poor Structure

• No objectives• No metrics• No measurement methods• Not measurable• Double jeopardy (double dipping)• Developed after contract signed• Vendor creates and performs measurement

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Poorly Thought Out

• Confusing/ambiguous terminology• Missing elements • Conflicting elements• Obsolete and irrelevant• Difficult to calculate• Fallacy of averages• Too many• Not measured end-to-end

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Weasel Words

• Best efforts…• Reasonable efforts…• Commercially reasonable…• Industry standard…• Common practice…• Appropriate level…• Approximately…• Satisfactory…

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Guns Without Bullets

• No remedies

• Ineffective remedies

• Not collectible

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Not Managed

• Not managed at all• Lack of time• Data not collected• Managed inconsistently• No responsibility and accountability to manage• Inexperienced or untrained resources• No confidence in results• Inadequate process• No follow up• Project management principles ignored

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No SLAs !!!!!!!

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Anatomy of a SLA

• Description

• Objective

• Metric

• Calculation method

• Timing

• Remedy

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Service Level

DescriptionTarget How Measured Remedy

Account team availability

Vendor account team will respond to phone calls, phone messages or e-mails and resolve any issues or answer any questions.

100% response within 4 Business Hours of Call Stamp Time.

Tracked by call log maintained by Fleet Services and e-mail time stamp.

In the event that Vendor is non-responsive to Client, Vendor agrees to provide the necessary resources to remedy the situation. 30 Days – The Account Team will provide specific Action Steps to correct/remedy the outstanding situation (responsiveness) with specific timing. 60 Days – In the event the responsiveness has not improved, Vendor will provide a new Account Management Team to Client Account90 Days – At the end of the 90 Day period, if the issue is not resolved, Vendor agrees to provide a full-time Client employee in the Client facility until such time the responsiveness has been resolved.

Availability and integrity of data

Invoices and detailed billing files shall be available on the Vendor’s FTP server for data transfer at the start of each month. If there are errors or difficulty in accessing the files, Vendor shall respond to Client with a resolution plan promptly. The data shall then be made available to Client either electronically or by physical delivery of media in a format acceptable to Client.

FTP data available 7:00 AM Eastern Time on the first business day of each month.Response to issues shall be within 4 Business Hours.

Tracked by Client FTP Server log.Tracked by log maintained by Client IT Department Analyst.

Vendor will comply with the standard as outlined. In the event that the FTP File is delayed, and the delay is associated with the actions that are controllable by Vendor, Vendor will provide advanced notification and waiver any late fees associated with the billing until such time the FTP Data file can be successfully transmitted to Client. In addition, if there are more than 2 delays in the FTP file not being available for a period of three (3) months in row, Vendor will provide Client with a credit of $1,500 per month until such time the agreed upon target is met within the specified time period.

Accurate charges and billing data

Separate invoices will be generated for fuel, maintenance and service fees. Vendor will correctly reflect the contracted rates and accurately pass through charges from the Vendor each month.If there are data inaccuracies in the invoice and detail billing files, Vendor shall respond to support calls with a resolution plan promptly. The correct data shall then be made available to Client either electronically or by physical delivery of media in a format acceptable to Client.

Invoices and data will be 100% accurate. Response to issues shall be within 4 Business Hours of Issue Log Time. Resolution plan will be communicated to Client within 24 Business Hours of call.Corrections to the billing shall be made no later than the next billing period.

Analysis by Client.Statement on Auditing Standards No. 70 (SAS 70), Service Organizations, audit report to be provided by Vendor to Client annually.

In the event that there is an issue associated with the invoice, Client will have the ability to identify the billing item that is in dispute and place the item in suspension until such time, the appropriate backup and/or explanation can be provided to Client. In addition, all late fees associated with the charge will be waived.Vendor agrees to provide a prompt resolution to correct the Data File Accuracy as stipulated in this Service Level item. If a reoccurring Data File issue occurs beyond two (2) consecutive billing periods within a twelve (12) month period and the issue is within Vendor’s control, Vendor agrees to credit Clients $1,000 for each subsequent billing period until such time the issue has been successfully resolved.

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Some Lessons Learned

• SLAs are easiest to establish during the RFP stage

• SLAs often fail due to lack of remedies

• Have clear calculations to enable collection

• Control the money to expedite collection

• Suppliers will demand commitments from Clients too

• Many failures not contemplated in RFP or contract

• Don’t pay extra for what should already get

• Don’t pay extra for performance you don’t need

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Critical Success Factors

1. Have SLAs!

2. Negotiate before selection

3. Have clear, easy measurements

4. Have remedies and collect them

5. Have regular reviews

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First Principles of Project Management1. The Commitment Principle

– An equitable commitment between the provider of resources and the project delivery team must exist before a viable project exists.

2. The Success Principle– The measures of project success, in terms of both process and product, must be defined at the

beginning of the project as a basis for project management decision making and post-project evaluation.

3. The Tetrad Trade-off Principle – The core variables of the project management process, namely: product scope, quality grade, time-to-

produce and total cost-at-completion must all be mutually consistent and attainable.

4. The Strategy Principle – A strategy encompassing first planning then doing, in a focused set of sequential and progressive

phases, must be in place.

5. The Management Principle– Policies and procedures that are effective and efficient must be in place for the conduct and control of

the project commitment.

6. The Single-Point Responsibility Principle– A single channel of communication must exist between the project sponsor and the project team leader

for all decisions affecting the product scope.

7. The Cultural Environment Principle– Management must provide an informed and supportive cultural environment to ensure that the project

delivery team are able to work to the limits of their capacity.