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How to secure deliveries with SLA Agne Lindberg

How to secure deliveries with SLA Agne Lindberg. Today’s agenda. Challenges – what creates disputes? Service Levels Traditional Proactive Some examples Sanctions. Challenges – Why do Disputes Occur?. No 1 – Scope No 2 – Price model No 3 – SLA/KPI

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How to secure deliveries with SLA Agne Lindberg

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  1. How to secure deliveries with SLA Agne Lindberg

  2. Today’s agenda • Challenges – what creates disputes? • Service Levels • Traditional • Proactive • Some examples • Sanctions

  3. Challenges – Why do Disputes Occur? • No 1 – Scope • No 2 – Price model • No 3 – SLA/KPI • No 4 – Market developments not reflected in contract and deliveries • No 5 – Cloud: need for supplier to have ONE solution for all customers

  4. Scope of Services • Traditional service deliveries/outsourcing: • Specification • Change Control • Scope Sweepers? • Cloud: • Reference to web/user manual • Right for customer to exit • Need for a basic level of functionality – compare SaaS! • Crucial points for a Cloud contract: • Service Levels • Secure customer enhancements • Exit

  5. Service Levels / KPI:s • Quality measurement: SLA • Specified • Avoid ”dynamic clauses” • Need to regulate: • Time period • Methods of measurement • Documentation requirements/Reports • Consequences for non-delivery

  6. Some examples – ADM/Cloud • Step 1: How to order Development • Confirmation of order • Provide offer • Capacity: Provide resources at each level of competence. Connected to ”forecast process” • Step 2: Development – customer enhancements • Delivery on time • Connect to Milestone and acceptance test • Quality: • Density of errors (system testing + acceptance testing) • Function points: SLA or price model? • Priorities – need for clear definition + definition rights.

  7. Examples, cont. • Availabiltiy • SaaS: Needs to be for the complete solution • Service Downtime – keep control! • Interfaces • Needs to be complemented with ”incident management” • Incident and problem management in the contract • Incident prioritization • Incident Response time • Incident Resolution time • ”Stop the clock” regulation • What is the meaning with ”objective”, ”TRT” etc. • Needs to be complemented with number of Incidents

  8. More examples of KPI:s • Update of documentation • Reporting (SLA reporting, report generated from system) • New Releases • Content requirements? • Frequency • Proactive SLA:s • Density of errors in the Development work • Staff turnover • Tied to action plan rather than a penalty regime

  9. Consequences of KPI breach • Consequences: • Service Level Penalties = predetermined levels of compensation/reduction of price • Advantage: No need to prove any damage! • Focus on KPI:s that are critical! • Discussion topic No. 1: Exclusive OR parallel sanctions? • Incentives • Is there a need for a better Service Level? Earn back? • Penalty calculation: • What ”makes the clock tick”: • ”Every incident in excess of the Service Level” / ”Every week” / ”% of inaccessibility” • Amount: % of what? A fixed amount? A lump sump or escalating? • Maximum level – a cap is required!

  10. Alternative consequences • Service Level Penalties only!? • Damages • Direct/Indirect losses. Loss of Data • Cap • Carve outs • ”Step-in” • Third party observation • Retention of fees – Should the delivery continue? Regulatory Requirements? • Termination of Contract – Not a realistic option when dealing with complex service deliveries

  11. Dispute Resolutions • Escalation (within the framework of the co-operation model) • A dispute can be devastating to the parties relations and to the delivery • In most cases - Arbitration (maybe with the exception of unpaid fees) – No publicly established practice • Advantages: Speedy procedure. An opportunity to select experts. • Avoiding the public eye. • Disadvantages: Expensive. One shot. Avoiding the public eye.

  12. Agne Lindberg/ Partner / Head of Sourcing Practice GroupPhone +46 8 677 54 15 Mobile +46 70925 25 25agne.lindberg@delphi.se Advokatfirman Delphi Regeringsgatan 30–32 / P.O. Box 1432 / SE-111 84 Stockholm / Sweden Phone + 46 8 677 54 00 / Fax +46 8 20 18 84 / www.delphi.se

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