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Service Level Agreements(SLA)

August 7, 2009
What is SLA?
Service Level Agreement (SLA) is an official document included in master contract for an outsourcing agreement which includes detail description of services required, level of performance needed and where applicable: credits received by us and bonus given to the provider depending on their performance level.
Why SLA need for outsourcing:
Wewill virtually transfer the ownership and responsibility of a function within our business to the service provider. In most of cases, once outsourced we have no control on how that function will be performed. For this reasons SLAs playing an important roles to guide our service provider to understand our business needs so that they can carry out their tasks as needed to be and to monitor their performance as well as to legally establish each party¬タルs obligation out of the outsourcing contract.
SLA contains:
Terms and service will be expected:
This may include the key persons who involve in the agreement and also those who directly or indirectly related with the project.
The next thing that we need to prepare is the list of services that we expect from the service provider which details all the doable tasks and where applicable general responsibilities of the provider.
Some of the key issues may be raised to pinpoint the important parts of the outsourcing plans.
Service levels will be measured
This is a part where explaining how the provider¬タルs performance will be measured.
Provider will me measured its quality, speed, availability, capacity, reliability, user-friendliness, timeliness, efficiency or effectiveness of services.
Service level measuring process:
Measuring process can be conducted by us as a client, by our provider using their own measuring system or we can use third party vendor to objectively monitor our provider¬タルs performance.
Measurement periods:
Measuring system must also have a predefined period so that we can see our provider¬タルs performance level.
Reporting procedure:
This reporting process should be done in periodical basis same as measurement periods. Raw data may also need to be presented as original report produced by computer or monitoring system.
Service level credits:
This is a credit which should be given to us by our provider in the case of service failure.
Service level bonuses:
If the performance may directly boost our business and bring a significant profit, we may prepare to give a bonus to our provider.
Issues in SLA:
It what some confusion and misunderstanding between both side.
Result:
Preparing a SLA is a painful process; however a good, comprehensive and effective SLA is a foundation to a successful outsourcing relationship
Pricing models in outsourcing
By kirubakaran kulasegaran, On 2/14/08 1:03 PM
Pricing Models:
1. Fixed price model.
The projects that are specifically defined in terms of their requirements, schedules, and project pathand the customer will give a design pattern to client, both are well next they fix price before doing the project. The cost is depending on size of the project. Ones it fixed it can¬タルt change.
Uses:Requirements and Schedule are clear.
2. Fixed Price +Model:
It is similar to fixed price model but one different is we may change the price during the agreement period is over but the project is not completed at that the client and customer will discuses about the price.
Uses: Requirements and Schedule are not clear.
3. Time and Material:
This model of projects which are initial stage of development, the client will pay for hour basis. The client may revise the size of the team, and at the same time, optimize the cost and duration of the project.
Uses: Specification is not clear, it is in initial stage.
4. Full Time Equivalent (FTE):
Customer will define a rate card for a single staff for a specific number of hours.The rate card remains the same for different skill sets such as Analysis, Project Management, User Interface, Programming, testing, and Database specialist.
Uses: Highly flexible,lowest possible cost, Client has a competent resource on his side, Client involvement is high
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