Service Partnership versus Service Level Agreements – Two Different Sides of a Coin
January 31, 2017

Service Partnership versus Service Level Agreements – Two Different Sides of a Coin

Many practitioners operating a Shared Services do not have formal agreements to guide their relationships with clients, especially when these are internal/captive services. Other rely on Service Level Agreements to manage the client relationship. And while, in the early, transactions-focused years of Shared Services this may have been reasonable, even appropriate, today’s models have evolved and SLAs need to evolve, too.

The main reason for this is that today’s Shared Services/client relationships are less about meeting pre-agreed behaviors or process steps than they are about supporting a client in meeting their target business outputs. In other words: there is no longer a fixed stencil or template to apply; instead, the nature of service is based on understanding what can go wrong, or shift unexpectedly, and adapting to this.

In this respect, an SLA may well highlight a disappointment and exact a penalty or cost as a result of shortfalls, but a Service Partnership Agreement goes a step further by better defining the nature of the agreement from the start (and guiding its resolution, as a consequence).

Let’s take an example. Say you stay at a hotel, and are kept up all night as a result of a rowdy group next door. You complain to the front desk, but no one there is able to make a decision at that time of night. In the morning, as you check out, the manager offers you a future night’s accommodation free. Has that solved the problem? As far as SLAs go, perhaps. But if you consider the experience from an SPA perspective, it falls short on several counts:

Expectations (a quiet night) were not clearly defined
There was no escalation procedure at the time of complaint
Conflict resolution relied on penalty, rather than satisfying customer
The responsibility was one-way. What about the customer’s responsibility?

By contrast, SPAs are based on a framework for supporting client-oriented service by setting out roles and responsibilities of both sides. And that is a crucial differentiator.

Whereas the SLA enforces, the SPA facilitates. In that respect, SLAs are like the well-worn hammer in your toolbox: even if it’s not the ideal tool for the job, we are most comfortable wielding it. But it can cause more damage in its application than you intend.

The key thing is that SPAs are about culture, and will require change management to drive a more effective culture. If you aspire to a collaborative relationship that won’t smash things to bits, you should be looking to replace your SLAs with SPAs that will guide your relationships to new heights of client satisfaction.

To find out more about Service Partnership Agreement, please download our article on How to Design a Service Partnership Agreement that Works.