Green Wall Clock
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Outsourcing in Crisis: When Clients See Green and Feel Red
A crisis, as defined by dictionary.com, may be a condition of instability or danger leading to a decisive change, and a dramatic emotional or circumstantial upheaval in a person's life. Any service delivery provider that has announced their perfect performance scores to a dissatisfied client knows just how that crisis feels. The client may even be provoked to pursue contract termination if this dubious high performance reporting continues.
Alsbridge has labeled this phenomenon “Seeing Green and Feeling Red.” All too often this happens when reporting mechanisms do not align with service realities–or when the provider’s scorecard shows all to be green, yet the client is clearly unimpressed with false claims of perfection.
Some clients are simply unhappy most of the time–usually because their overall business is not meeting expectations. Many clients demonstrate the classical Maslow “hierarchy of needs” sensibility–that is, they only notice a service provider’s contributions when they are not working, such as with commodity-based assets. When this happens, creating a delightful experience from perfect service is nearly impossible to achieve.
Regardless, service level agreements (SLAs) and service metrics need to reflect what is important to the client. Some SLAs are complex and require thoughtful design beyond the usual setting of metric targets. Sound SLAs include the construction of metric definitions, targets and thresholds, measurement systems, business rules for service credits and incentives linked to service improvement calculations. Clients and service providers must take the time needed to design SLAs to meet operating and business objectives.
Four Methods for Achieving Perfect Scores AND Client Delight
- Align Performance Metrics with Operational Requirements – For example, define measurement windows for the performance metric that are the same as the client’s operational hours for critical business functions. If a provider’s scorecard shows application availability has surpassed metric targets, but last month’s general ledger closing schedule was 24 hours late due to an application outage, then the metrics are not aligned with the operational need.
- Avoid Diluting the Performance Measurement Calculation – Similar to the point above, if a server availability measurement calculation includes all wall clock hours in a month and dilutes the negative effect of five minutes of downtime on a client’s shipping dock, then the client’s promised delivery targets are not met and they are likely seeing “red.”
- Allow for Cascading Problems to be Measured – While many service disruptions have one root cause, several subsequent business disruptions may cascade through the client’s organization. Many service level agreements will hold the service provider accountable for the root cause and not measure those ripple effect disruptions.
- Design the Service Level Agreement for Client Control – Allow the service level agreement to be controlled by the client. Within certain thresholds, the client needs to add, delete and change service metrics over time. Include customer satisfaction surveys that are meaningful, and place all performance reporting under a sound governance/relationship management process.
The “Seeing Green and Feeling Red” phenomenon is too prevalent in the sourcing industry. Clients and service providers should avoid crises by developing well-aligned and flexible service level agreements in the context of strong relationship management processes.
About the Author
Paul Cervelloni is a director at Alsbridge, Inc., the independent advisory firm that helps organizations conduct thorough evaluations of outsourcing options for operating their information technology, finance and accounting, and human resources organizations.
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