Importance of SLA and AMC

In today’s world, an organization’s dependency on Information Technology is continuously increasing. Almost 95% of internal and external processes of an organization are automated and depend on IT. Thus, it can be seen that IT has become the backbone of any organization’s success. As compared to internal processes, external process is much more crucial as these are used to interact with the partners, clients and customers. Any flaw in the application carrying out these processes or any delay by the application support team to resolve any issues that have come up in these processes will cost the organization loss of business and reputation

To be successful, organizations have to put in place an effective and efficient application support team. Now-a-days, due to budget crunches and stiff competition in the market, application support is not carried out by organization itself but outsourced to a vendor who has experience and proficiency in the same field.

It can be seen that application support is an integral part for an organization’s success. Hence, it is important to select the right vendor with well defined objectives and goals.

This can be achieved with the help of Service Level Agreement (SLA) and Annual Maintenance Contract (AMC)

A Service Level Agreement can be defined as a service contract in which service/services are properly defined between two or more parties in which one is a client and other is the service provider.

A SLA or an AMC to be efficient and successful should contain following things:

1. Criteria to select appropriate vendor: Selecting the right vendor is the base for a smooth application support till the contract is active. To achieve this, organizations have to define their criteria for the selection of vendor and vendor has to describe about himself as per the norms specified by the organization so that it becomes easy for both the parties to work with each other.

For Example: Criteria can be as follows:

• No. of years of experience in the relevant field.
• Global Presence
• Employee Strength
• Infrastructure

2. Tasks to be delivered by the Application Support Vendor: Under this section the organization should define the functions or tasks are carried out by the vendor for application support. Also, the vendor should define his list of tasks that he would perform along with appropriate charges for the same. Thus, it becomes easier for both the parties to finalize the distribution of responsibilities and tasks along with deciding appropriate commercial value.

For Example: The tasks and functions that a vendor should perform are as listed below:

• Documentation
• Issue Resolution
• Configuration
• Coding
• Testing etc.

The vendor will provide his price list for above mentioned tasks based on which negotiations can be done to achieve a win-win situation

3. Work Volume that will be accepted and delivered:  This is a vital section that needs to be defined carefully as it is the body of an SLA or AMC contract. Here the organization defines the total amount of work that the vendor will carry out under the application support. The vendor can provide his price list for the same.

For Example: The organization will define the work volume as listed below:

• All Application related or first 1000 issues to be resolved by vendor within the SLA cost.
• Support will be provided 24x7
• No of free site visits within the SLA periods

The vendor will provide his list of well defined clauses and volume of work that he will be carrying out based on the above criteria. This will help both the parties to come to well defined conclusions.

4. Accepting Standards for responsiveness: This category mainly deals with the time factor. Here the organization has to define the minimum and the maximum time limit in which an issue can be resolved. Thus, it has to set priority where in if priority is “high” issues should be resolved within a set time and similarly for others. The vendor will see if this format is feasible in his way of providing support and will provide his format and respective charges for the same.

For Example: The Organization will define their response requirement as follows:

• Priority “Level 1” issue should be resolved within one Hour along with client visit
• Priority “Level 2” issues should be resolved within one day
• Priority “Level 3” issues should be resolved within two days etc

The vendor will provide his way of servicing which for example does not include client visit. Thus, this will help both the parties to come to conclusion on pricing and way of responding to an issue.

5. Quality of Deliverables: This section is used to measure the performance of the vendor while resolving the issue. It also helps the organization and the vendor to understand if there is any need for improvement in the current service structure. This helps the vendor and the organization to initialize continuous improvement in the quality of service they provide.

However, this can be a complex part and a subject of debate as SLAs are formulated by both the parties who want to best guard their side.

Hence, it becomes very important to precisely define the quality of deliverables which are easy to understand and implement.

For Example: The examples are as listed below:

• Response and resolution within Speculated time
• Formal email communication along with issue update in the portal
• Solution provided should be a stable and long term solution and not a temporary one.
• Monthly and weekly open and close issue status with dependability should be communicated to the organization etc.

6. Owner of the issue if anything goes wrong: This is a tricky section but plays a very important part for a SLA or AMC to move smoothly without any debates and tiffs over raised issues. In this section, ownership of a specific type of raised issue is properly defined. In order to achieve this objective, all the types of issues are required to be listed down. Then it is required to put them in broad categories and then the decision should be made between the organization and the Vendor who will be the owner for the respective Categories.

For Example: The broad categories of issues can be as listed below:

• System crash
• Set of users not being able to login to the system / application
• User access issues
• Bugs in the application hindering daily use

Benefits of a Well defined SLA or AMC:

1. Selection of the Appropriate vendor
2. Resolution of issues within specified time frame
3. Maintaining good relationship between the users and the support team
4. No quarrels and fights over ownership of issues
5. Continuous improvement of the service process
6. Optimum utilization of resources in terms of money, man and machines.
7. Top management getting proper status of the functioning of the application
8. Overall organizational growth along with long term relationship with the vendor
9. Overall Vendor growth for sustaining key clients for a long period of time

Application Support services can be a headache for both the organization and vendor if SLA and AMC are not properly defined. Hence, it is very important for the organization and vendor to do detail analysis and research of the process and the application managing the respective process before writing down the SLA or AMC terms and conditions. The SLA and AMC should be written with consent of both the parties by properly defining each and every aspects of the application with proper ownership to achieve a smooth and issueless functioning of the application and the process managing it.

About Author:

Amol Bhembre is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, he actively contributes to the areas of Technology and Information Security. He can be contacted at: amol.b@spluspl.com