Project Management

Negotiating your service level agreement

The negotiation of a service level agreement requires planning and a special set of skills. To comfortably create an SLA between an IT organization and a client, keep these five tips in mind.


If you, as a consultant, are assisting your client’s IT organization with developing a service level agreement (SLA) with its customers, negotiating skills are an invaluable asset. These five suggestions will make the negotiating process go more smoothly.

Select the right individual
Ideally, the IT professional who will be negotiating on behalf of IT will be at the same level in the organization as the individual representing the customer. The culture of most organizations suggests that when these two people come to the bargaining table, they’ll have an easier time if they’re peers. When the individuals are of differing rank, the lower-ranking employee may feel intimidated. He may sense he has fewer options if he feels subordinate to the other person.

The customer will choose the person she believes can best represent her company and discuss its needs with IT. The customer representative, sometimes referred to as an account manager, may be a manager, director, or vice president. Be sure the customer representative is familiar with all of the services that she and her colleagues are receiving from IT.

The person who normally has the responsibility for negotiating an SLA on behalf of IT is the service level manager. The title implies the rank of manager; however, this role may be assigned to another staff member. If your customer has chosen a representative at the manager level or higher to fulfill the account manager responsibility, keep in mind that the IT service level manager should be someone who is able to earn the respect of the account manager or has a proven track record with the customer.

Prepare
Because past events can be an obstacle to good negotiating, be familiar with the relationship that exists between IT and its customer, especially if that relationship has been strained. Typical preparation before meeting with the customer representative includes developing an understanding of the history of the IT-customer relationship and determining the customer’s needs.

For example, if IT hasn’t lived up to the expectations of the customer, be aware of these shortcomings beforehand. You don’t want to learn of them at the bargaining table. Similarly, if the relationship has been stellar, be familiar with some of the successful projects so that the service level manager can remind the account manager of the value that IT delivers to the customer.

To determine the customer’s needs, the service level manager may need to meet with the account manager prior to the negotiation session to understand the critical success factors for the customer and how IT can help the customer be even more successful. The account manager may also suggest that other IT customers provide the service level manager with specific concerns regarding their IT needs.

Choose the right time
When developing a project plan for an SLA, weeks, not days, should be built into the schedule. Once you actually come to the bargaining table, your discussions will result in several more meetings. The customer representative and IT will both request items that may need to be reviewed by the stakeholders. For everyone to be comfortable with the resulting changes or suggestions, they’ll need to talk with others involved and decide if they can live with the recommendation.

By allowing enough time for these negotiations to take place, you’ll be less likely to settle on terms that will be difficult to live with, especially under a long-term agreement. There will be no need to feel pressured into agreeing because of a looming deadline.

Also, give some thought to the timing of the negotiation meetings. Try scheduling meetings for mid-morning instead of after lunch. Both parties will be fresher and more likely to fully participate.

Determine your style
As a representative of the IT organization, you should clearly state what you’re prepared to provide to your customers and ask your customers to indicate what they need from IT. Unless there is some extraordinary reason to guard your position, you’ll be better off by keeping an open and honest dialogue.

Open communication will allow negotiations to go more smoothly and quickly because neither party will be attempting to conceal information or artificially protect his position, which can easily derail your SLA negotiation. Remember, by definition, an SLA is an agreement, which means that both parties accept the terms and conditions. If your goal is a sound SLA that solidifies the relationship with your customer, your preferred style should be an open dialogue.

Know your boundaries
If you’re going to be open with your customer during SLA negotiations, you must know how much negotiating room you have as well. If you have been empowered by your IT organization to forge an agreement with your customer, you must use good judgment to ensure that IT can deliver what you promised.

Clearly defined expectations and targets are the rule. For example, if you know that IT can respond within 30 minutes and resolve a problem within four hours, you must keep that in mind when the customer requests a 15-minute response and one-hour resolution times.

Your first reaction to such a customer request might be “no way.” But this is where experience and knowing your boundaries comes in. For example, you may be able to discuss the feasibility of meeting the more stringent customer requirements by suggesting that IT conduct a pilot program of the SLA. During the pilot, IT could demonstrate a willingness to attempt to meet the customer requirements and prove or disprove the appropriateness of the revised target.

Final thoughts
Negotiating a service level agreement can be tricky and uncomfortable. The negotiating activity is best left to the service level manager, who should allocate sufficient time for adequate preparation and planning. Coming to an agreement that favors the customer and IT may be less stressful than you imagined.

 

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