Why SLAs Matter
Companies that routinely utilize third-party services will usually sign an agreement (contract) to formalize the business relationship. Although a standard agreement captures terms and conditions, it does not necessarily detail how expectations and performance relate.
This is where a Service Level Agreement (SLA) can offer clarity and measurable performance goals. Furthermore, an SLA is the main framework for the provider and client to agree on the service delivery in context. Likewise, an SLA can help manage risk by establishing a greater sense of accountability through a defined performance baseline.
When it comes to language services, implementing an SLA is still not common practice for many clients. Moreover, language services are flexible by design to accommodate diverse project scopes. And without sufficient clarity, this can lead to different interpretations by the Language Service Provider (LSP) and the client. As a result, clients can experience varying services and performance even for similar project scopes.
Therefore, an effective SLA can set boundaries and purchasing controls to ensure consistent performance and deliverables. At the same time, LSPs have a better understanding of the expected service delivery and its assessment.
10 Considerations for an Effective SLA
Following are considerations to assist with the design of an effective SLA. These provide general guidance and offer a starting point by highlighting selected areas.
- Tip 1: Outline the context and scope
- Tip 2: Select an appropriate SLA configuration
- Tip 3: Identify key contacts/stakeholders
- Tip 4: Ensure the SLA’s transferability
- Tip 5: Describe the service elements and deliverables
- Tip 6: Define your KPIs
- Tip 7: Describe the reporting and review process
- Tip 8: Define severity levels
- Tip 9: Define performance penalties
- Tip 10: Describe the escalation path
The key to defining meaningful expectations and performance goals is to outline the context for the service delivery. In addition, a well-defined context helps identify needed services to produce the expected deliverables and quality.
Here are some general questions that might help:
- Why does my organization/I need language services (purpose/motivation)?
- What risks do language services represent for the organization/me (risk/concerns)?
- What specific business goals do language services enable (outcome/impact)?
- Who in the organization needs language services (service users)?
- What are the needs and expectations of the service users (services/requirements)?
- Which needs are common (shared) versus unique (service groupings)?
- What are standard versus unique deliverables (type of deliverables)?
- How are language services procured (centralized/decentralized/hybrid)?
- Where are the language services procured/requested (geographies/locations)?
- When are language services needed (time zones and service hours)?
- How often are language services needed (frequency/fluctuation)?
- What is the typical demand for language services by deliverable and/or need (volume)?
- What are the required priorities by deliverable type and/or need (priority/urgency)?
The specific configuration depends on your situation and desired flexibility for maintaining your SLA.
For example, if your needs are basic and involve just a few users or a single user group, you could amend your main contract and include your SLA as a subsection. On the other hand, if your needs are more complex, you might find it easier to maintain your SLA as a standalone agreement. A standalone SLA allows making updates without being bound to the contract renewal cycle.
Moreover, you can use standalone SLAs for each user group (or business entity) and LSP if appropriate. This approach would make sense if combining requirements would result in a complex and lengthy SLA. The goal should be to create an SLA configuration that is easy to understand, implement, and maintain.
SLA configuration options:
- General setup
- Standalone (separate from the main contract)
- Appended (part of the main contract)
- Structural setup
- Service-based: A single SLA that covers standard (shared) needs/expectations for all user groups.
- User-based: Multiple SLAs or a single SLA with multiple user-based sections to capture the shared and unique needs/expectations of each user group.
- Hybrid: The hybrid SLA combines service-based and user-based needs/expectations by organizing them into a standard services section and one or more unique user-based sections.
One of the main challenges with business relationships is knowing who to contact beyond fundamental needs. Since an SLA aims to ensure consistent service delivery and performance, identifying key contacts and stakeholders helps both parties.
The affected roles can involve multiple individuals depending on how the LSP and your organization manage business relationships. Sometimes, SLAs just list responsible departments and provide general contact information.
Overall, an SLA might include the following roles (or functional areas) provided by each party:
- Program oversight (program management/ultimate escalation point)
- Account oversight (account management/service escalation point)
- Production oversight (production/quality management/quality escalation point)
- Service delivery (day-to-day contact for service requests/initial escalation point)
- Program oversight (if applicable)
- Procurement oversight (if applicable)
- User group contact (per user group if appropriate)
Transferability might not be an obvious consideration, but in today’s dynamic business world, acquisitions and mergers are frequent. Therefore, you want to ensure the transferability of your SLA after an LSP experiences changes to its ownership and operation.
Similar concerns apply to outsourced activities or tasks, which is a common scenario in the localization industry. Many utilized resources are external to an LSP and can involve a combination of freelancers, affiliates, and other third parties. By addressing outsourced work in your SLA, you ensure that the contributions of external parties comply with the same performance requirements.
This part of the SLA is one of the most critical sections and a collaborative effort between the client and LSP(s). Essentially, this section should capture common deliverables and the required services to produce them.
By involving the LSP(s), you will also gain a better understanding of how each LSP bundles service elements. In addition, you can clarify if different service tiers apply to deliverables with similar needs but different criticality and end use.
Furthermore, when working with more than one LSP, you can gain insights into different practices and align your requirements for the same deliverables. Also, it establishes a consistent performance baseline for all LSPs.
Key Performance Indicators (KPIs) should help improve business practices and enable operational goals. Replicating somebody else’s KPIs or satisfying one’s curiosity is never a good design strategy.
Moreover, KPIs must be realistic and involve reasonable effort to generate. In most cases, clients do not expect to pay for standard KPI reporting. This of course means that LSPs must have the capabilities to provide such reporting at no cost.
In either case, KPIs must map to specific goals and objectives to be meaningful. To make KPI design tangible, focus on goals and objectives for your role and department (or team). Ideally, your goals and objectives should follow the SMART principle and connect with your organization’s goals and objectives.
In essence, goals and objectives represent the outcome or condition you aim to achieve or maintain. In contrast, KPIs tell you whether you achieved the expected outcome or condition.
Assessing performance consists of two parts: (1) Routine reporting of KPIs and (2) scheduled collaborative reviews of the service delivery and provided information.
The goal is to identify adequate or inadequate performance and expose trends. Equally important, it helps both parties to maintain transparency and establish trust as well as confidence in each other.
The actual reporting frequency and time depends on the capabilities of the LSP to generate data for key metrics. Regardless of the underlying approach and technology, both the ongoing reporting and reviews are fundamental features of a proactive relationship.
Severity levels are classifications of incidents and effects related to the service delivery. By defining the conditions, you can gauge the disruptive impact on your organization. Moreover, severity levels enable you to follow a predefined escalation path and take appropriate actions.
There is no standard to defining severity levels. Therefore, you should choose a methodology that makes sense for your organization. And perhaps your organization already uses a particular approach for other services, which could serve as your starting point.
In general, the grouping of conditions should represent a gradual escalation based on service availability and impact. For example, you might use four severity levels with “1” representing “minor impact” and “4” representing “significant impact.”
Performance penalties should be an incentive for your provider to maintain expected performance levels. Overall, penalties are corrective measures that can involve financial and assignment-based actions. For instance, financial actions could include reimbursement, discount, or credit. Assignment-based actions could involve limiting or postponing work assignments until the performance meets expected performance levels.
Furthermore, the design of penalties should align with your KPIs and severity levels. Most importantly, do not use penalties to punish providers or to control costs. This conduct would likely backfire and undermine any trust and confidence in the relationship.
A documented escalation path is an essential component of performance assessment. It ensures that you and your provider have a mutual understanding of when, how, and to whom you should escalate performance issues. Likewise, it helps avoid frustration, minimizes delays, and assigns clear ownership.
An SLA is a must-have tool for ensuring consistent service experience and performance. In addition, an SLA can extend or amend the terms and conditions of a standard service agreement by connecting performance with expectations.
However, designing an effective SLA requires careful planning and a thorough understanding of the organizational needs for language services. The listed considerations are a starting point to assist you with the design of an effective SLA.
Please feel free to contact us should you need help with the design of your SLA for language services.