Gain Competitive Advantage with SLAs (1 of 4)
8/5/08 at 11:17 PM by Frank Coker Why do SLAs matter?
Service Level Agreements (SLAs) are common with large companies and large IT providers. But only a few small IT service companies have figured out how to take advantage of SLAs for their small business clients. Yet, ifthese small service companies handle it right, SLAs can be a great tool for selling new business, converting existing clients to fixed fee contracts and for setting premium prices for your services. Bottom line: offering SLAs can give you a competitive advantage, more satisfied clients, increased revenue, and a growth strategy for your business.
This is not a simple get rich strategy, but it is a way to make a relatively small investment and get a big return. Most service providers shy away from SLAs because they think they are too complex to manage. While it is true that SLAs management require the right tools and attention, the payback can far outweigh the cost. To our knowledge there is only one PSA (professional service automation) system that offers comprehensive SLA support – but more on that later.
What is an SLA?
In a nutshell, here’s how SLAs work: they are agreements, or “guarantees,” that your company will respond to the service needs of your client within a specified time frame and with specific response obligations. For example, you might commit to follow-up calls and a decision on the first action step within 2 hours of all “critical” requests. For large companies, SLA agreements can be much more complex, but for small companies they can be very streamlined and can have positive benefit to both the client and to the IT service company.
From a client perspective, an SLA is an assurance of response time. This is a way for them to be reasured that when they need help on an urgent basis, you are going to drop all lower priority work and give them your full attention. This is like a permit to crowd in line ahead of others that may have been waiting longer but who don’t have as high a priory. Knowing that their service package gives them this automatic higher priority is worth the extra cost for many companies – but certainly not all. If a company does not see the need for this prioritization commitment, it would be a mistake to try to sell them on a premium-cost SLA service package. In fact his can blow up if they think that they are actually going to be penalized by all the other companies that are paying for preferential treatment. We will discuss more about the selling process later, but for now it should be sufficient to say that SLA service packages are not a one-size-fits-all proposition. Careful thinking needs to go into setting up the offerings and selectively presenting options to your clients.
What is this SLA series?
In this series on SLAs, we will explore more detail on how to define, manage and sell SLA service packages. This post is intended to be an introduction with a focus on why you should consider SLAs as part of a business development and growth strategy.
The future 3 parts to this series will cover:
- SLA contracts: structure and pricing guidelines
- SLA operations and systems support
- SLA promotion and selling
One of the landmark books on this topic is written by the owner of an IT service company in Australia: Mathew Dickerson. His latest book is SLAM 2.0 and can be purchased on his web site at www.axxis.com. Mat will post a series of articles on SLAs taken from his company’s experience in building the business with SLAs as the center-piece.
Stay tuned for the next installment! And watch for Mat Dickerson’s posts on the same topic.
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CoreConnex specializes in professional services automation (PSA) software for VARs, MSPs, channel distribution partners, IT service providers and other professional service companies. We encourage you to share experiences and perspectives as players in our professional community. This blog is moderated. Comments that are unprofessional or derogatory will not be posted.