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The Future of SLA and KPIs

 

Are SLA and KPI being used to highlight areas of poor performance to then improve, or as a tool to unfairly pressurise the service provider?

 
By Tony Martin, December 7, 2022 UAE IFM
 

The Future of SLA and KPIs
 

The Institute of Workplace and Facilities Management (IWFM) explain the purpose of a Service Level Agreement (SLA) as:

‘To clearly to set out the terms for the management of a service agreed between the Customer and Supplier. Done well, it will define the service objectives and manage the expectations of both parties. It may be simple and informal or complex and part of a legally binding agreement, in either case it should clearly define the service, the performance standards required and the consideration (payment or service credit)’

Make sense?

They (IWFM) also state that one of the key criteria for an SLA is that, ‘First and foremost it should be simple to understand….’ Is a complex SLA that is part of a legally binding agreement, simple to understand? I would also suggest that even a simple contract can come with repetitive, onerous, and ambiguous language. 

What about Key Performance Indicators (KPI)? Generally, this is how it’s defined ‘...a quantifiable measure of performance over time for a specific objective’.

One thing to clarify, in case it’s unclear, is that KPIs and SLAs are different, and while I agree that there is some overlap, they are inextricably linked, though one (KPIs) measure – how well the FM services are being delivered against the ‘Service Standards/Targets’ and the other (SLA) gauge performance, the actual agreement between the parties. So, SLA define the agreement overall and the service standards between both parties, KPI then measure this and monitor performance levels.

The majority of RFPs (request for proposal) Al Bonian FM receive contain detailed descriptions of the SLA to be implemented. In general, most SLA include:

  • A description of what the service provider will do.
  • The quality and timing of the services.
  • How performance is to be monitored.
  • How problems are to be addressed.
  • Penalties for non-compliance.
  • In what situations the SLA may be waived.

They also include headings such as ‘Management Services’ and ‘KPI Scoring Mechanisms’. Then sub-headings such as ‘Elements’ or ‘Key Activities’ then ‘Service Standards’ and ‘Targets’ or ‘Performance Levels’ and ‘Key Performance Indicators’ (KPI) all scored with ‘weighting and ‘Measurement Criteria’. This brings me to my next point, more often than not these SLA/KPI are non-negotiable and are to be implemented (usually with a 60–90-day grace period). Can a good SLA only be achieved if delivered and written jointly? I would suggest this is the case. I have sat many times with clients and jointly written SLA, with SMART related KPIs and objectives that are relevant and reflect the service to be delivered for that specific contract. IWFM agree with this and state, ‘A good SLA will be developed jointly between the customer and supplier who has to deliver it’ and also ‘It should provide a WIN WIN for all parties.’ I very much concur!

I have had positive and negative experiences with SLA, in how they are interpreted and then scored. It’s my belief that if SLAs are open to interpretation, and different perspective that comes from ambiguity and ownership, are not even worth the paper they are printed on. What is the point in implementing SLAs that can then be interpreted differently by the relevant parties? I have often heard of situations from my peers in the industry, and also been party to being threatened with low KPI scores for reasons not mentioned in the SLA. The threat of financial penalties used as a tool, help no-one. They are entirely negative and then the entire focus then leads to avoiding penalties. There must be consistency and continuity in the implementation of the SLA, and the calculation of the KPIs; those responsible for doing so, must fully understand the site and its issues and be aware and familiar with the contract.

No doubt many reading this have been involved in some robust discussion with clients or vice versa, after receiving a low KPI score, that has been found using some obscure reasoning, or perception of what is actually written. This can lead to the delivery of the services suffering, a break-down in relationships. FM Services by its very definition can be emotive, and lead to the provision of excellent service delivery, this however, relies on all aspects of the delivery and the contract being aligned with the SLA and being implemented fairly, with discussion, adaptability to the site situation and lessons learned. The KPIs should be considered as an early warning system, and not as a tool to simply produce a weighted score that could be reduced because someone is having a bad day or that a report was delayed.

Some final points to ponder:

  • Do SLA and KPIs really work?
  • Let’s be realistic, the FM industry in one way or another is driven by SLA/KPI.
  • Are they still relevant in today’s modern world and continuously expanding and improving technology, with advanced CaFM, transparent shared portals, IOT, wireless sensors, live capture and reporting etc?
  • Are SLA more about highlighting failure, rather than actively fostering positive relationships between the service provider and client? Use it to red flag potential negative issues early, to then avoid further failures, and be proactive.
  • Do financial penalties really motivate service providers or does this simply focus them on avoiding these penalties?
  • Are SLA and KPI being used to highlight areas of poor performance to then improve, or as a tool to unfairly pressurise the service provider?

To conclude, my experience with SLA & KPIs has been very positive. I think back over the years, with a wry smile to the many debates I have had with clients, in an attempt to increase the KPI score, justifying issues and backing up my team at site. Will they (SLA/KPI) be in use much longer? I would suggest not. Technology is sprinting past and leaving them in its dust cloud.  As I have implied throughout this short piece, if used correctly, and as IWFM rightly point out, it’s a win-win for all parties. 

 

This article was authored by Tony Martin, CEO of Al Bonian FM as part of the 'Expert Talk' series. CM today’s ‘Expert Talk’ series carries knowledge pieces every week by industry professionals who give their take on the key trends, observations, issues, and challenges in the built environment. The opinions in these articles are the author's own and do not reflect that of CMtoday. This is a standard disclaimer.

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