Service management agreements provide a management foundation

Dec 14, 2000
Gartner

By Jeff Owen

Service management agreements (SMAs) represent the best tool for monitoring, measuring, managing, and demonstrating the contribution of IT to the enterprise. Consequently, to assist CIOs and IS managers in their IT planning, Gartner presents guidelines for establishing effective SMAs.

IS organizations have found that one of the best tools to manage IT measurement is the SMA. Moreover, enterprises find SMAs to be highly effective tools for not only measuring IT but also managing it—from a performance, cost, and efficiency perspective as well as an effectiveness perspective. Achieving those goals, however, requires more involvement between the IS organization and the business managers than is the norm in most enterprises. Moreover, no single SMA will work everywhere—even within the same enterprise. Service levels and end-user requirements vary considerably from situation to situation.

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A standard SMA template
Fortunately, enterprises can avoid the duplication and contradiction often found in such environments by standardizing on an SMA template. Such templates typically include approximately 70 percent to 80 percent of the required information, including standards for metrics, performance, and relationship management. The rest of the information results from customer-specific negotiations—e.g., costs, response times, or process-specific requirements.

Many IS organizations lack the ability to combine the measurement and monitoring of services provided while demonstrating the contribution of IT to the enterprise. Nevertheless, a strong need exists in IS organizations for tools or methodologies that enable and promote a combination of measurement, management, and the demonstration of value.

SMAs satisfy that need. The term "SMA" evolved during GartnerGroup discussions with clients regarding traditional service-level agreements (SLAs). SLAs are useful tools for measuring and managing ongoing service provisions between an IS organization and the business operations, but they typically exclude important measurement, relationship, and process management capabilities. SMAs address those gaps and solidify an IS organization's management foundation.

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Foundation elements
GartnerGroup research has highlighted the growing interest in SMAs and has outlined three sets of SMA foundation elements:

IT foundations

Standardization of metrics
Standardization of service descriptions
Standardization of reporting

Process foundations

Account manager is assigned to a customer
Account manager and the customer develop SLA
Service performance metrics are established
Service performance is published monthly
Account manager reviews quarterly with the customer

Management foundations

Service quotes
Communication
Billing questions
Customer interviews and reviews

These three foundation element sets enable the development of "boilerplate" SMAs that contain between 70 percent and 80 percent standardized content—e.g., service descriptions, measures to be used, chain of authority and responsibility. The remaining 20 percent to 30 percent of content typically consists of agreed-on service and performance levels, and availability, cost, and situational details—e.g., business units served, managers' names and responsibilities. Therefore, it is important to examine the management foundation elements of an SMA—the last pieces that enable and enforce communication between IS providers and IS users.

Management SMA foundation elements

Service quotes. Given the previous standardization of service descriptions and metrics for services, an IS organization should be able to develop boilerplate service quotes as generally found in traditional SLAs. This standardization enables the development of a catalog of basic IT services that can be adapted as needed to end-user requirements. The biggest variables in such situations are generally unknown service or performance levels and pricing or costs of IT services, especially where chargeback systems or adequate accounting of IT costs do not exist.

The establishment and use of SMAs as an IS management tool requires adequate knowledge of IT resources and costs. Such information is obtained through regular measurement (i.e., key metrics or benchmarking) of IT performance and costs. The goal of service quotes is a clear understanding by the IS organization and the users of IS services of what is to be delivered, at what levels of performance, and at what cost.
Communication. SMAs should contain not just basic reporting elements—they should specify a basic, desired chain of communication between parties. Enterprises must determine how various communications will be handled, including questions about service, support, or cost, or who has responsibility and authority for ensuring that communication occurs.

Billing questions. Billing questions are likely the second-leading communication issue regarding SLAs or SMAs, closely behind service-level or availability questions. How billing questions are handled and resolved should be part of any SMA process. Many SMAs include sample or frequently asked billing questions as part of their boilerplate text.
Customer interviews and reviews. Another key element in IS management is understanding what the customers want and need. Laying out a process for regular customer interviews, including in-person interviews and formal surveys, should be part of any SMA—as should a process for interpreting and integrating the results into ongoing SMA management and future SMA implementation.

Bottom line

Ultimately, SMAs are the best management tools for IS managers to measure, manage, and demonstrate the value of IT's relationship with business operations.
IS managers should be ready and willing to compromise on all aspects of SMAs to establish realistic, useful consensus models and processes, keeping in mind the basic requirements set forth in here.
Given such foundations, SMAs provide the best basis for integrating IT measurement into operational and strategic IS management, while quantifying and demonstrating IT's use and contribution to the enterprise.

Gartner originally published this report on Jan. 19, 2000.