• United States
by Larry Shoup

Increased accountability

News Analysis
Feb 02, 20045 mins
Data Center

Give your business units an internal service-level agreement to demonstrate IT performance.

In today’s world, IT must do more than simply manage technology; it must deliver quality services in line with business objectives. Internal service-level agreements between IT departments and the business units they serve are an integral part of the process.

An internal SLA is a published guaranteed level of service that IT gives to each business unit it supports. For example, the IT department of a financial services firm would have separate SLAs for the investment banking and human resources departments. Both are essential to the company, but the requirements, priorities and amount of IT resources they need differ.

Properly executed internal SLAs benefit both parties. They help IT prioritize its workload and perform future capacity planning. SLAs are also an important tool for managing expectations, demonstrating performance and enhancing IT’s credibility with the rest of the business.

From the business standpoint, internal SLAs lead to greater accountability, improved productivity and increased confidence that the company is getting the most from its IT investment.

Here is some practical advice culled from the experience of working with dozens of IT departments that have successfully implemented their own internal SLAs.

Start small. Begin the process by establishing agreements for one or two mission-critical services that can be closely monitored, such as network availability or help desk response. Mean-time-between-network outages or average help desk issue resolution time are some sample metrics you can use (see list).

SLA statistics

In creating an SLA, some metrics that can be used include:
Application availability.
Application response time.
Help desk availability.
Help desk response/resolution time.
Server availability.
Server response time.
Network availability.
Web site availability.
Web site response time.
Database availability.
Database response time.
Mainframe availability.
Batch job completion time.
End-user response time.
Service provisioning time.

With some experience, you can extend coverage to other groups of services that encompass an entire business process, such as an employee Web portal . This portal might consist of several IT components, such as Web servers, databases, network bandwidth and storage that all can be monitored under an SLA.

Meet with the department heads and end users to elicit their input. What level of service do they expect? Are they willing to pay a bit more for a higher standard of service? Business managers are used to making trade-offs between price and performance, and must choose between a premium but more costly service vs. a less-expensive option that covers the basics. If you don’t have a thorough understanding of what the business units need from a service, you’ll never be able to set the right service-level objectives and satisfy their requirements.

To be taken seriously, internal SLAs need to have some teeth, which means some sort of penalty for non-compliance has to be in force. With external service providers, these typically involve the reimbursement of a portion of the service fee for the affected service.

With internal agreements, there also should be a penalty, but it does not necessarily have to be financial, such as a chargeback “credit,” as long as the IT department accepts responsibility for the violation. The penalty should reflect whatever internal processes you have developed to ensure accountability, but without handicapping IT from fulfilling compliance.

One IT executive we know gained tremendous respect for his department by e-mailing a formal apology to the affected department heads whenever there was a service shortfall.

Next, make sure data is easily understood. All too often, when business managers ask for service-level reports, they receive raw performance data that’s irrelevant to them. What they’re really looking for are business metrics such as availability, response times and cost of service delivery reported on a monthly, weekly or even on-demand basis. Reports need to be presented in meaningful terms that present service levels from the end user’s viewpoint, not the IT administrator’s. For example, “MIPs per day” is gibberish to the end user and not very defensible when there are real or perceived service violations.

A sample of SLA business metrics would include:

•  Resource availability and utilization. Cost of service delivery. System failure/disruptions. Time to repair/restoration. Business impact. Penalty calculation. Departmental chargeback. Satisfaction ratings.








Like other business and technical processes, internal SLAs aren’t perfect at their inception. They’re refined and improved over time. The internal SLA life cycle includes creating the SLA package (service definition, service-performance level and service cost); monitoring and enforcing the SLA; assessing and refining the service levels; and analyzing and reassessing the business unit’s service-level requirements. This is a continuous process that leads to improvements in the level of service that the business unit receives and the efficiency with which it’s delivered.

Above all, keep in mind that internal SLAs are not a panacea. They will not magically transform unhappy users into satisfied customers or infuse senior management with glowing confidence in IT’s performance. Instead, internal SLAs are a key step toward greater user satisfaction and aligning IT operations with business goals.

By focusing on business requirements and presenting IT performance in business terms, internal SLAs play an important role in demonstrating IT’s value to the business. They’ve helped many IT organizations achieve cost savings, respect and value.

Forging an agreement

Here are some steps you can take in carrying out an internal SLA:
Start small. Keep it simple and identify the most important metrics in the SLA. Use business metrics that are communicated easily and that users can understand.
Understand and agree on the requirements, one department at a time.Find the right tool to help you automate service-level management.
Control expectations regarding service. There is a big difference between “desirable” and “acceptable.”Make SLAs a continuous improvement process, constantly refining and redefining as needed.
Put your money where your mouth is. Include penalty terms to force everybody to take the SLA seriously.  

Shoup is CEO of service management software vendor iCan SP, a subsidiary of Computer Associates. He can be reached at