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Recent Research Report
Service Level Agreement: Monitoring & Management   

Executive Summary

The volume of outsourcing contracts is expected to increase significantly in the year 2010. This will increase the importance of Service Level Agreements mainly due to two reasons:
  • Service providers and buyers in the financial industry are facing the pressure of the constantly changing regulations and the need for consistent compliance with these regulations.
  • Financial firms are looking at multi-sourcing to diversify their risks, rather than relying extensively on any single service provider and later facing a probable lock-in situation.
With multiple providers tracking their performance, measuring their abilities, and collating information from various sources, SLA monitoring and system integration has become extremely critical.

It is imperative that buyers and providers stay vigilant in forming clauses of an SLA to distinctively define each party’s obligation.

FSOkx, in the months of November and December 2009, had conducted a survey followed by secondary research in the area of service level monitoring and management, to establish the strategic significance of SLAs. The results of the research and certain key observations are presented in this report.

The findings are:
  1. SLAs cannot be front office/middle office/back office specific. Going forward, they will have to capture the complexities originating out of interlinkages.
  2. SLA monitoring:
    • Different metrics are prevalent for tracking different aspects of businesses. A clear understanding of critical areas of operations is essential.
    • Prioritization followed by alignment of metrics with business objectives, would go a long way to reduce any disconnects in the service providers’ and buyers’ purposes of using performance metrics.
  3. Continuous integration between the service providers’ and buyers’ systems can make performance measurement simpler to understand and easier to manage.

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