INDIA: They say, inking a compact and favourable IT contract is a ‘promethean’ task. The word incidentally has more power here than that to merely bloviate.

In Greek mythology, Prometheus was the person who emerged a champion of mankind. It is said that he used his wily intelligence to full purpose and very deftly stole fire from Zeus and gave it to mortals.

If you are an IT manager or CIO all intent to unleash the brave and astute side of yours for your company by stealing hot SLAs and making them land to your advantage, wait….the story is not finished yet.

Zeus punished Prometheus brutally. He was bound to a rock while a great eagle ate his liver every day only to have it grow back to be eaten again the next day.

Some promethean part inside you is confessing silently right now, because we very well know, what it means when the so-called full-proof SLAs backfire.

If the contract fails to put down clear and sharp deliverables or falters in measuring them or attributing them to the provider, the liver of costs and precious business time will get eaten every day without mercy.

Myth has it that Prometheus is both credited with – and blamed for – playing a pivotal role in the early history of mankind.

It’s not hard to guess why.

If you want to make your IT contract a strong one, SLAs or Service Level Agreements or any of their other siblings need a real good homework. That’s some pivotal work.

The big question is – are you ensuring that your expectations are written and understood well and are there robust mechanisms that will guarantee that lofty sales promises would indeed be delivered?

For a CIO, the commercial savoir-faire is going to be way more important in times to come.

Because what you say and what vendor listens might not really be the same thing.

It’s much more than nine months

Vendors know more about their organisations for a nine-month horizon. Beyond these nine months, customers know more. And that exactly spawns a lot of differences in many negotiations, reasons William Synder, Research VP, Gartner.

“Implement on strategic levels, if you will,” he advises. “And think really long-term in light of full cost of ownership.”
And put on the business-glasses.

Dennis Drogseth, Vice President, Enterprise Management Associates, Inc. takes that vein. All contracts, as he suggests, are based around objectives that should relate at some level to business goals.  CIOs and the people managing those contracts should have that understanding.

“ In other words, just ‘acquiring’ a server, or a set of SW licenses, or a service (telecommunications, app hosting, cloud resources) should never be viewed in isolation – but in a larger service delivery / business impact context.”

So should one go beyond the typical 'keep the lights on' uptime metrics, MPLs for extracting IT Service delivery? If yes, what other metrics should be incorporated?

Hackett Global Business Services Practice Leader Honorio Padron argues that if a company has the capability to measure services at a detailed level via automation, SLA's need to match the level of the available information.

In the past, he explains, since these detailed metrics were not available, the tendency and advice was to settle at a high service outcome level, that has changed to a more detailed level. Additionally the payments or penalties have also changed to a more granular level.

“One very important consideration in this area is the type of outsourcing in question. Vendors have totally confused the market in their favor by calling most outsourcing a "BPO". BPO stands for Business Process Outsourcing and it is supposed to be used when the vendor brings their processes and systems to execute your work, which by the way very few have their own capabilitiy, and only have it in selected areas. Examples are a call center, payroll, cloud-based SaaS like Workday. In these real BPO cases the SLAs will be at a higher level since companies do not control the delivery details.”

Then there is the other league- Managed Services.

Now for the majority of outsourcing where the vendor is coming on to the company's system to execute the work, these are called Managed Services and not BPOs, he tells.

In Managed Services cases, Padron recommends more detailed SLAs, and more visibility into the environment, since it is the company’s environment after all.

In any case, being business-savvy is inevitable for CIOs.

The emerging trend of externally sourced services will require on part of CIO organization a broad commercial understanding of integrating the Service Level Agreements, Contract Management, and Vendor Management under the guiding framework of measurable ROI, as Dr. Bharat Bhasker, Professor, Information Technology and Systems, Indian Institute of Management Lucknow observes.

“CIOs have to adapt themselves to new reality and take responsibility of increased ownership of Capital Expenditure (CAPEX) and Operating Expenditure (OPEX) budgets.”

And there are many ways to do just that.