KPIs for service contracts indicate the overall performance of the contract and do not cover all aspects of the contract; they provide a performance indicator in key areas. KPIs should be designated by the customer, agree with the supplier and maintain the flexibility that needs to be modified to reflect the changing needs of the supplier relationship and the organization`s objectives. Properly selected KPIs not only meet the company`s strategic objectives, but also lead to the identification of more systemic opportunities in the contract or relationship. In this example, the possibility of changing service delivery (adoption of forms of electronic communications) over the life of the contract reflects the fact that service contracts exist in dynamic markets where technology often introduces new ways to improve services. An ALS is also a tool for measuring performance, but it is different from a KPI. This is an agreement between an internal or external service provider and the entity that is the end user of that service. AN ALS should clearly define, in plain language, what the client receives and should expect from the service provider. It is important to understand that key performance indicators (KPIs) and service level agreements (SLAs) are not the same, although there are some overlaps. In this article, I would like to explain the difference between KPIs and SLAs and examine the practical applications of different collaborators. KPIs should be selected with input from all stakeholders, including contract managers, end-users, procurement experts and other relevant shared services (e.g. B corporate finance or HR). The action of stakeholders involves reconciling the needs and wishes of all stakeholders without compromising key operational outcomes. We recently reviewed a delivery agreement that contained a KPI that was expressed under the title « DIFOT – 95%. » Providers tend to prefer service credits for non-compliance with KPIs.
However, you must always ensure that a service credit is sufficient to pay you for losses. If this is not the case, you should also have the right to claim damages. An ALS is a written agreement that qualitatively and quantitatively indicates the service a customer has linked by a customer. It identifies the metrics used to measure the level of service as well as corrective measures or penalties resulting from non-compliance with promised service level expectations. AN ALS is required to support the performance of transactions that depend on the lender`s underlying services. Different levels of service can be offered at different price classes and customers often make an optimal trade-off between service levels and costs. By defining the contractual obligations of ALS, suppliers manage expectations in their customers. Measured metrics and performance indicators enable both the supplier and the customer to identify, track, report and evaluate actual measures and performance of actual business requirements.