SLA’s and Small Numbers

by Colin Hart

October 21, 2016.

 

Service Level Agreements (SLA’s) are an important part of the vendor/client relationship. Most often they’re an agreement that outlines specific metrics that a vendor must achieve in order to be deemed to have provided acceptable service. Failing to meet the SLA can have a variety of implications – anything from a ‘red flag’ to penalties or even, if chronic and extreme, cancellation of the contract.

 

Recently we were negotiating SLA’s with a new client. We proposed some levels that were both attainable, so Groundswell could avoid penalties, but also high enough that they were meaningful to our Client.  Lets say we proposed that we would resolve a certain ticket type within 8 hours 90% of the time.

 

This was in line with similar agreements with other clients so we included this 90% SLA in our draft contract. A few days later we reviewed this proposal with our new Client. She was concerned that a 90% SLA meant that, potentially, 10% of our tickets could go un-addressed. She hoped we could bump it up to 99% even if that meant extending the resolution time from 8 hours to 24.

 

A fair and interesting offer. It makes sense, it sounds good and hey, we’ve all heard about “five 9’s (99.999%)” SLA’s… shouldn’t “two 9’s” be easy?

 

This is where the impact of small numbers come into play.

 

We reviewed that the anticipated volume of this particular ticket type was only around 30/month.  This means that, even if we only had one ticket that missed our SLA, we would be at 97%.  With only 30 tickets per month its mathematically impossible to hit 99%!

 

She immediately understood the impact that small numbers would have on our SLA. She agreed that, for the priority of this ticket  type, three missed tickets per month would make sense. Ultimately we settled on the originally proposed  90% SLA.

 

When deigning SLA’s, always keep in mind the potential impact of low numbers.  At times the targets may seem low on first blush, but the context matters. If low volumes are likely then it’s important to set your SLA’s appropriately.