If you work in a B-2-B [Business-2-Business] environment, you will, at some point, have the opportunity to be in a customer account review. This is where you will be reviewing the performance of your organisation against the business commitments that the customer has contracted with you.
A recent account review sparked this article as the account review I attended was interesting for a number of reasons, not least of which, was the intense discussion on what we should be measuring to gauge the success of the services that we were providing.
Service Level Agreements and the Water Melon effect
The first topic that came up was SLA’s - or Service Level Agreements. SLA’s are is a part of a service contract where a service is formally defined and documented in the contract. Particular aspects of the service - scope, quality, responsibilities - are agreed between the service provider and the service user as part of the contract negotiations and these are then used to measure how well you are providing the services.
The customer brought up the concept of the “water melon effect” and there were a number of people in the room who did not know what that was, nor where it came from. I did! The source of the concept came from a publication from EquaTerra / KPMG in 2013, please see the enclosed for the article:
The water melon effect is where, on the outside the SLA’s are green and are green every month, but the customer feels that the service is not. Inside the water melon, however, issues abound. Often, SLAs are developed based on some form of fault tolerance. Uptime, mean time between failures, mean time to repair, call time, time to resolution and like metrics may register as compliant in the monthly report. However, these SLAs don’t do much to measure the things that really matter such as quality, working as a team, delivering on the business objectives, and working as a valued partner. So the definition is wrong, the target is wrong, and the calculation is probably wrong as well. Those who rely on service and support day to day know too well the operational issues and the impact on the business. Established at the beginning of the relationship in good faith, these SLA measurements tend to lose their meaning later in the contract, becoming pawns in an emotional game where the stakes are penalties, breach of contract, renegotiations, and even the search for a different provider of service. None of which actually add any value to the organization. And this is what was happening to the relationship we had with the customer. The customer themselves, recognised that the original set of SLA’s were not reflective either of their business, how they were looking to the future and more importantly, how we could support their business.
Processes, Outcomes, and Benefits
What then followed was a wide-ranging discussion on what the customer wanted and in fact what we could do to change? After all, without having to make major changes to the contract - in effect tearing it up and re-writing it, which neither party wanted to do, how could we work together in a mutually beneficial way?
We could, of course change the process measures, but keep the overall SLA’s the same - in effect “cheat the SLA framework”. But this did not go far enough. We were already measuring first-time fix, the percentage of calls resolved within 4 hours, etc. It did not feel radical enough.
We could of course measure outcomes, in effect change the measures around. Instead of first time fix, we could measure availability of store devices, ie, uptime of tills. This would mean we could reflect better the customer's requirements, that of service availability to their customers, rather than how quickly we could get something fixed. Better, and more reflective of the customer's world.
Why not go one step further and measure benefits? What were the benefits of the service and SLA’s we were tracking to the customer? This is where we were really putting ourselves into their shoes. Reflecting their business on the service we were providing. What did they really want? The fastest throughput of service for their customers. So that is what we are going to focus on. We are going to pilot a number of preventative services, targeting failing areas of the business. We are also going to be proactive in working with the customer on this. We are going to use the intelligence we have built up on their products and how they are used to suggest different approaches to how we will service them.
This is going to be the most difficult and will take time. But it makes much more sense than being known as a water melon provider!!
As always, I leave you with a quote.
“The true measure of a man is not his intelligence or how high he rises in this freak establishment. No, the true measure of a man is this: how quickly can he respond to the needs of others and how much of himself he can give.” ― Philip K. Dick