Managing Service Level Agreements: A Personal Interview with Ed Chopskie By Cinda Daly

With the growing emphasis on IT and business objective alignment and the trends to both offshore and outsource support, the role of SLAs is evolving. IT veteran Ed Chopskie, now a senior officer with Peregrine Systems, has influenced service level management in large corporations for more than 20 years.

“Most business executives suffer from what I call AMS, airline magazine syndrome,” says Ed. “If you were to believe the press today, you would believe that everyone is outsourcing and that everyone is saving money.” This perception doesn’t reflect reality, but Ed encourages IT organizations to start thinking more like an outsourcer and start operating IT services like a business. He shared his perspective and discussed the role that SLAs have in this new environment.

Daly. Companies are challenged to optimize technical support with budget limitations to produce the best customer experience possible. They struggle to create a proper mix of technology, human, and other resources to accomplish that. How can SLAs help companies manage this better?

Chopskie. The complaint I hear most frequently is that the business units always think that IT service is free and that everything should be a priority or severity one issue. In the absence of any financial constraints or service level agreements, there is no way to quantify that IT really can provide service to the level of the budget and the customer’s expectations that people can agree upon.

So, quite honestly, without having an SLA in place, there is no way for either side to really be happy. The business unit doesn’t know what to expect; so they expect everything right away. IT isn’t able to quantify the operating levels in terms of the expected budget.

The SLA is an excellent start to doing that. Have some sort of policy and set of expectations in place. The first step toward an effective SLA is simply sitting down with the business unit and asking, “What is the most important thing to you, and how do you expect us to manage it?” IT can then respond with specific services that they can offer based upon financial and related business constraints.

Daly. Many believe that SLAs are too difficult to enforce; so they can’t really work. True? Not true?

Chopskie. Not true. You need to get involved in robust customer relationships within the business units and have orderly reviews on a regular basis—not yearly—to determine what to work on. Find out what’s working, what isn’t, and what’s important to the customers now. Make sure that your objectives are still aligned.

Things change. If you’re not proactively talking to the business unit, you will fall out of synch with them. Today, they may need support for VPNs. Two months later they may be concerned about Blackberry, and VPNs will no longer be important. Next year they will want to be sure that their wireless laptops are working everywhere; so VPNs will become important again.

Daly. Outsourcing service providers rely heavily on SLAs to manage customer expectations. How can internally sourced service providers learn from those practices?

Chopskie. Here’s the huge problem in IT: most organizations can’t define what it costs to deliver a service or quantify the service level they are providing.

If IT organizations were asked how much it would cost to support an e-mail network, considering all of the hardware, the people, and network availability, most would have no idea. It’s crazy. If you ask a manufacturer how much it costs to produce a widget, he can tell you to the fraction of a cent. When outsourcers proclaim that they can support that e-mail network for 30 percent less and provide the best practices, IT shops get caught flatfooted.

Daly. What do IT organizations need to do to remedy this dilemma?

Chopskie. First, rather than view outsourcing as a threat, manage that possibility as an opportunity to get out of the silos. Start thinking like an outsourcer and organizing IT and support like a business, even if you aren’t actively managing SLAs or able to quantify how much it costs to deliver the service today.

A big trend we’ve seen is the refocus on the total cost of ownership. If a company is actively managing the outsourcer, they know exactly how much it costs and what level of service they are getting. The same should be true for the IT organization managing the service internally. In both scenarios, executives would know if outsourcing would—or is—really saving the organization money. Get prepared to respond to questions with the type of service you are providing internally, to what level of expectation, and at what cost.

Daly. SLAs, primarily, have been traditional phone based support tools. How do SLAs need to evolve to address Web- and Intranet-based support expectations?

Chopskie. Call center metrics are of no value to SLA management. If you are basing service levels on call abandonment rates or first call resolution, service expectations will not be met. No one cares how many rings it takes. The reality is that events come in through a variety of channels, including through management tools that automatically trigger events and often correct situations before they become problems.

If SLAs are not applied to events coming in automatically, then the IT shop only gets part of the events. No one calls on a job abend, for example. But a job abend may create system downtime that fails to meet an SLA criteria. Without having something that can correlate all events back to a service level agreement, it will be extremely difficult to manage to service levels.

Take another common example. If the database administrator is monitoring the performance and size of its database and it goes offline for one reason or another, the database administrator will start to work on it. However, if that event is not correlated to an SLA, you can’t report back manageability of the system. There is a fundamental disconnect between what IT wants to deliver and what is being delivered.

This is a major issue. Consequently, most shops are trying to integrate network system management tools. Yet many of them are dedicating people and dozens of hours to manually correlate all the events to SLAs. These events must be automatically correlated through network management systems, such as those from Peregrine.

Daly. How does problem management technology need to change to support these new processes?

Chopskie. Any tool that IT pros use that track events or change requests needs to be integrated with the system that is actually monitoring, managing, and reporting on service level agreements. That is where technology needs to change.

But it’s not really about the technology. IT has highly specialized people working on what they’re responsible for—transaction processing, database management, network applications, and so on. Each group has its own set of tools. One company I work with is in the midst of a tool rationalization project. They discovered more than 300 sets of tools and are quite frustrated about how to get down to a succinct number of tools and arrive at some value. They may have to sacrifice some functionality, but they will have something more integrated and can begin to craft the SLA roadmap.

So, the first thing that needs to change is the siloed mindset of IT. IT needs to start working cross functionally and realize that they’re delivering a service to the business. They need to start managing not as individual sets of infrastructure, but as an integrated service.

This would be a huge shift. There’s no technology here—just highly specialized people who understand that they work on a complete set of services and are beginning to act more like an outsourcer.

Daly. What is the best approach for establishing service agreements?

Chopskie. Individual SLAs in each functional silo may be interesting, but those SLAs don’t reflect the way the business units look at IT. Create the SLAs based upon how business views IT, not the other way around. Then, make sure that the SLAs track with that perception.

Organizations that are ready to break down silos and get involved in the professional management of IT usually look at the ITIL framework as a good idea. ITIL gets everyone in agreement that there is a process and a nomenclature. And, when a system goes down, people start executing and doing the right things. Integrated, correlated service reports are generated, and service levels are managed.

Daly. As IT support organizations assume more responsibility for asset and change management, to what extent can the SLA framework help them develop effective practices?

Chopskie. Most people try to implement service level management before they implement change management. It is commendable that they’re working with SLAs. But the main reason they will miss the targets is because they are not managing change. These are self-inflicted wounds.

Application changes, for example, are tracked within the ITIL concept of release and change management. Unfortunately, however, many applications groups don’t feel the need to participate in the ITIL process. Without change management, it’s tough to manage service levels because of all of the random activity that goes on. Change management has to be defined in order for the SLA management process to be successful. If the change process is not defined first, then it at least must be accomplished in parallel.

Daly. What is one of the most critical components of an SLA?

Chopskie. The most critical thing is to get all groups within IT to agree that there is a problem. There has been some good work done with SLAs so far, but there is still a problem. And the way to fix that problem is to break out of the shell and start. Then, the next tough step is getting people to agree on what the process is going to be, how they’re going to get there, decide the technology to get them there, and then measure and quantify if they did get there.

Daly. How can these agreements be monitored and measured with confidence and accuracy?

Chopskie. Service level agreements are not devised to make it harder for IT to do their jobs, but to help IT show that they are delivering value. Tools can automate much of the process.

Daly. What is the best means for reporting SLA compliance and achievement?

Chopskie. Aside from reporting the results in as real time as possible, most companies are producing a balanced scorecard on a simple, one-page Web report. They show how they are tracking on time, on budget, on availability, and on performance. Obviously, tech support has tons of reports. When you achieve 98 percent compliance, identify the top ten issues that kept you from being 99 percent and make that knowledge easily accessible. Report changes and news about the systems, and use simple to read business charts so people can see what is going on with the systems. People usually respond to that.

Daly. Leave us one take away thought.

Chopskie. Start thinking about how to create and manage SLAs now. It’s fundamental to your career and our industry’s development. We must correlate our minds and IT practices with the business. Treat the development process as a new and interesting project to work on. Think proactively. Otherwise, you run the risk of having it imposed upon you later by your outsourcers showing you the way.

Ed Chopskie, AVP of enterprise technical marketing for Peregrine Systems, is featured in the product showcase, “Using SLAs for IT Business Management,” at HDI 2004.

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