Service level agreements (SLA) and their measurement play a major role in the realization of effective outsourcing management.If the strategic goals of the SLA and the metrics for measuring the goals are aligned, this carefully considered selection supports goal achievement.

Telecommunications network operators base their decisions for outsourcing business processes on various strategic goals. Generally they are related to cost-cutting efforts or the creation of more breathing space so that the company can concentrate more closely on the marketing of services to end customers. Examples range from the outsourcing of the maintenance of the company’s software applications to the complete outsourcing of network operation. Once such a decision has been made, the commitment to this course continues for a number of years as a rule and is manifested by a contract between the client and the outsourcing provider. So-called service level agreements must be concluded to ensure that this relationship functions well and that the services which are supposed to be performed are actually carried out.

Service level agreements (SLA) are an essential component of any outsourcing deal. They define the outlines of the project in terms of the tasks which are to be carried out and the scope of the delivery which the service provider must perform for the client as well as the quantity and extent of equipment which will be purchased and delivered, the acceptance criteria for the responsiveness, and the quality of the delivered product. Properly drafted SLAs describe in highly precise terms the expectationsof both parties as well as carefully defined metrics for measuring the achievement of these objectives.

The heart of any efficient SLA is the performance metrics. These metrics will be needed for the duration of the outsourcing relationship to measure the service provider’s performance and to determine whether he is fulfilling his contractual obligations. The selected metrics should meet certain criteria:

• They should measure the right performance characteristics to ensure that the client receives the services at the promised level and at the same time make it possible for the service provider to realize an acceptable profit.

• Their implementation should be as simple as possible, detailed to a reasonable degree, but without incurring unreasonable cost expenditures.

• They should merge all of the contractual obligations into reasonable and achievable performance levels so that “good service” can be clearly distinguished from “poor service” and give the service provider a fair chance to satisfy his client’s expectations.
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