Partners must respond as customer-centric CIOs move beyond the SLA

Partners must respond as customer-centric CIOs move beyond the SLA

Experience level agreements (XLAs) are gaining traction as key performance metrics for IT orgs delivering solutions to customers and employees alike. Here’s how to evolve your SLA strategy.

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Service level agreements (SLAs) have long been the standard operational metrics for technology services, measuring performance in areas such as systems availability or resolution time. But a new approach to gauging IT performance has begun to take hold in organisations where ensuring an optimal customer experience has become paramount.

Experience level agreements — XLAs, for short — go beyond traditional IT SLAs to focus on the end customer experience, tracking measurements such as customer or user satisfaction and sentiment. 

In an era marked by a laser focus on customer-centricity and increasingly digitised interactions, there is a need for key performance indicators directly correlated with the quality of the experience instead of simply the performance of the technology that underpins them.

“Organisations are increasingly using XLAs,” said Sameer Bhagwat, vice president and head of the Applications Managed Services Center of Excellence at Capgemini. “The shift to the digital economy accelerated the adoption of XLAs as companies have been eager to gain better insights into the customer experience.”

IT outsourcing providers were the first to make a shift toward experience-based performance metrics, incorporating quantitative and qualitative data to measure service outcomes and user experience. But the XLA approach can be valuable for CIOs eager to communicate the business value of what IT contributes to the organisation.

“IT leaders often get consumed with details that are important, but hard to consume,” said Rahul Mahna, managing director of managed security services at EisnerAmper. Metrics such as the number of incident tickets or trends in systems alerts or alarms may be meaningful within IT, but can be largely noise to those working outside the walls of IT.

“We find it better to position IT as solutions that enable the business to operate and support the goals of the firm,” Mahna said. “Positioning an IT department as a key component of all management functions that are strategic in nature can produce far better results in maintaining the IT organisation through difficult time periods.”

The evolution from SLAs to XLAs

SLAs have reigned supreme in measuring IT performance for decades. And they were largely sufficient for what was, for a period of time, a back-office function. “Historically, IT teams operated separately from business users and established their own set of SLAs primarily focused on IT metrics such as availability and resolution time,” Bhagwat explained.

With the shifts in customer and employee digital needs, attitudes, and behaviours, a siloed approach to IT performance management no longer makes sense. Traditional SLAs provide little insight into business performance or user satisfaction. With technology now intrinsic to the end user experience, IT metrics should evolve to reflect that.

“This is where XLAs come into the picture,” Bhagwat said, adding that they can be a key foundation for changing how the business value of IT is measured and reported across an organisation.

In addition, XLAs “provide an incentive for all of the parties involved — internal groups and outside vendors — to cooperate and do the right thing for the business to achieve the rewards and not just sub-optimise the end-to-end process to optimise the portion of the process they are responsible for,” said Andy Sealock, senior partner in the advisory and transformation practice at West Monroe.

A measured approach to customer-centricity

Knowing the value of XLAs is one thing; being able to devise, measure, and track them is another. With decades of reliance on traditional SLAs, it can be challenging to rethink IT performance in this potential abstract way.

Still, it’s very much possible to measure experience for both external customers and internal users of IT systems. And with employee experience proving to be an important driver of overall business performance, it’s fast becoming essential to do so. 

The vast majority (85 per cent) of respondents to a recent IDC survey said that improved employee experience and engagement lead to a better customer experience, higher customer satisfaction, and increased revenues.

External XLAs tend to align with key business goals related to customer engagement, customer retention, and conversion rates. Internal XLAs more likely centre around employee satisfaction scores, response times, adoption, or engagement. 

Rather than measure uptime of enterprise applications alone, an organisation might track employee satisfaction with the remote work experience. Another XLA might focus on optimising the employee onboarding process to ensure employees can hit the ground running on day one.

“Internal service management tools can be used to track XLA performance,” explained Bhagwat. “IT leaders can then use XLAs to have a pulse on the user experience and overall customer satisfaction.”

In most situations, XLAs will not replace SLAs, but complement them to provide a more complete picture of customer or user experiences — and IT’s contribution to them.

“SLAs should be retained even if XLAs are introduced, in part because without SLAs an organisation will lose important visibility into operational performance and the direction that can provide towards root-causing issues,” said West Monroe’s Sealock.

XLA best practices

XLAs are, by definition, boundary crossers, cutting across functions, processes, and technologies. “Removing the siloes between business and IT is one of the challenges in implementing XLAs,” said Capgemini’s Bhagwat.

Other issues include determining who owns the XLA, defining which metrics are the most meaningful to organisational success, establishing a change management plan to ensure XLA adoption and acceptance, and creating a robust XLA enforcement plan.

To address these and other issues, organisations seeking to implement XLAs should heed the following best practices:

Establish clear responsibility and accountability: In many cases, a business function such as marketing or HR may own the metrics associated with an XLA, but IT must have a seat at the table and work closely with business stakeholders on expected outcomes and potential issues.

“These past two years have consistently proven that there’s no longer a separation between IT and the business,” Bhagwat said. “The two functions must work together for an organisation to thrive in today’s evolved experience economy.

Map the user journey: By charting out user journeys through IT services and solutions, organisations can identify various user types and needs, uncover key pain points, identify gaps in services, and create a baseline for improvement and optimisation.

Focus on meaningful metrics: Settling on metrics that best represent the desired outcome can be tricky. They need to both “represent tangible value generation for the business and be clearly and directly — even though not completely — driven by the performance of the parties,” Sealock said.

Be transparent: Experience data should be shared widely and often among teams, employees, and external partners. This creates greater visibility into issues and encourages greater collaboration.

Emphasise carrots, not sticks: When working with external parties in particular, it’s beneficial to set up gainsharing or other rewards for XLA achievements rather than punishment for XLAs misses.

“We have seen XLAs used most effectively when they are structured as a reward to the participating vendors for the achievement of business objectives, not as penalties for not achieving business objectives,” Sealock said. 

“The problem with the latter scenario is that few, if any, vendors are willing to take on the financial liability of incurring penalties for outcomes that are outside of their direct control.”

Get IT staff on board: SLAs are familiar to IT veterans. They remain the gold standard for measuring technical performance. While the IT organisation should understand that SLAs are not going away, IT professionals will need to be brought up to speed and on board with XLAs. 

Ensuring a successful shift will require IT leaders to invest in evolving IT’s mindset toward continuously measuring and improving the user experience, in addition to ensuring availability and issue resolution.

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