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9 tips for how to use operating level agreements in multisourcing

Stephanie Overby | Feb. 18, 2013
The rise of multisourcing has thrust operating level agreements in the IT outsourcing spotlight. But establishing OLAs among service providers can be difficult.

Operating level agreements (OLA) aren't exactly new to IT. Unlike service level agreements (SLA) between an IT organization and its service provider, OLAs state how particular parties involved in the process of delivering IT services will interact with each other in order to maintain performance.

"By establishing OLAs between these groups, the IT function can provide the appearance of seamless service to the business," says Edward Hansen, partner with law firm Baker & McKenzie.

Until recently, OLAs were most often internal to an IT organization or a single large service provider, ensuring that the groups within the organization were working together to deliver IT services. But with the rise of multisourcing, OLAs are back in the spotlight.

"In this context an OLA becomes a record of shared assumptions and interdependencies at the level of processes shared and intersecting between each of the multiple parties engaged in the delivery of services," says Les Druitt, founding principal of outsourcing consultancy Sourcing Advisory Services. "It is where the rubber meets the road in a multi-party outsourcing."

"It has become more and more important for the ultimate customer to know that the relationships and interactions among these multiple parties are well-known, documented in clear and precise language, and reflected in binding agreements that can be enforced-if necessary-by the customer," says partner Robert Zahler, partner in global sourcing group at law firm Pillsbury.

How to Use OLAs in a Multi-Sourced Setting

Establishing OLAs in the multi-sourced environment, however, is inherently more difficult than instituting them within a single organization.

"There is limited understanding of this new role, what level of description is sufficient, the role the OLAs play in validating both pricing and solution assumptions, and in facilitating continuous improvement," Druitt says. "Creating OLAs for the purposes of documenting and confirming how solutions will play in harmony requires a collaborative process to arrive at a set of documents that all parties respect and support."

Here are nine dos and don'ts for establishing OLAs in the multi-sourced IT environment.

1. Do expect bumps in the road. "Establishing OLAs requires a service provider to clearly understand their own processes and [to be in] harmonious agreement with peer providers about the role each is to play within those processes," says Druit. OLAs for mature processes, such as incident management, will be easier to establish than for other areas. "It can be a struggle when process maturity levels differ significantly between providers," adds Druitt.

2. Don't let service providers hijack the process. "Often the service providers are most interested in those OLAs that are necessary to support the performance of their delivery against a client's SLA," says Druitt.


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