Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) are key elements of business process management (BPM). While SLAs and KPIs are closely related and provide insights into specific performance measures of a business, they have clearly different scope and intent. Also, SLAs and KPIs can be difficult to define, measure, and achieve when using a gig-workforce to deliver field services. The laws and regulations used to define how a business engages a gig-worker (1099-NEC tax reporting status) and the type of work involved in the delivery of field services can make establishing and accurately tracking SLAs and KPIs difficult.
Service Level Agreements (SLAs) –
Wikipedia defines SLA as “a commitment between a service provider and a client…(where) aspects of the service – quality, availability, responsibilities – are agreed” (https://en.wikipedia.org/wiki/Service-level_agreement). In other words, an SLA is a written agreement that qualitatively and quantitatively specifies a service commitment between a business and its client. SLAs usually define units of performance measure and penalties for failure to meet those measures. SLAs are set to measure, evaluate, and compensate for future service performance. SLAs can include standards for timelines, quality levels, and/or the amount of service a client expects from the field service provider. In addition, SLA metrics allow clients to track real-world needs of their businesses and are usually set by the client for the field service business to meet.
Key Performance Indicators (KPIs) –
KPIs are measures that define the progress with respect to a strategic goal or objective. KPIs are used to measure past performance and whether the business is meeting expectations relative to growth, revenue, ROI, profit margin, or other decision-making criteria. KPIs are usually set to evaluate whether a business is meeting its strategic goals and what areas need to be addressed to improve its performance.
Using SLAs and KPIs –
As mentioned, SLAs and KPIs are closely related, but clearly different. An SLA is forward-looking, while KPIs focus on past performance. SLAs set benchmarks for you to measure performance in the future. KPIs will measure the performance of your business against strategic business benchmarks as time passes. KPIs are set based on strategic goals and objectives, while SLAs are near-term performance metrics that can directly impact a business’s operation or abilities. SLAs are used to establish expectations (usually via a contractual agreement) for service delivery by another vendor, while KPIs are used to self-evaluate success or failure towards specific goals and objectives.
Main Elements of an SLA –
- Business Objectives: objectives to be achieved in the provision of the services.
- Target Services: description of service deliverables.
- Performance Metrics: performance standards expected by the client.
- Reporting Mechanism: mechanism for periodic reporting of performance metrics.
- Compensation Credits and Remediation: compensation formula that incentivizes for exceeding performance metrics and penalizes for failure to achieve performance metrics.
- Change Control and Contract Management: mechanism for periodic review and change to the service levels over the course of the contract.
- Grounds for Termination: conditions that give the right to terminate the contract where performance standards fall consistently below an acceptable level.
Managing SLAs when using a Gig-workforce –
Establishing and tracking SLAs in field services delivery can be challenging. A field service business, and its project management team, cannot manage a group of “1099 contractors” the same way they manage the company’s employees. The differences associated with managing contractors versus employees can present interesting challenges to the project manager, especially in relationship to tracking and achieving certain SLAs. Given a project manager can only provide a gig-worker with start and complete-by dates/times for a given workorder or project, it is difficult to track incremental progress and/or fine-grain elements associated with the work. Therefore, the project manager has a difficult time determining where a project or workorder is against a specific SLA.
The other challenge is developing a project management system with sufficient flexibility to support a wide variety of SLAs. Common components of an SLA include response time, time to complete service, quantity, completion percentage, quality levels, failure rates, times of operation, exclusion dates, etc. Providing a simple interface to allow project managers the ability to input complex formulas with abstract variables that can be tracked, analyzed, invoiced, and reported back to the client has proven to be difficult. The variety of projects inherent in field services, and the complex constraints often placed on the time and location of the service, makes it almost impossible to cover all possible SLA descriptions. In most cases either the project management system covers a limited number of project or work-order types, and/or a person must implement a customer specific tool (usually a software application or interface) that implements a formula that matches the SLA description. This “application” pulls relevant project/work-order performance data from the project management system in real-time, and reports to the client, and billing/invoicing system, to what level the performance objectives were met. Therefore, the cost to a field service company to implement, track, and report SLAs can be significant.
Present State of SLA Implementation in Field Service Project Management Systems –
At present few, if any, project management systems can support the wide variety and complexity of SLAs associated with field service delivery using a gig-workforce. Some project management systems attempt to provide sufficient APIs to allow external applications to retrieve relevant data in support of calculating and reporting on SLA performance metrics. Dashboarding of these performance metrics is important to the project management team and often requires yet another application to be leveraged. Therefore, an integrated system to support project management of a variety of field services and their related SLAs would significantly improve operational efficiency and scale of a field service business that leverages a gig-workforce.