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Service level agreements: An essential aspect of outsourcing
The Service Industries Journal
Abstract
This paper notes and explains the increasing use of service level agreements (SLAs), stresses their importance to insourcing and outsourcing relationships, proposes a taxonomy of service attributes, and recommends a hierarchical methodology for constructing SLAs. Evidence from interviews and examination of SLA documents suggests that well-designed SLAs contribute to fruitful relationships between business partners. The proposed methodology and taxonomy will simplify the time-consuming tasks of writing and negotiating SLAs. SLAs have not received academic attention proportionate to their commercial importance. Research to ascertain whether SLAs are used effectively and to seek better expression of business requirements in an SLA is appropriate.
... One key aspect of designing SLAs is their framing in terms of bonus or penalty clauses. While such clauses represent fundamental elements of SLAs [9][10][11] that are widely used in the IT outsourcing industry [12,13], the effects of bonus versus penalty clauses have been largely neglected in extant literature. For example, Gopal et al. [14] highlight that "research is required to understand other incentive-based contracts such as agreements with […] a reward or penalty for the vendor" (p. ...
... In the following, we discuss key contributions of our study to the literature on IT outsourcing contracts and SLA design [3,10,11,14,20] and the literature on factors associated with knowledge sharing [18,31,41], followed by a discussion of study limitations and associated avenues for future research. ...
... Taken together, this provides rich opportunities for future research in examining effects of similar contract manipulations on the SR side, or on both the SR and the SP side in one and the same investigation. Second, while SLAs typically specify arrangements between a SR and a SP at the organizational level [10], our study focuses on the individual level. Therefore, we would like to encourage future studies that combine individual and organizational-level variables to infer implications for organizational design. ...
Adding to the collective knowledge on how to craft effective IT outsourcing contracts, this study examines the effects of service level agreement (SLA)framing in terms of bonus versus penalty clauses on two important factors of outsourcing success: service providers' knowledge-sharing willingness and commitment (effort-related vs. affective). Results from an experiment with 198 IT professionals and novices show that penalty framing decreases knowledge-sharing willingness and affective commitment, while increasing effort-related commitment. Our experiment also controls for interaction effects between SLA framing and professional work experience. While we do not find disordinal interaction effects, we find some evidence that novices are affected more strongly by penalty contexts than more experienced IT professionals. Our results imply that the (bonus versus penalty)framing of SLAs can affect the success of IT outsourcing arrangements and that such framing decisions require careful consideration of the specific outsourcing goals.
... SLAs include the definitions, the auditing functions, processes or outputs delivered from the service provider, and a set of pre-agreed performance levels (Larson, 1998). The increasing use of SLAs can likely be explained by the increasing attention for outsourcing, which has become a popular and often used management technique (Beaumont, 2006). Important reasons for the outsourcing of services include reduced costs, improved service quality and risk avoidance. ...
... Important reasons for the outsourcing of services include reduced costs, improved service quality and risk avoidance. Furthermore, outsourcing allows the client to exploit its expertise without distraction caused by non-core activities (Beaumont, 2006). ...
... SLAs can be divided into two basic types: direct and indirect or support services (Larson, 1998). The most frequently outsourced processes are Information and Communication Technology (ICT) applications (Beaumont, 2006). SLAs are therefore most often used in the world of ICT and can be defined as "formal negotiated agreements that enable ICT organizations and their customers to collaboratively identify, discuss and manage ICT service expectations" (Karten, 2004). ...
In nowadays, the majority of health care provision supported by Information Technology (IT) services including Internet, cloud tech, e-commerce, e-health etc. Some emerging issues around the application of these technologies and services are on the one hand their quality assurance, reliability and security. On the other hand research efforts also focus on their costing so as to allow potential users to enjoy the agreed service. Accordingly, a healthcare organization must fully investigate risks and its costs (operating, maintenance etc.) and apply appropriate metrics to assess the contribution of Information and Communication Technology (ICT) resources services and applications.
Towards this objective in cases that an organization outsourcing IT resources and services a useful tool that is widely used from enterprises within the contracts of information technology services trading is Service Level Management and Service Level Agreement (SLA). SLA is a contract between the user and the provider of the service. It is a document with legal validity that is part of a broader contract that accrues through the assignment and the provision of services to a third party partner.
The compilation of an SLA and the efficient monitoring of the offered services are of crucial financial importance. The SLAs management and the assessment of the measurements results performed are within the scope of every enterprise that provides such services in the field. Furthermore, software tools that focus on developing, managing and monitoring SLAs, are well-established.
Our work, thoroughly studies the issues of contract specifications, languages, standards and modelling of resource dependability for SLA-Based Services within the healthcare domain and analyzes them under the prism of the literature, research and business gained experience. Alongside, a detailed survey is attempted on specific characteristics of the SLAs of existing studies and especially in the healthcare field will be presented. Finally, we propose the development of an Integrated Health Economic Model for the Service Level Management in the health market.
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... To overcome this problem in outsourcing, Service Level Agreement (SLA) is an important component in which it can be seen from the use of SLA in outsourcing. Empirical studies show that the growth in the use of the SLA is in line with the development of outsourcing [20]. It also a study proven that SLA being effective tools for managing outsourcing [21]. ...
... SLA is not only used for outsourcing, it is also used in-house sourcing. Use SLA for in-house sourcing as a document of understanding [20], [23]. While the SLA is used in the outsourcing contract is treated as legally binding contract [23]. ...
... Numerous scholars refer to Hiles (1993) [25] to define SLA as a minimum service level to be provided by the SP and agreed by SR. Developments in the practice of the SLA led to the definition where it is an agreement that describes the services to be provided [20]. Moreover, SLA expended to ensure standards of quality, performance and time can be judged an acceptable level on a regular basis with the agreement known as performance-based [30]. ...
Governance mechanism is playing vital role in service performance. Service level agreement is a governance mechanism to facilitate the performance management of the facility management services outsourced. Service level agreement is indispensable document to be referred to ensure that the facility management services delivery comply the quality standard stipulated in the agreement. The service level agreement elements represent the required service performance. Previous research indicates that one of the reasons for the agreement failure is due to unclear and confusing service level agreement elements. The aim of this study is to develop the service level agreement fundamental elements for facilities management services in outsourcing contract.
... Creating value for customers in a context where the service provision process has been outsourced can lead to challenges (Jonson, 1999;Metters and Verma, 2008) that require a high degree of co-ordination and shared visions among the different actors. Beaumont (2006) addresses some potential disadvantages of outsourcing, such as loss of distinctive competencies, compromised confidentiality, problems of transferring activities to the business partner, ascertainment of relevant costs, a lack of a "cultural fit" between the parties and the lack of flexibility inherent in signing a fixed-term contract. ...
... It is a challenge for the PTAs since they must take into consideration not only the users' benefits and corporate benefits, but also the social benefits (Fryer et al., 2007). Outsourcing service processes and formalizing internal relationships have become common management decisions (Beaumont, 2006). Few research studies, however, explore this trend and there is a lack of theories explaining this organizational structure (Baltacioglu et al., 2007;Balakrishnan et al., 2008). ...
... Since the contractual agreement serves as the basis for this business relationship, the agreement should be reviewed in its forthcoming edition regarding the potential for operators to interpret its contents and, more importantly, to include incentives for service quality with a customer-oriented approach. Beaumont (2006) proposes a service-level agreement in outsourcing business relationships, which is a contract that defines the services provided and the performance criteria. ...
Purpose
The purpose of this paper is to explore the role of a quality management system (QMS) for the assurance and improvement of value in an inter‐organizational business relationship. The study is carried out in the public transportation industry where service provision has been outsourced.
Design/methodology/approach
In‐depth interviews are conducted with 26 participants from two organizations involved in an inter‐organizational business relationship. From the interview material, the authors identified the drivers that create value for the inter‐organizational business relationship and for the customers of public transportation. All value drivers are categorized according to the central areas in a QMS.
Findings
The results show that internal processes and management responsibility are central areas where value is destroyed. Since service provision has been outsourced, this means that the intended value is never experienced by the customer.
Research limitations/implications
The identified value creators and destroyers originate from the suppliers' view and focus on how the different suppliers create value for customers.
Practical implications
Managers should acquire knowledge about the value they create or destroy and focus on improving the value‐creation processes. The QMS can be used to assure and improve value creation in an inter‐organizational business relationship.
Originality/value
The research sheds light on the difficulties and possibilities in value creation where service provision has been outsourced.
... In general, outsourcing can be referred to, as a make or buy the intermediate goods, to the hiring of temporary labour and to the decisions on use of external services. (Kennedy, Holt, ward, and Rehg, 2002).According to Beaumont, (2006) outsourcing can be said to be one sub-type of distributed work. It is the delegation of task or job from internal entity, such as a sub-contractor. ...
... Gilley and Rasheed (2004) provide clarifications for the definitional confusions, positioning outsourcing as procuring something that was either originally sourced internally (i.e vertical disintegration) or could have been termed internal vs external sourcing. (Beaumont, 2006), In the words of Bennedsen and Schultz, (2005) outstanding decisions are. influenced by the quality of information available, cost, profitability, strategic alliances, supplier quality, financial evaluation, risk and efficiency. ...
This study investigated the influence of outsourcing on the performance of Nigeria petroleum development company, three objectives and three research questions was design to guild the study. The study adopted quantitative research techniques, using the taro yamani formula to derive a sample size of 300 respondents was use for the analysis , findings revealed that outsourcing have a significant effect on the performance of the staff of Nigeria petroleum development company, the study concluded that Outsourcing as perpetuated in Nigeria is a threat to the desired level of economic growth and development of Nigeria workers and recommends among others that Nigeria government managers or Administrators should Endeavour to provide more frameworks for selecting outsourcing vendors that will benefit the organizations in the area of need to avoid financial crisis.
... It is the process of deliberating noncore activities or operations from internal production within a business to an external entity that specializes in that particular operation. According to Beaumont, (2006) outsourcing can be said to be one sub-type of distributed work. It is the delegation of task or job from internal production to external entity, such as a sub-contractor. ...
... Gilley and Rasheed (2004) provide clarifications for the definitional confusions; positioning outsourcing as procuring something that was either originally sourced internally (i.e vertical disintegration) or could have been sourced internally notwithstanding the decision to go outside (i.e make or buy). This includes arrangements that have been termed-internal vs external sourcing (Beaumont, 2006). ...
this paper focused on outsourcing as a strategic option to organizational effectiveness with selected micro-finance banks in southeast Nigeria as its study firms. From a population of 578 members of staff from the selected microfinance, purposive sampling was used to select 410 members of staff who were surveyed for the study. In line with the design of this study, the data collected for this study were analyzed using inferential statistics. The study was guided by three research objectives and hypotheses that are consistent. Data was gathered using a five-point Likert scale questionnaire and the hypotheses were tested using Mann-Whitney Test (U) using the 20.0 version of the statistical package for social sciences (SPSS). It is concluded in this study that micro-finance banks in southeast Nigeria can leverage on outsourcing to improve their adaptability, innovativeness, and sustainability which are the hallmarks of improved competitiveness and in the long-run organizational effectiveness. The researchers recommend that micro-finance banks should focus more on their core duties where it enjoys unique competitive capabilities (UCC), while outsourcing their non-core functions. It should, however, integrate outsourcing programs into the corporate strategy of the organization to eliminate waste or duplications in resource application.
... A KPI is a quantifiable measure that is used to compare performance in terms of meeting goals. Many organizations also have been using SLAs to measure the performance of the external vendors and research has been undertaken on service level agreements (SLAs) and outsourcing (Beaumont, 2006). We included SOX as the Sarbanes-Oxley Act (SOA) requires the personal accountability of management for financial reports and the processes by which such reports are created (Cannon, Growe, 2005). ...
... Although research has been undertaken on service level agreements (SLAs) and outsourcing, limited attention has been given to how service providers measure service quality in outsourcing contracts (Beaumont, 2006). Many researchers have recognized the need to develop valid measures of service quality. ...
... In general, outsourcing can be referred to as make or buy decisions on intermediate goods, to the hiring of temporary labour and to the use of external services (Kennedy et al., 2002). According to Beaumont (2006), outsourcing can be said to be one subtype of distributed work. It is the delegation of task or job from internal production to external entity, such as a subcontractor. ...
... Gilley et al., (2004) gave clarifications for the definitional confusions; positioning outsourcing as procuring something that was either originally sourced internally (i.e vertical disintegration) or could have been sourced internally notwithstanding the decision to go outside (i.e make or buy). This includes arrangements that have been termed -internal versus external sourcing, (Beaumont, 2006). ...
There is now more pressure on business practioners to justify that marketing function contributes to shareholders value by the firms. Management of firms are interested in assessing the extent to which cost of business can be minimized and how that could help in reducing marketing expenditure and ultimately increase return on marketing investment (ROMI). The study attempted to ascertain the link between outsourcing and marketing performance. Copies of questionnaire were distributed purposively to ten fast food outlets in Lagos, Nigeria. Two hypotheses were developed and were subjected to descriptive and regression analysis. It was discovered that outsourcing contributed to increase in marketing performance. The study makes useful policy recommendations for marketing professionals, entrepreneurs and top executives of fast food outlets in Nigeria.
... Time taking for completing all the steps of contract requires full support from both parties because negotiating, implementing and monitoring a SLA are very crucial process. This finding is similar to the findings of studies conducted by Beaumont (2006) and Goo et al. (2009). ...
Purpose –This paper aims to examine the impact of Recruitment Process Outsourcing (RPO) motivators on the clients’ satisfaction in the banking sector in India.
Design/methodology/approach- Based on questionnaire survey approach, this paper uses multi level stratified sampling to administer 585 questionnaires to selected bank executives operating in 39 commercial banks in India. Structure equation modeling has been used.
Findings –The impact of RPO motivators on the clients’ satisfaction was found to be strong and statistically significant. It indicates that as the motivators of outsourcing increases, it will lead to increase the satisfaction level of clients.
Research limitations/implications –This study provides a framework which helps the RPO providers to understand the motivators of RPO so that they can give maximum satisfaction to their clients.
Originality/value – While most of the studies on outsourcing tend to be theoretical, this is an empirical study focusing on outsourcing by organization based on developing countries such as India.
Keywords India, Recruitment Process Outsourcing (RPO), Motivators, Clients’ Satisfaction Attributes, Banks
... In service-sourcing contexts, the ongoing evolution and improvement of management tools are necessary for cost control and minimization of value leakage in service delivery processes (Ellram et al., 2004), efficient evaluation processes and desired service outcomes (Florea et al., 2022;Haensel and Hofmann, 2018). An essential aspect of service sourcing is the formulation and specification of service-level agreements (SLAs) (Beaumont, 2006) that are often characterized by ongoing modifications throughout the contract period (Molin and Åge, 2017). ...
Purpose
The purpose of this study is to develop and validate the business streamlining (BS) model proposed in 2017.
Design/methodology/approach
This study/paper develops and validates the qualitatively generated BS model, a conceptual model of service sourcing relationships, by testing it quantitatively. A survey was sent to chief exective officers, chief purchasing officers or facility managers in 764 private or public companies in Sweden with an annual turnover exceeding € 10m. The categories were tested and analyzed by means of factor analysis.
Findings
The BS model for managing service sourcing processes was confirmed to be significant overall, meaning that it is applicable irrespective of service sourcing context. The efficiency pursuing (EP) was found to have an interlinking role that calls for a revision of the BS model. Furthermore, the four categories tended to load pairwise.
Research limitations/implications
Although this cross-sectional study confirms the relevance of the BS model for managing service-sourcing processes, further studies should examine both the relative significance of its categories in different service-sourcing contexts and why the four main categories tend to pair.
Practical implications
The results support that the model is flexible and adaptable to a wide range of service-sourcing circumstances. Irrespective of the relative complexity of facility management (FM) sourcing processes, the categories can be adapted to fit the service sourcing context. Thus, it can be used as a tool to analyze and facilitate strategic decision-making.
Originality/value
The paper validates that the BS model can represent the dynamics of different service-sourcing processes, regardless of the complexity of the context.
... Insufficient product availability in retail has also been identified as a typical problem example of low quality (Fleisch and Thiesse, 2007). Many previous studies have discussed the significance of service level management in a wide range of research areas, such as retail industries, manufacturing industries, and multimedia service providers - Teixeira et al. (2012); service strategies in manufacturing - Löfberg et al. (2010); and service level agreements - Beaumont (2006). Firms have generally tend to have large inventories in order to maintain desired service levels, which has resulted in extra costs. ...
Infrastructure is defined as the physical facilities that provide the primary support for carrying out an organizational business process. Infrastructure includes all technical aspects and facilities required to keep an organization's operations or business processes running smoothly. Infrastructure facilities are considered to all facilities related to an office building, road, water treatment plant, water distribution, airport, building and office, drainage, reservoir, bunding, retaining wall, bridge, sewerage treatment plant, power distribution, power plant, telecommunication, fuel facilities, fuel distribution, housing, port and jetty, and other facilities that support the operational activities of an organization's business process. PT. Kaltim Prima Coal considers the service level in maintenance activities that are related to the compliance performance in quality service, lead time, and work completion performance. These are some of the performance indicators used to measure the Infrastructure Department's agreement for contract maintenance. An operational strategy improvement in infrastructure department contract service maintenance is expected to improve the service level, shorten the lead time and increase customer satisfaction in order to meet the performance indicators. Six-Sigma – DMAIC (Define-Measure-Analyze-Improve-Control) approach is implemented to overcome the service level compliance problem in infrastructure operational maintenance service. Six Sigma has proven to be effective in reducing quality defects, eliminating variation, and significantly increasing the organization performance. The major issue will be investigated using fish bone analysis to determine the root cause and optimize the operational maintenance activities and increase the service level performance from 84 percent average to 100 percent.
... Thus, service level agreements (SLAs) are used to define outsourcing relations and organisational governance. Well-designed SLAs can have a significant impact on the relationship between the stakeholders involved and the quality of service delivery, service process, and service objects (e.g., Beaumont, 2006). The service attributes that are included in SLAs should be defined based on the customer needs and developed together with involved stakeholders. ...
Service management theory, developed by two concurrent schools (Nordic and American), emphasises customer-focused management practices and relates to the fields of marketing, operations, organisational behaviour, and human resource management.
This chapter describes four main components forming service management theory: creating value for the customer, collaboration both internally and externally, focusing on quality, and developing the personnel. Research shows the correlation between service quality, value and customer satisfaction, and the quality between internal process and external service dependency. Moreover, it opens a discussion on how customer and employee behaviour affect overall organisational performance.
This chapter provides examples of how workplace management research has applied service management theory and argues that customer experience of joint service deliveries (in physical, digital and social environments) is the customer experience of the total workplace. The chapter also acknowledges the limitations of service management theory, especially the lack of studies in human-machine encounters due to the increasing role of technology in the workplace and services in general.
... The effective inventory replenishment plan should be based on demand forecasts and consider how inventory should be replenished to fulfil the customer demand quickly and optimal level and evaluation of inventory replenishment policies. The service level management has been widely utility such as in multimedia service providers Teixeira et al. (2012); service strategies in manufacturing - Löfberg et al. (2010) and service level agreements - Beaumont (2006). Hübner et al. (2013) reveals that recent scenarios the effect of competitions of retailing firms implement incentives approach to better quality provides to customer. ...
ENTERPRISE INFORMATION SYSTEM ABSTRACT Purpose: Supply chain inventory coordination (SCIC) is concerned with managing in multi retail network of homogenous/ heterogeneous networks, often inventory management in uncertainty situation between various supply chain members (SCMs) and the joint collaborative effort of all SCMs to achieves mutually defined goals and targets. There are various supply chain Inventory coordination mechanisms (SCICM) reported in the literature that have been discussed to most evidences of uncertainty of supply and demand like asymmetric information sharing, information technology, inventory dependent price rate, controllable lead time, synchronization of inventory, long term partnerships and joint decision making which help to coordinate supply chain members (CSCMs). Various coordination models and mechanism have been proposed consider isolated activities of the supply chain (SC). There is need to consider the holistic perspective of coordinate in the entire multi retail supply chain network (SCNs). This paper set out to analyse a case study of India retail industry, through presence on the status of inventory coordination mechanism in the supply chain (SC). Design/Methodology/Approach: A situation-actor-process (SAP)-learning-acting Performance (LAP) model has been implemented to analyse the case study of multi-retail supply chain network. In existing situation indicates that multi retail SCIC requirement of various coordination mechanism (CM) for effectively reduces stock-out situation, physical inventory inaccuracy, backorders, and successful coordination within SCMs, and appropriate alignment within supply and demand uncertainty to fil the gaps. Actors are the associated to participants, influencing situation to evolve different business processes. Based on SAP, various learning issues have been analysed which leads to suitable action followed by impact of SAP on the performance to effectively improve in multi retail industry of supply and demands uncertainties and efficient physical inventory alignment mechanisms. Finding:The various relationships exists in multi echelons retailer networks such as types of relationship between single supplier and multi retails in homogenous/heterogeneous network. Inventory coordination mechanism within the SCMs, various mechanisms like asymmetric information sharing, information technology, information systems, joint decision making procedures and incentives mechanism required to successful inventory coordination within multi retails supply chain networks. Various collaborative business mechanisms initiatives such as VMI with stock-out cost sharing, VMI with fixed transfer incentives and stock-out cost sharing, continuous replenishment, and CPFR practices implications in multi retailers supply chain networks (SCNs). Research Limitations/Implications: The Inventory coordination mechanism of SAP-LAP is used to explain effective inventory coordination mechanism in multi retails in homogenous/heterogeneous network considers. Effectively inventory alignment within the multi supply chain network (SCN) and only discussed SCICM in a managerial context with reference to a dynamic SAP-LAP model as applied to the Indian multi retail industry. Practical Implications: The contractual design supply chain inventory coordination (CDSCIC) of SAP-LAP present the situation of coordination to participants who may initiate the processes needed to be coordinated. It also help in identifying CDSCIC gaps in adaptation of coordination mechanisms (CM). The synthesis of SAP leads to LAP, which brides the gaps of CDSCIC by suggesting actions on the gaps of flexibility or the learning from the present situation, actors and processes. Originality/Value: The Novel approach to analyse the various issues of SCICM in a single supplier and multi retail network. And comparing of various aspects on inventory coordination mechanisms and CDSCIC and its impact on performance of supply chain process.
... It is deploying an external services provider to hire qualified labor for organizational usage (Kennedy et al., 2002). Beaumont (2006), describes it as one subtype of distributed work. Smith et al. (2006) see it as a technique that relies on the competence of external service provider to recruit labor for a specific organization. ...
This study examines the relationship between outsourcing strategies and organizational effectiveness of oil
companies in Rivers state. The study employed a cross-sectional research survey. Accessible population for the study is
ten (10) selected oil companies. A total of 998 staffs were surveyed. Simple random sampling techniq ue was employed
with a sample size of 286. A questionnaire was used to collect data from the respondents. Face validity was used to
ascertain the validity of the instrument while Cronbach’s Alpha coefficient was used to establish the reliability of the
instrument. Spearman Rank Order Correlation Coefficient was used to test the hypotheses with the aid of Statistical
Package for Social Science (SPSS) version 20.0. It was found that outsourcing strategies have a significant positive
relationship with the organizational effectiveness of oil companies in Rivers State. The study concluded that outsourcing
strategies that are based on expertise orientation and corporate culture would improve the organizational efficiency of oil
companies. One of the recommendations is that managers should effectively implement outsourcing strategies, to
enhance organizational effectiveness.
... In general, outsourcing can be referred to as make or buy decisions on intermediate goods, to the hiring of temporary labour and to the use of external services (Kennedy, Holt, Ward, and Rehg, 2002). According to Beaumont, (2006) outsourcing can be said to be one sub-type of distributed work. It is the delegation of task or job from internal production to external entity, such as a sub-contractor. ...
This research assessed business process outsourcing on delivery of projects in time, on budget and of quality.
... It is deploying an external services provider to hire qualified labor for organizational usage (Kennedy et al., 2002). Beaumont (2006), describes it as one subtype of distributed work. Smith et al. (2006) see it as a technique that relies on the competence of external service provider to recruit labor for a specific organization. ...
... Poor service levels can result in the loss of customers and sales, whereas on the other hand excessive inventory results in unnecessary costs due to carrying large inventories (Hübner et al., 2013). To date, the importance of service level management has been widely studied in a number of different research areas, such as: multimedia service providers - Teixeira et al. (2012); service strategies in manufacturing - Löfberg et al. (2010) and service level agreements - Beaumont (2006). Hübner et al. (2013) studied the effect of competition on a retailing firm's incentive to provide quality. ...
Purpose
In today’s competitive retail industry the most critical success factor is customer service which is indicated by product availability. It is argued that in the retail industry, product availability is an important measure of quality. The single most vital decision that every retailer needs to make is, how to maximize service level while keeping minimum inventory level. The purpose of this paper is to explain and demonstrate the relationship between inventory level and customer service level.
Design/methodology/approach
This study examines an inventory system utilizing a simulation model based on company data obtained from a retail fast-moving-consumer goods chain operating in Thailand.
Findings
The results suggest that the achievement of a responsive service level is dependent on managing an efficient supply chain in addition to logistics cost reductions. The findings also reveal the effect the inventory level has on the service level. From the findings of this study, demand variability and service level have been found to have the most significant influence on the inventory level. From the findings, it can also be shown that real and accurate information is very important for service supply chains.
Practical implications
The paper promotes the importance of having an appropriate inventory management policy for a retail chain which should be driven by retail companies in order to better balance inventory and service levels.
Originality/value
The relationship between the inventory level and customer service level lead to different outcomes at different combinations of inventory and service levels. Significant relationships were found between inventory and service levels.
... Accordingly, SLAs are structured between the parties to better manage service expectations and ensure that relationships remain on course. SLAs contain details of services to be provided, metrics to measure performance such as adherence to delivery schedules, and can also include penalty and bonus clauses for under-or over-performances (Beaumont, 2006;Currie et al., 2008). Having a mutually negotiated agreement helps both sides to identify possible risks and reiterate their obligations to comply with the directives as have been laid down in the document. ...
Purpose
The paper aims to capture the nuances of two client–supplier relationships to offer new insights on the influences of transactional, knowledge and social elements in outsourcing partnerships.
Design/methodology/approach
The study has used descriptive case studies with narrative storylines. Interviews were conducted with three relationship managers (boundary gatekeepers) to understand preferred governance practices between clients and suppliers in diverse economic markets.
Findings
Experiences of three real-life cases engaged in offshore outsourcing have helped to identify the market, operational knowledge and social influences in a relational exchange. Findings reveal that offshore partnerships are first constituted with service-level agreements, which set control measures and layout business expectations from both partners. Boundary gatekeepers bring further accountability across firms by designing social networks for capturing and sharing of knowledge, thereby reducing each partner’s perception of risk. As firms evaluate transactional, knowledge and social elements for building a futuristic relational exchange, more disaggregated and dispersed enterprises evolve as new opportunities are explored in foreign markets.
Research limitations/implications
The retrospective nature of the client–supplier partnership is a limitation in this research study. However, retrospection adds to experience, and to practice perspectives made in hindsight, and therefore has a positive influence in this study.
Originality/value
This paper shares real-world experiences that can be used by scholars and practitioners to better understand how relational governance practices operate in a global socio-economic setting.
... Em suas pesquisas, Beaumont (2006) reconhece na literatura acadêmica relativa incapacidade de acompanhar o interesse e as inovações organizacionais movidas pelas organizações quando o assunto são as relações de fornecimento de serviços (sourcing). Quando estas são abordadas, a maioria da literatura descreve aplicações específicas de outsourcing e de SLA no contexto da Tecnologia da Informação (TI). ...
Lethicia Mallet Vivas (CEFET-RJ) lelemvivas@yahoo.com.br Haja vista a crescente popularidade da manutenção industrial terceirizada, a presente artigo tem por objetivo introduzir no meio acadêmico uma tipificação dos modelos de contratação comumente utilizados pelo mercado de prestação desse serviiço. A pesquisa buscou compreender quais características eram mais indicadas na diferenciação entre modelos. Feito isso, apresenta-se um extensivo trabalho de comparar as vantagens e desvantagens de cada modelo. A conclusão do artigo lida com a discussão sobre a pertinência da tipificação apresentada para além dos serviços de manutenção. Belo Horizonte, MG, Brasil, 04 a 07 de outubro de 2011. 2 1. Introdução Iqbal & Nieves (2007) afirmam que diversas mudanças contemporâneas no ambiente de negócios alteram dramaticamente os custos de transação dos negócios. Os autores citam, por exemplo, a decorrente imposição de menores restrições físicas aos modelos de negócio, estratégias e relacionamentos; e a dispersão a níveis inéditos do conhecimento e da capacidade produtiva. Aron & Singh (2005, apud. McIVOR, 2009) complementam este quadro de transformações atentando para o maior dinamismo no desenvolvimento de produtos e do mercado de serviços – tanto localmente quanto no mercado internacional de sourcing. Desta forma, as empresas passaram a constantemente reconsiderar suas decisões do que fazer, comprar ou alugar. O resultado deste panorama são maiores dinamismo e flexibilidade na definição dos mercados por serviços. As empresas agora são capazes de embarcar em relações colaborativas com prestadores de serviço, que por sua vez, são capazes de prover capacitações e recursos antes inacessíveis (TUNSTALL, 2007).
... Accordingly, SLAs are structured between the parties to better manage service expectations and ensure relationships remain on course. SLAs contain details of services to be provided, metrics to measure performance and adherence to delivery schedules, and can also include penalty and bonus clauses for under-or overperformances (Beaumont 2006;Currie et al. 2008). Having a mutually negotiated agreement helps both sides to identify possible risks and reiterate their obligations to comply with the directives as have been laid down in the document. ...
Offshore outsourcing has facilitated exchange of knowledge and services with clients and suppliers situated in diverse economic markets. To better manage knowledge exchange and mitigate risks from international partnerships, client and suppliers use various elements of relational governance practice. This study investigates three cases engaged in supplier-client relationships, to examine how the operational and social aspects of the knowledge exchange are governed. Findings reveal that offshore partnerships are first constituted with service level agreements, which set control measures and layout business expectations from both partners. Boundary gate keepers bring further accountability across firms by designing social networks for capturing and sharing of knowledge, thereby reducing each partner's perception of risk. The study contributes to existing studies on offshore knowledge markets and explains how relational governance practices operate in a global socio-technical setting. In doing so, the study demonstrates how knowledge processes, social networks and market economies influence relational elements for supporting the exchange.
... In academia the necessity for categorizations of services is emphasized in numerous works. Buco et al. [15], Beaumont [16] or Mayerl et al. [17], for example, suggest classifications of services into the groups "basic services" and "combined services". In their works, basic services are referred to as "technical services", "constitutional utility" or "service elements", for instance. ...
Today, the management of service quality is posing a major challenge for many service systems formed by providers and their business customers. We argue that the trade-off between service costs and benefits incurred by both of these parties is not sufficiently considered when service quality is stipulated. Many Service Level Agreements are tailored to fine-grained IT services. The impact of service levels defined for these technical services on customers' business processes, however, is difficult to estimate. Thus, it is a major objective to identify IT services that directly affect the performance of customers' business departments. In this research-in-progress paper we present first results of an empirical study aiming at the definition of IT services and corresponding service level indicators from a customer business department perspective. Based on an initial literature research and a number of semi-structured interviews - with users working in different departments of a public IT customer and having different backgrounds and IT knowledge - we have identified a set of common, "directly business-relevant" IT services. Thus, we take an important first step towards the application of Service Level Engineering, i.e. the derivation of business-relevant performance metrics and associated cost-efficient target values to precisely identify efficient service quality.
... . Furthermore, the firm and its suppliers must foster a culture that enables relational capabilities to be strengthened. To develop those relational capabilities it is essential to define what Beaumont (2006) identify as the service level agreement that will help customers define their needs, assist negotiations between parties and provide mechanisms for modifying the agreement and monitoring the supplier's performance. ...
Purpose
The purpose of this paper is to analyse the impact of relational capability compared to that of internal capability on outsourcing, and the influence of relational capability as a moderating variable between outsourcing and internal capabilities. The paper aims to integrate the internal and relational perspectives in a single model of strategic evaluation.
Design/methodology/approach
This work analyses the outsourcing process in a representative sample of firms operating in a region of Spain. To accomplish the research objectives, a personal survey was conducted using a questionnaire to evaluate 13 activities of the order distribution process in the supply chain.
Findings
The results indicate that internal capabilities have a negative effect on outsourcing while relational capabilities have a positive effect. They also show that, the greater the relational capabilities of an operation are, the less significant the relationship between internal capabilities and outsourcing will be.
Practical implications
Firstly, by using the proposed model, companies can evaluate their internal and relational strategies and compare them to the sector averages at a given moment. Secondly, they can detect opportunities to improve competitiveness and develop relational capabilities for some of the activities that they wish to outsource. This work helps identify which process activities to outsource and which type of relationship should be maintained to develop a set of capabilities.
Originality/value
This paper provides a comprehensive application of a theoretical framework in a new model of strategic evaluation of outsourcing. Another innovation of this work is the introduction of relational capabilities as a variable moderating the relationship between internal capabilities and outsourcing.
... Research suggests that 30% of outsourcing contracts do not achieve their goals and that up to 60% are not fully satisfied with their supplier (Deloitte, 2005;Logan, 2000), with a number referring to their relationships as "difficult and uncomfortable" (Harris et al., 2005). Core issues include the development of strong and trust-worthy relationships (Beaumont, 2006;Johnsen et al. 2006). ...
Outsourcing requires staff from two organisations to work together to achieve sometimes conflicting ends. Practitioner advice suggests a matching of organisational cultures; however, whilst there is some research on the impact of national culture in offshore outsourcing, little attention has been paid to the issue of organisational culture, nor the type of interventions that may be useful. This paper discusses research on differences in organisational culture between suppliers and clients in outsourcing, and potential best-practice in staff development to reduce problems.
Business executives are under significant pressure to add value to their organizations, particularly by identifying ways to reduce operational costs. Outsourcing continues to be an effective strategy for achieving these goals, though careful consideration is crucial before implementation. This study investigates the impact of IT outsourcing on small and medium enterprises (SMEs), specifically examining operational costs and sales revenue. It explores the popularity of IT outsourcing and the motivations behind businesses choosing to outsource their IT functions. Through quantitative analysis, the study assesses operational costs and factors influencing sales revenue in SMEs. The study’s findings indicate that there is no correlation between operational costs and sales revenue in the context of IT outsourcing among SMEs. As a result, it is recommended that SMEs closely monitor other business drivers prior to implementing IT outsourcing strategies.
Purpose
This paper aims to involve both the development of a quantitative measure of outsourcing success that integrates recent research findings on expectations and applying the hierarchy-of-effects (HOE) model to investigating the influence of success on client satisfaction and recommendation intention.
Design/methodology/approach
This paper conducted a global survey of information systems managers and Chief Information Officers from firms who have engaged in outsourcing and analyzed the data using partial least squares (PLS).
Findings
The study analysis demonstrates the impact of client expectations on perceived outsourcing success, client satisfaction and intention to recommend. This paper also discusses how findings of this study provide important implications for both researchers and practitioners.
Originality/value
To further investigate the theoretical trend toward examining the impact of expectations on outsourcing success, this study extends the foundational success research by quantitatively demonstrating the robustness of an outsourcing success construct that incorporates expectations. Moreover, this study extends the traditional models of success by incorporating factors from each of the stages of client behavior, including cognition, affect and conation.
Purpose
The authors’ contribution to the literature involves using expectation disconfirmation theory (EDT) to examine the impact of expectations on outsourcing success. This study hypothesizes that perceptions of outsourcing success are contingent on disconfirmation between clients’ expectations and the perceived performance of fundamental issues related to the outsourcing relationship.
Design/methodology/approach
To test the hypothesis, this study surveyed chief information officers, vice presidents and senior information systems managers to determine their perceptions of vendors. This study analyzed the data using structural equation modeling.
Findings
The findings demonstrate that the existing outsourcing success factors are more precisely depicted as multidimensional success factors that predict managerial perceptions of outsourcing success. This study uses a novel perspective to identify the multidimensional nature of the outsourcing success factors that might have remained latent without further analysis.
Originality/value
Using EDT, this study extends the understanding of outsourcing success as not merely composed of unidimensional factors but as a collection of multidimensional outsourcing success factors. This research demonstrates that not only do these success factors predict outsourcing success, but they can also be grouped together to provide a diversified, yet parsimonious view of how expectations relating to certain success factors influence a client’s perception of outsourcing success.
Die mit der steigenden Automatisierung einhergehende Substitution des Produktionsfaktors Arbeit (Mensch) durch den Produktionsfaktor Anlage (Maschine) erhöht die Bedeutung ei-nes effizienten Umgangs mit der kapitalintensiven Ressource Anlage. Hierzu rücken immer stärker Bestrebungen zur ganzheitlichen Berücksichtigung dieses Themas im Unternehmen in den Fokus. Ein strategisches Asset Management System erfüllt diese Anforderungen und ermöglicht eine lebenszyklusoptimierte Bewirtschaftung sämtlicher Anlagen mit dem Ziel der Minimierung der Lebenszykluskosten.
The economic governance in the Eurozone and the EU is not the same after the crisis. The results of the financial crisis changed the EU’s way of thinking about addressing issues such as the public debt service, the banking system functioning, the ECB’s role and the depth of its intervention. When R. Mundell (1961) developed the theory of optimum currency areas the Eurozone was certainly not in his mind, while the same view is maintained by P. Krugman (2009) too. However, the EU financial and economic sector is entirely different today. After tens of EU bodies meetings there is now a number of new rescue mechanisms, institutions and regulations. But, are all these changes well enough to get the Eurozone out of the crisis? Certainly not, but they had never been given in the past as well. The “moral hazard” and the lack of a last resort lender did not finally work as the EU leaders thought. The Eurozone is the core of the EU and it is slowly evolved, step by step, from an economic to a political union. The EU has at its disposal the European Stability Mechanism (ESM) with a lending capacity of over half a billion euros, while there have been also other mechanisms like the EFSF and the EFSM, with the total sum of granted loans by these three mechanisms to date being amounted to over 350 billion euros. Additionally, the EU heads rapidly for a banking union through the establishment of new institutions like the Single Resolution Fund (SRF), the Single Resolution Mechanism (SRM) and the Single Supervisory Mechanism (SSM), which will supervise over 180 systemic banks in the Eurozone. Furthermore, the ECB used non-standard monetary policy mechanisms in order to support countries and banking institutions. The best known mechanism is the Quantitative Easing (QE) programme worth about one trillion euros. The new model of economic governance moves to a progressive direction, but the size of the instruments may not be enough for the EU to exit the crisis.
Pages 29 - 45
Successful outsourcing strategy is a key enabler of sustainable competitiveness of established firms engaged in technology-intensive business. This study proposes a research framework of a successful outsourcing process composed of resources, dynamic capabilities and created values, from a review of relevant literature and in-depth case study of four leading medical device firms. The research results specify four outsourcing types according to the characteristics of outsourced resources, and their alignment with resources owned by the outsourcer. Each type of outsourcing is positively affected by the outsourcer’s dynamic capabilities, namely sensing, integrating capability, absorptive capability and technology transfer capability. In addition, the significance of the outsourcee’s size according to each outsourcing type is also found. As a result of successful outsourcing experience, the outsourcer can reap the benefits of enhanced dynamic capabilities, i.e., market-oriented innovation, strategic flexibility, agility and increased efficiency, thereby creating a virtuous cycle of sustainable competitiveness in a volatile environment.
Managing service delivery process requires a seamless flow from specifications (service-level agreements, SLAs) to operational performance metrics including the aspects of quality and flexibility. Coproduction challenges the delivery process as customer may own and control the physical asset. Managing the installed base and assets which are customer’s or third party’s property is a typical feature of advanced industrial services.
Service level agreements are vital to any information technology (IT) outsourcing project and have become increasingly popular in today’s outsourcing world. Although appropriate mechanisms for constructing effective SLAs are already created, they have not been used in comparative studies
The increased complexity and variety of information systems outsourcing poses challenges for the successful management of sourcing projects. Stefanie Leimeister examines different types of IT outsourcing relationships and their governance structures depending on the outsourcing clients' underlying expectations. Based on a variety of current theories from the fields of information systems, business administration, and social science, she develops a governance model for the successful management of IT outsourcing projects. Following a multi-method approach and also based on a quantitative empirical investigation of German IT leaders and CIOs, she proposes appropriate governance mechanisms for the specific management of each outsourcing client type. The author derives actionable advice for applicable strategies and an effective allocation of resources for an outsourcing venture. © Gabler Verlag | Springer Fachmedien Wiesbaden GmbH 2010. All rights reserved.
ackground: The Malawi government in 2002 embarked on an innovative health care financing mechanism called Service Level Agreement (SLA) with Christian Health Association of Malawi (CHAM) institutions that are located in areas where people with low incomes reside. The rationale of SLA was to increase access, equity and quality of health care services as well as to reduce the financial burden of health expenditure faced by poor and rural communities. This thesis evaluates the implications of SLA contracting out mechanism on access, utilization and financial risk protection, and determines factors that might have affected the performance of SLAs in relation to their objectives. Methods: The study adopted a triangulation approach using qualitative and quantitative methods and case studies to investigate the implications of contracting out in Malawi. Data sources included documentary review, in-depth, semi-structured interviews and questionnaire survey. The principal agent model guided the conceptual framework of the study. Results: We find positive impact on overall access to health care services, qualitative evidence of perverse incentives for both parties to the contracting out programme and that some intended beneficiaries are still exposed to financial risk. Conclusion: An important conclusion of this study is that contracting out has succeeded in improving access to maternal and child health care as well as provided financial risk protection associated with out of pocket expenditure. However, despite this improvement in access and reduction in financial risk, we observe little evidence of meaningful improvement in quality and efficiency, perhaps because SLA focused on demand side factors, and paid little attention to supply factors: resources, materials and infrastructure continued to be inadequate.
Condition-based maintenance is analyzed for multi-stage production with a separate maintenance department. It is assumed that the conditions of the machines deteriorate as a function of multiple production parameters and that the task of maintenance is to keep up predefined operational availabilities of the individual machines. In this context the problem of determining the optimal machine condition that triggers the release of a preventive maintenance job and the problem of scheduling maintenance jobs at the maintenance department arise. Existing approaches to solve these problems either assume a monolithic production/maintenance system or concentrate on a decentralized system in which the information flow and resource transfer do not cause delays. With our paper we aim at (1) deriving a triggering mechanism that is able to cope with relaxed assumptions and at (2) developing specific priority rules for scheduling maintenance jobs. Therefore, in this paper a specific continuous condition monitoring and a suitable information exchange protocol are developed, factors determining the release situation are operationalized, impacts of choosing the triggering conditions are identified and the components of specific priority rules for scheduling maintenance jobs are clearly elaborated. Finally the performance of the resulting solution approach is analyzed by simulations. Thereby, relevant characteristics of the production/maintenance system, the maintenance task and relevant priority rules are varied systematically. This research contributes answers to the questions on how the exchange of local information can be structured, the parameters of condition-based maintenance can be set and on what maintenance-specific priority rules can be applied in case of incomplete information about deterioration in a decentralized multistage production/maintenance system.
Modelling for change management in construction might benefit from experiences from other industries. This study compares reasons for change as well as change practices in interorganizational relationships in construction and information technology. Sixteen contractual relationships have been studied through a questionnaire and interview survey conducted among both clients and providers. Project-type relations are contrasted with more continuous service support contracts. More than their providers, clients tend to ascribe high change frequencies to an increase in technical understanding during projects. Early provider participation is associated with lower change frequencies, while the strength of incentives is less influential. The ease of transforming changes into new projects varies between technologies. Irreversibility is important, as well as relations between pre-investigations and the successive revealing of initial conditions, together with the life-cycle of formal and informal communication. Findings can be used for transfer of agile practices.
Summary This research reports the findings from a study on nine knowledge process outsourcing (KPO) vendors working in the financial services industry. It delineates financial business processes along a low to high-end continuum. Findings suggest that KPO vendors are gradually moving along the value pathway offering more complex intellectual value activity based products and services to clients. However, they face many challenges including gaining the confidence of potential clients about outsourcing knowledge-intensive work, and finding effective solutions to mitigate outsourcing risk. Our paper concludes by developing a taxonomy of KPO scenarios to provide a backdrop for further academic research and to illustrate current practice.
IT services supporting business operations are an increasingly critical factor for business success today. The management of service quality levels, however, remains a major challenge for many companies. Especially in conjunction with IT outsourcing relationships there are many issues which require advanced methods and concepts - but there are no current studies that provide a structured overview on these and discuss their importance. Therefore, in this research in progress paper we present the results of a qualitative study on current challenges in IT outsourcing regarding the management of service quality levels. Based on a number of interviews with experts in Service Level Management we have identified ten issues representing the most pressing demands for improved solutions from the customers' point of view. These findings form the basis for a research agenda in the field of Service Level Management.
The emergence of new service science approaches to business problems in information technology (IT) services offers new, unusually relevant insights for the senior management of vendors in this business area. This research examines how service-level agreement contract flexibility should be designed when the technological and business market environments result in volatility of demand, based on an understanding of related changes in the cost drivers that underlie IT services contracts. Our approach draws on a blend of well-known methods from financial economics—the real option pricing method and the contingent claims analysis method. In particular, our research examines a setting in which a vendor provides IT services to a client according to a prenegotiated IT services contract in the presence of demand volatility. We analyze the motivation of and value consequences for a vendor that offers the client the flexibility to opt out of the contract. For example, the client might switch to another vendor, or backsource and provide its own services internally. Our core results offer important foundational thinking for how to specify various forms of IT service-related flexibility in terms of put and call options from the point of view of an IT services vendor, so that their value and exercise timing can be estimated. We show that the client firm's demand trigger value for deciding when to backsource its IT services varies, and it depends on the degree of demand volatility as well as the usage-based fees charged by the vendor. Working from our modeling approach, we also are able to characterize the extent to which a vendor can benefit from bearing the costs of making a backsourcing flexibility option available to its client.
El capítulo 9: Conclusiones e implicaciones, escrito tanto en inglés como en español Tesis Univ. Granada. Departamento de Organización de Empresas. Leída el 17 de abril de 2008
Empresas vêm utilizando a terceirização como forma de organização, formando redes de fornecedores ou usando-a como uma tática para implementar uma renovação estratégica. Além disso, a terceirização tornou-se uma técnica aceitável inclusive em setores de governo. Entre os serviços terceirizados, existem alguns remunerados no todo ou em parte com base nos resultados obtidos. Neste tipo de terceirização de serviços há uma dependência entre as condições de remuneração e o desempenho do fornecedor do serviço contratado, o que torna relevante seu estudo, como contribuição ao conhecimento sobre a coordenação. O objetivo desta dissertação é estudar fatores de desenho de contratos incentivados na terceirização de serviços, visando responder à questão de pesquisa: “Como contratos incentivados que vêm sendo utilizados para terceirizar serviços estão alinhados com fatores apontados na literatura?”. A intenção é contribuir para o aperfeiçoamento de processos de coordenação da cadeia de serviços terceirizados. Foram estudadas características de serviços e da cadeia de suprimento de serviços, buscando referências e contrapontos com a cadeia de suprimento de produtos, bem como mecanismos de coordenação. Do estudo da literatura foram levantados fatores relevantes para o desenho de contratos de performance a partir dos quais elaborou-se um Quadro de Referência, validado através da confrontação e verificação do alinhamento de elementos de aplicações práticas ao Quadro de Referência elaborado. A unidade de análise é o contrato praticado para terceirizar serviços remunerados por performance. No Estudo de Caso foram analisados oito contratos utilizados por três empresas estaduais que prestam serviços de água e esgotos, as quais vêm adotando terceirização de serviços com remuneração atrelada, no todo ou em parte, aos resultados obtidos pela empresa contratada. Os resultados da análise indicam a priorização, por parte dos contratantes, de alguns fatores no desenho dos contratos de performance. Outros fatores não receberam tanta atenção, apesar de serem apontados na literatura como relevantes. Verificou-se a ênfase no estabelecimento de medidas de performance, que nem sempre coincide com a ênfase na eficácia dos incentivos para obter a condição de coordenação pretendida. Como contribuição à administração, apresenta-se o Quadro de Referência que oferece uma lista básica de fatores de desenho e um modelo para auxiliar o gestor no desenho de contratos de remuneração atrelada ao desempenho. Os fatores de desenho foram aplicados a dois grupos de serviços de natureza distinta e permitiram comparações ‘intra-grupos’ e ‘entre grupos’, o que sugere consistência e aplicabilidade, independentemente do tipo de contrato estudado. A partir do estudo desenvolvido, porém, não é possível estabelecer a hierarquização entre os fatores de desenho, pois não foi estudada uma eventual ponderação, ou importância relativa de cada um dos fatores em relação aos demais. Outra ressalva é de que se trata de fatores de desenho cuja função é auxiliar a elaboração de contratos de performance, que não devem ser confundidos com as regras do contrato em si. Os fatores de desenho do Quadro de Referência podem ser usados como orientação para estabelecer as regras de um contrato, facilitando a verificação do alinhamento de interesses e das condições de coordenação. Podem ser utilizados ainda para ordenar alternativas e verificar pontos fortes e pontos fracos de cada alternativa, em relação aos fatores de desenho.
The purpose of the paper is to evaluate the development and use of service level agreements (SLAs) in a Belgian hospital from a client's point of view.
The paper is based on a theoretical framework indicating the variables that influence the relationship between the use of a specific governance mechanisms and performance, a new instrument was developed and applied on a convenience sample of 107 SLA clients from a Belgian hospital.
SLAs are useful for hospitals, as they improve people's insight into processes, stimulate people to think about performance measurement and, in some cases, also lead to improved services. The main advantages of SLAs do not really lie in improved relationships and better fits with clients' needs, but in improved process mapping and improved performance measurement. The questionnaire from this research study proves to be a useful and reliable instrument for evaluating internal SLAs from a client's point of view.
The results of this study are limited, as they are only based on one Belgian institution. Other limitations include the posttest-only research design and the unequal distribution of the respondents over the different SLAs. Recommendations for future research include applying the questionnaire in other Belgian hospitals and in settings where both a pretest and posttest can be conducted.
As far as known, no other studies have yet evaluated the effectiveness of SLAs in the healthcare sector. While a fairly-substantial amount of scientific literature deals with SLAs in the world of ICT, this literature is often very specific and cannot always be applied to other service sectors.
This paper presents research findings from an in-depth study on the global application service provider (ASP) industry. It explores the potential for Web-enabling enterprise resource planning (ERP) systems for small and medium-sized companies on a per-seat, per-month basis. Findings from field research suggest that, while the ASP business model offers many advantages for customers, few companies are prepared to outsource their mission-critical ERP systems to ASPs. This situation has led to many large and small ASP vendors to re-think their strategic business plans, with some high profile failures. Evaluating the situation from a market, organizational and technical analysis of the ASP industry, this paper argues that, while the ASP model is currently immature, the next three years will see the emergence of more clearly defined enterprise ASP offerings from key players in the software and computing services industry.
This article provides insight on the evolution and emergence of the supply chain management(SCM) concept and shares conclusions about the future of SCM from the perspective of educators, researchers, and practitioners. Based on a survey of SCM educators, the article seeks to delimit the scope or domain of SCM and how the boundaries have changed and continue to change. This is done by contrasting four perspectives on SCM versus purchasing: traditionalist, relabeling, unionist, and intersectionist.
This paper proposes a novel language for Service Level Agreements (SLAs) for dynamic and spontaneous electronic services. In a cross-organizational setting, it is important for customers of a service to obtain, monitor and enforce quality of service (QoS) guarantees by service providers, usually expressed in the form of SLAs. Since the supervision and management of SLAs and the provisioning of corresponding systems should be automated for economic reasons, we need a formal language to define an SLA. If moreover, providers and customers want to sign custom-made SLAs, the SLA language, correspondingly, must provide a large degree of flexibility. The SLA language described in this paper aims at providing the needed flexibility by means of an XML-based representation and a runtime system for SLAs. Using this language, parties to a SLA can describe how parameters are measured and computed from raw metrics, the guarantees they want with respect to those parameters and the involvement of third parties to, e.g., verify independently SLA compliance.
We describe a novel framework for specifying and monitoring Service Level Agreements (SLA) for Web Services. SLA monitoring and enforcement become increasingly important in a Web Service environment where enterprise applications and services rely on services that may be subscribed dynamically and on-demand. For economic and practical reasons, we want an automated provisioning process for both the service itself as well as the SLA managment system that measures and monitors the QoS parameters, checks the agreed-upon service levels, and reports violations to the authorized parties involved in the SLA management process. Our approach to these issues is presented in this paper. The Web Service Level Agreement (WSLA) framework is targeted at defining and monitoring SLAs for Web Services. Although WSLA has been designed for a Web Services environment, it is applicable as well to any inter-domain management scenario, such as business process and service management, or the management of networks, systems and applications in general. The WSLA framework consists of a flexible and extensible language based on XML Schema and a runtime architecture comprising several SLA monitoring services, which may be outsourced to third parties to ensure a maximum of objectivity. WSLA enables service customers and providers to unambiguously define a wide variety of SLAs, specify the SLA parameters and the way they are measured, and relate them to managed resource instrumentations. Upon receipt of an SLA specification, the WSLA monitoring services are automatically configured to enforce the SLA. An implementation of the WSLA framework, termed SLA Compliance Monitor, is publicly available as part of the IBM Web Services Toolkit.
This paper proposes a novel language for Service Level Agreements (SLAs) for dynamic and spontaneous electronic services. In a cross-organizational setting, it is important for customers of a service to obtain, monitor and enforce quality of service (QoS) guarantees by service providers, usually expressed in the form of SLAs. Since the supervision and management of SLAs and the provisioning of corresponding systems should be automated for economic reasons, we need a formal language to define an SLA. If, moreover, providers and customers want to sign custom-made SLAs, the SLA language, correspondingly, must provide a large degree of flexibility.
The SLA language described in this paper aims at providing the needed flexibility by means of an XML-based representation and a runtime system for SLAs. Using this language, parties to an SLA can describe how parameters are measured and computed from raw metrics, the guarantees they want with respect to those parameters and the involvement of third parties to, e.g., independently verify SLA compliance.
It has become increasingly desirable for companies worldwide to outsource their complex e-business infrastructure under the utility computing paradigm by means of service level agreements (SLAs). A successful utility computing provider must be able not only to satisfy its customers' demand for high service-quality standards, but also to fulfill its service-quality commitments based upon business objectives (e.g., cost-effectively minimizing the exposed business impact of service level violations). This paper presents the design rationale of a business-objectives-based utility computing SLA management system, called SAM, along with implementation experiences.
Increasingly, services such as E-commerce, Web hosting,
application hosting, etc., are being deployed over an infrastructure
that spans multiple control domains. These end-to-end services require
cooperation and internetworking between multiple organizations, systems
and entities. Currently, there are no standard mechanisms to share
selective management information between the various service providers
or between service providers and their customers. Such mechanisms are
necessary for end-to-end service management and diagnosis as well as for
ensuring the service level obligations between a service provider and
its customers or partners. In this paper we describe an architecture
that uses contracts based on service level agreements (SLA) to share
selective management information across administrative boundaries. We
also describe the design of a prototype implementation of this
architecture that has been used by us for automatically measuring,
monitoring, and verifying service level agreements for Internet services
SLAng is an XML language for defining service level agreements, the part of a contract between the client and provider of an Internet service that describes the quality attributes that the service is required to possess. We define the semantics of SLAng precisely by modelling the syntax of the language in UML, then embedding the language model in an environmental model that describes the structure and behaviour of services. The presence of SLAng elements imposes behavioural constraints on service elements, and the precise definition of these constraints using OCL constitutes the semantic description of the language. We use the semantics to define a notion of SLA compatibility, and an extension to UML that enables the modelling of service situations as a precursor to analysis, implementation and provisioning activities.
Competition elevates the importance of controlling costs in ways that are positive, vital and long-lasting. Strategic sourcing for capital and operating expenses is one such method.
A description is given of Customer Service level concepts from the distributor point of view. The author believes different service rules do apply and suggests that lost sales is a more significant business criterion than service level percentages traditionally used for performance measurement.
This paper gives a general overview of the service level management (SLM) approach, which can offer significant advantage to service providers competing in the current European market. Starting from a theoretical approach, concepts are then applied to telecommunications scenarios focusing on the provision of data services and the Internet protocol (IP). Major concepts related to service level agreements (SLAs) and SLA management systems are analysed in greater detail defining how such concepts can be applied to IP networks. Finally some details are given concerning possible parameters to be applied to the provision of IP services, including both permanent and switched services.
Service level agreements (SLAs) are informal contracts agreed between supplier and user of a service. Defines the performance required of the service and puts in place measurement mechanisms whereby actual performance against targets can be monitored. Through placing emphasis on closer communication between customer and supplier and providing objective measures of actual performance against targets, the adoption of SLAs can provide a significant contribution to an organization’s pursuit of TQM goals. Outlines the SLA process and illustrates benefits which accrue through the adoption of SLAs.
This paper reports on data pertaining to outsourcing collected from a survey administered in 2002 in Australia. The underlying assumption was that outsourcing is becoming popular for sound business reasons such as economies of scale and enabling executives to concentrate on core business activities. This paper explores the outsourcing decision (to outsource, not to outsource, or to discontinue outsourcing), especially reasons for (not) outsourcing. Most of the reasons have been anticipated in the literature. The strongest group of reasons (termed “Operational”) pertained to cost savings and improving performance, but outsourcing is also used to access skills and resources not available in-house. The most important impediment to outsourcing was ascertaining relevant costs, and formulating and quantifying requirements. We describe the methodology, report findings and allude to future research.
The risk-remedy method is beginning to replace cost-benefit or weighted scoring methods in the evaluation of information technology outsourcing tenders by the Australian Public Service. This paper describes the use of the method. It also describes some of the lessons that have been learnt from the use of the method in six tender evaluations: use the correct requirements, use requirements correctly, consider the cost of bidding, consider the cost of delay, check the bids carefully and use a design rather than a selection approach.Journal of Information Technology 1999 14, 203211. doi:10.1080/026839699344692
The measurement of service quality continues to be a challenging research theme and one of great practical importance to service providers and regulatory agencies. The key challenges begin with the identification of the set of potentially important dimensions of service quality perceived by passengers, current and potential. We then have to establish a way of measuring each attribute and identifying their relative importance in the overall calculation of satisfaction associated with existing service levels. Once a set of relevant attributes has been identified, this information can be integrated into programs such as monitoring and benchmarking, and even in contract specification. This paper, building on earlier research by the authors, investigates ways of quantifying service quality and comparing the levels within and between bus operators. The importance of establishing suitable market segments and the need to scale the service quality index for each operator to make meaningful comparisons is highlighted.
Increasingly, Internet services are being deployed over an infrastructure that spans multiple control domains. These services require cooperation between multiple organizations, systems and entities. Currently, few standard mechanisms exist to share selective management information between the various service providers or between service providers and their customers. Such mechanisms are necessary for end-to-end service management and diagnosis as well as for ensuring the service level obligations between a service provider and its customers or partners. This paper describes an architecture that uses contracts based on service level agreements (SLAs) to share selective management information across administrative boundaries. The design of a prototype implementation for automatically measuring, monitoring, and verifying service level agreements for Internet services is also described.
In Australia, popular discussion of the growing market in outsourcing information technology IT has been spurred by decisions of several large companies and the Australian government to outsource IT operations but there has been little academic research into IT outsourcing in Australia. This paper reports on research into Australian IT outsourcing based on data collected in 1999. The primary research objectives were to identify the IT functions that were outsourced and the reasons for outsourcing. Secondary research objectives were ascertaining the incidence of IT outsourcing amongst Australian organisations, the costs and benefits of IT outsourcing, possible changes in modes of and motivations for IT outsourcing and factors that are associated with successful IT outsourcing arrangements. The research used quantitative and qualitative methods. A survey was used to collect data from 277 informants. Six interviews were used to explore managers' reasons for outsourcing and relate these to the success of outsourcing arrangements. The nature of and motivations for outsourcing have evolved; for example, cost saving is not if it ever was the prime motivator. The three most important factors driving outsourcing in Australia are access to skills, improved service quality and increasing managers' ability to focus on core business activities. Decisions to outsource were weakly associated with company size but not with industry sectors. The factors most associated with successful IT outsourcing were the cultural match between the service provider and client, and the nature of the contractual arrangements-partnerships are more fruitful than rigidly interpreted black letter contracts. Outsourcing not just of IT is becoming increasingly popular; we suggest reasons for this and propose further research.
Service-level agreements (SLAs) have been claimed to be an excellent vehicle for organisational improvement where there is a substantial degree of departmental autonomy. Such a situation is likely to exist in NHS trust hospitals because of the differentiated nature of the work performed by each department, with varying degrees of specialisation and professionalism, access to patients, use of technology and differing cost bases but also an interdependence of the direct services to the support services. It is proposed that SLAs can be used to promote improved integration between departments, quality assurance and provide a framework for cost transfer charging. The article describes and analyses SLAs from an overview of the idea to the particular implementation to date at the Huddersfield NHS Trust. SLAs have been negotiated between the Directorate of Clinical Support and its customers, and these are supported by computerised measurement and reporting tools.
Managing central support services through service level agreements, The Government Accountants Journal
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Developing a method for measuring the service level of general hospitals with consulting stations
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Service level management at the distributor level, Production and Inventory Manage-ment The Complete Guide to Planning and Implementing Service Level Agree-ments
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How to Establish Service Level Agreements
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SLAs defined: meeting response time service level agreements in an integrated, multi-protocol network
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Beck, J. and Allegretti, B. (1999) SLAs defined: meeting response time service level agreements in an integrated, multi-protocol network, Enterprise Systems Journal, 14(3), pp.40– 44.