Service level agreements and managing relationships with your new payroll software supplier

Choosing the right supplier is only the first step in puchasing payroll software. Once installed, you need to ensure it works and that problems are addressed.

Service level agreements (SLAs) set out the level of service you expect from a supplier, and what remedies are expected if the service falls short of this level.

However, getting an SLA right can be difficult. Too restrictive, and it will be difficult to change if business needs evolve. Too casual, and you may find it difficult to resolve problems quickly.

“It’s vital that an SLA reflects what your business requirements are, and that this is well communicated to your supplier,” says Mina Kumari, HR director at Star, a UK-based internet service provider.

Specifications

An SLA should specify what service will be measured – and what will be excluded – and provide limits in areas such as service availability in different times, responsibility of each parties, escalation procedures and cost/service trade-offs.

“We spent a lot of time checking that the SLA supported the brief we’d written, and provided the support, back-up and business continuity that was required for our Oracle HR systems,” Kumari adds.

An agreement may also include a ‘management’ element, which specifies what will be measured, how it will be measured, how that data will be reported, conflict resolution procedures and a mechanism for updating the agreement as required.

Metrics

This means it is essential that both parties choose the right metrics to measure within the SLA. Think about what you want the payroll software to achieve and prioritise that; so if you want the system to be available across multiple time-zones, prioritise uptime. If it’s more important to keep data confidential, you might prioritise security. Whatever you choose, you must be able to measure it, and both parties should agree on how things will be measured.

Choose metrics that can be collected easily – there are software tools that can automatically capture many common SLA metrics, while others might be captured by reporting functions within payroll software. Don’t expect anyone to regularly and reliably collect data manually.

Defining metrics is pointless without baseline measurements. At the outset of the SLA, capture baseline statistics that are agreed upon by all parties.

Partnership

It’s easy for SLAs to become punitive, but it can be more effective if the SLA is two-sided, and treats your relationship as more of a partnership. Ensure that the metrics being measured don’t penalise suppliers for delays or mistakes made by your organisation.

Update

The most common mistake made with SLAs is to write them then forget about them. As your business changes, so should an SLA. Common reasons to change your SLA include changing market conditions, new technical infrastructure, improved metrics and measurements or changes in responsibilities.

To avoid this pitfall, experts advise creating a multi-tiered SLA incorporating separate documents covering legal, technical, operational and escalation procedures. This means it’s far easier to change one part of the agreement when the need arises.