On December 15, we welcomed Beacon Consulting Group to our growing Capital Markets practice. As a trusted advisor to North America’s asset management community, the company brings valuable thought leadership, benchmarking data, and middle- and back-office expertise that will help Accenture’s capital markets clients achieve and maintain an edge in an increasingly competitive market. A recent Beacon report on service level agreements (SLAs) is a case in point.
Does your firm need an SLA?
In recent years, asset management firms have increasingly turned to functionalization and outsourcing for efficiency gains and cost savings in their operations. These strategies are not without risk though.
Functionalized operations necessitate multiple hand-offs within a single process, which require close collaboration and coordination among business units. Outsourcing adds third-party service providers into the mix. If all players aren’t on the same page and pulling their weight, quality can plummet and deadlines can be missed. One of the best ways to communicate expectations and keep everyone on track is through SLAs.
What makes a good SLA?
SLAs can be formal or informal, between two business units or with an external party. Regardless of who is involved, an effective SLA will always:
- Define the scope of work.
- Identify the key responsibilities of each party.
- Specify the quality, accuracy and timeliness of deliverables.
- Explain how each parameter will be measured and assessed.
- Outline the consequences of service level violations.
Remember: The ultimate goal of an SLA is to help the parties involved identify and correct service level issues quickly and efficiently, so as to mitigate their impact on operations.
How to develop an SLA
SLAs should be realistic, measurable and enforceable. That requires understanding the underlying processes, identifying key metrics, and setting up systems and tools for reporting. It also means determining what constitutes a service level violation and establishing corresponding penalties. Consequences should vary depending on the severity of the violation, and whether the SLA partners belong to the same firm or two different entities.
At the end of the day, it’s important to remember that SLAs are meant to be constructive contracts that strengthen relationships. Done well, they can not only minimize risk, but also maximize benefits for everyone involved.
For more on developing and using SLAs, read “Maximizing the Value of Service Level Agreements”