Saturday, January 31, 2015

SLA vs KPI: Service Level Agreements vs. Key Performance Indicators

SLA vs KPI: Service Level Agreements vs. Key Performance Indicators

What is the difference between Service Level Agreement measurements and Key Performance Indicators? Well, although sometimes they are referred to as synonyms, there are a few differences.
Service Level Agreement (SLA) is an agreement between two parties regarding a particular service. Apparently SLA must contain quantitative measurements that:
  • Represent a desired and mutually agreed state of a service
  • Provide additional boundaries of a service scope (in addition to the agreement itself)
  • Describe agreed and guaranteed minimal service performance
On the other hand Key Performance Indicators (KPIs) are metrics that target service providers organization objectives – both tactical and strategic. Usually these metrics are used to measure:
  • Efficiency and effectiveness of a service
  • Service operation status.
It should be noted that not all metrics automatically become Key Performance Indicators. KPIs must be bound to the organization or service goals and must drive continuous improvement and efficiency.
If you have many customers for a service then SLAs may vary from customer to customer; however KPIs usually are common for a service.
Let us take a few examples that outline the differences. Consider a help desk service.
  • SLA examples (for a particular customer): reaction time, resolution time, compliance to agreed deadlines
  • KPI examples (organization or service oriented): average reaction time for all customers, service desk employee load, incoming ticket volume trend, required capacity to fulfil SLA promises to customers
To sum it up – SLAs are about minimal, expected and agreed quality of a service provided to a customer; however KPIs are about desired operation efficiency and organization goals. It is important to measure both service level compliance and key performance indicators in order to keep promises and excel service quality.

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