In the spotlight: Operating-Level Agreements

Increasingly, businesses around the world are adopting unique approaches for sourcing IT services. The focus is on sourcing options that not only offer best-in-class IT services but also cost benefits vis-à-vis increased contractual efficiencies. As a result, many customers have embraced multisourcing as a preferred choice. The multisourcing model works on the premise that different areas of IT services are sourced from leading, best-in-class vendors who offer specialized services in niche areas.

The multisourcing approach has already found many takers who are now looking at mechanisms to promote and ensure clear communication, interaction, and co-operation between multiple suppliers. The end goal being – increased agility, profitability, and timely delivery of end-to-end IT services. As such, frameworks that are more tangible and support the multisourcing model are being sought, thereby putting the spotlight on Operating-Level Agreements (OLAs).

Simply defined, OLAs refer to the agreement between the various vendors involved in the process of delivering IT services on how they will interact with each other to sustain performance and deliver superior results.

Implementing and establishing OLAs in a multi-vendor setting, is however, difficult. With multiple parties involved, it becomes necessary for the end documentation to be agreed upon and supported by all. One of the fundamental requirements of an effective OLA is that it should be clear, concise, and understandable by all vendors. The expectations should be unambiguous and undiluted by legalese or IT jargon. Even while establishing an OLA, a CIO must ensure that his team takes the responsibility for smooth service across the board. In no way should an OLA outsource accountability leaving the organization at the mercy of outside service providers.

A good OLA should mention specific services included in it and must lay down how key interactions will be handled. This largely includes interactions around work planning, information and report sharing, operational data, integration of activities with the service desk and governance and dispute resolution. It is also a good idea to regularly track your OLA as it may help enhance service delivery and provide a strong foundation for future sourcing decisions.

In the days to come, sophistication and expertise in the use of OLAs will play a key role in achieving multisourcing success. It's no surprise that various vendor management professionals and sourcing experts have already begun to consider it a selection criterion.

About the Author

Wipro Insights set up the Council for Industry Research, comprising of domain and technology experts from the organization, to address the needs of customers. It specifically looks at innovative strategies that will help them gain competitive advantage in the market. The Council in collaboration with leading academic institutions and industry bodies studies market trends to equip organizations with insights that facilitate their IT and business strategies. http://www.wipro.com/insights/

Email us at: wipro.insights@wipro.com

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