- Value [1] Best Practices
- Agreement Best Practices -- Below are some best practices to consider when drafting an agreement. In addition, guidance on
how to negotiate an IAA is provided by the Financial Management Service.
- Value [2] Formal Communications
- Formalize Communications -The IAA should include processes and structure for regular ongoing, emergency and priority alerts
and escalation paths to be established.
- Value [3] Business Outcomes
- Service Definition and Delivery - Define the expected business outcome of the services first, and then set the SLA. See "Service
Level Management" for more details.
- Value [4] Governance
- Governance and Performance Measurement -State contractually the frequency of service level reporting, at least on a monthly
basis depending on the service. Inquire about the use of online dashboards the supplier may offer to manage and track service
delivery in near-real time.
- Value [5] Performance Measurement
- Value [6] Cross-Indemnification
- Liability - Consider cross-indemnification while insisting that the service provider provide all reasonable due diligence
according to a set of industry standards (COBIT, ITIL, ISO, or other standards), and state that by not performing due diligence
and adhering to an agreed-upon standard that the service provider may be open to liability.
- Value [7] Negotiation
- Negotiate Incentives and Penalties -The provider should be driven to meet the established customer expectations and even exceed
it by adopting the performance based pricing criteria. If performance of the service provider exceeds expectations, then incentives
should be given; conversely, appropriate penalties should be imposed if objectives are consistently missed. One strategy for
penalties and incentives in SLAs is for the service provider to put the penalty into a "bank" if there is an issue. As long
as the provider makes a determined effort and meets the SLA within an agreed-upon time limit (depending on the severity of
the lapse and criticality of the service), the client absolves the provider of the penalty.
- Value [8] Incentives
- Value [9] Exit Strategies
- Ensure a Return Path - In case things do not occur according to expectations, make sure there's an exit strategy. Remember,
the service provider's reputation is at stake and they will work with the consumer to fix problems. See Step 7 for additional
details.
- Value [10] Termination Cost Limitations
- Termination Costs - Limiting the amount of termination costs that will be paid is an incentive for the outsourced supplier
to make the deal work and satisfy the customer in the initial transition years.
- Value [11] Service Level Agreements
- A separate but related document is the service level agreement (SLA). The SLA defines the performance measures the provider
agrees to provide. Service levels are derived from Customer/Partner Agency requirements and need to match the service provider's
capabilities. The SLA is part of an overall service management approach and serves as a consistent interface to the business
for all service and performance related issues. The SLA is typically incorporated by reference in the IAA. This helps to ensure
that the service levels defined are part of the business arrangement between the shared service provider and customers. Service
level management entails several best practices that the service provider should have in place, including:
- Value [12] Service Level Targets
- * Establishing and maintaining SLAs that document service level targets as well as roles and responsibilities of the service
provider and the Customer/Partner Agency;
- Value [13] Roles
- Value [14] Responsibilities
- Value [15] Measurement
- * Measuring, reporting and notifications on service performance vs. agreed service levels, and on service workload characteristics
such as number of Customer/Partner Agencies, volume and resource utilization;
- Value [16] Reporting
- Value [17] Notification
- Value [18] Feedback
- * Providing feedback on reasons and details of actions to be taken to prevent recurrence (e.g., in case where service level
targets are not met);
- Value [19] Monitoring
- * Monitoring and improving Customer/Partner Agency satisfaction with the services that are provided; and
- Value [20] Improvement
- Value [21] Satisfaction
- Value [22] Input
- * Providing inputs into service improvement plans. Service Level Management strives to establish and enhance relationships
and communication between the shared service provider and the Customer/Partner Agencies.
- Value [23] Agility
- Preventing Service Provider Lock-in -- A key element for agencies to consider when planning and implementing shared services
is the ability to remain agile. Agility enables agencies to prevent service provider lock-in and to be able to move to other
shared service providers within a reasonable amount of time and expense.
- Value [24] Exit Strategy
- Ensure Agreements Facilitate Agility and Exit Strategy -- Agencies should consider several factors in order to remain agile
when implementing externally provisioned shared services in their organization:
- Value [25] Interoperability
- Interoperability - A key challenge for shared services is ensuring interoperability from the outset. This is needed to help
prevent incompatibilities and guide providers and Customer/Partner Agencies on how to fit IT systems and business applications
together and facilitate communication and interoperability between components across the disparate Customer/Partner Agency
community. Well-architected designs that result in platform independent reusable components that take advantage of service
oriented architectures (SOA), modular business applications, and web services that use eXtensible Markup Language (XML) are
critical to help ensure that shared services meet initial Customer/Partner Agency requirements, and enable consumers to both
grow their business processes and make them extractable from a specific provider.
- Value [26] Open Standards
- When adopting a new shared service, determine whether a proprietary-based or open standards-based solution should be purchased.
While it may be difficult in some situations to obtain an open standards-based solution, Customer/Partner Agencies should
be aware that open standards increase their agility in moving to other providers. Open standard and constructs such as XML,
or open source software, provide levels of agility that help agencies make shared services implementations more agile.
- Value [27] Switching Costs
- Understand and document the switching costs involved in moving from one provider to another. Related questions that agencies
should address include: * Is the existing shared service provider contractually obligated to support the new service provider?
* Is the Customer or Partner Agency able to extract their data with little to no cost? * Is the data destroyed according
to defined to standards?
- Value [28] Period of Performance
- When establishing a base period of performance (POP) in an IAA or contract with a shared service provider, a shorter base
period enables the Customer/Partner Agency to limit the mandatory amount of time before that Customer/Partner Agency can move
to a new provider. A shorter base POP anticipates that if there are issues with performance in the first year, the Customer/Partner
Agency is able to move without expending additional time and funding with a provider that is not meeting expectations.
- Value [29] Time to Value
- Moving an agency to transition to a new shared service provider may be a time consuming effort. It is recommended that agencies
use Federal Strategic Sourcing Initiative (FSSI) agreements and GWACs that are identified in the Shared Services Catalog.
These contracts provide fast access to already awarded procurement vehicles and enable agencies to take less time and fewer
acquisition steps versus a full and open competition by individual agencies. In addition, agencies should use standardized
Contract Line Item Numbers (CLINs) and have an accurate view of their commodity IT inventory in order to be able to properly
scope shared services efforts.
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