What are the best practices for aligning KPIs with service level agreements (SLAs)?

1 Understand your goals and needs

Before you draft your RFP, you need to understand what your goals and needs are for the service contract. What are the outcomes and benefits that you want to achieve? What are the risks and challenges that you want to avoid or mitigate? What are the requirements and constraints that you have to comply with? By answering these questions, you can identify the critical success factors and priorities for the service contract. These will help you to define the relevant and realistic KPIs that align with your goals and needs.

2 Choose SMART KPIs

Once you have identified your goals and needs, you need to choose KPIs that are SMART: specific, measurable, achievable, relevant, and time-bound. Specific KPIs are clearly defined and understood by both parties. Measurable KPIs are quantifiable and verifiable by data and evidence. Achievable KPIs are realistic and attainable within the scope and resources of the service contract. Relevant KPIs are aligned with your goals and needs and the SLAs of the service contract. Time-bound KPIs have clear deadlines and frequencies for reporting and evaluation.

3 Align KPIs with SLAs

After you have chosen your SMART KPIs, you need to align them with the SLAs of the service contract. This means that you need to ensure that the KPIs and the SLAs are consistent, compatible, and complementary. Consistent KPIs and SLAs have the same definitions, units, and standards for measuring and reporting performance. Compatible KPIs and SLAs have the same expectations, responsibilities, and incentives for both parties. Complementary KPIs and SLAs have the same objectives, outcomes, and benefits for both parties.

4 Communicate and negotiate KPIs and SLAs

Before you finalize your RFP, you need to communicate and negotiate your KPIs and SLAs with the potential service providers. This means that you need to share your goals and needs, explain your rationale and expectations, and solicit feedback and input from the service providers. By doing this, you can ensure that the KPIs and SLAs are mutually agreed upon, understood, and accepted by both parties. You can also avoid misunderstandings, conflicts, and disputes that may arise during the service contract.

5 Monitor and evaluate KPIs and SLAs

After you award the service contract, you need to monitor and evaluate the performance of the service provider based on the KPIs and SLAs. This means that you need to collect and analyze data and evidence, report and review results, and provide and receive feedback and recommendations. By doing this, you can track the progress and quality of the service delivery, identify and address issues and gaps, and recognize and reward achievements and improvements. You can also foster a collaborative and transparent service relationship that supports continuous learning and improvement.