Sorry, you need to enable JavaScript to visit this website.

Experience Level Agreement: Shifting Emphasis from Services to Outcomes

Experience Level Agreement: Shifting Emphasis from Services to Outcomes
June 12, 2020

Imagine going out to one of the fine dining restaurants for a nice meal with your family. You choose a highly recommended place known for their delicious food. You sit down and order. The food arrives and as expected it is delicious. But is that all that contributes towards concluding this as a successful outing? What about the other factors? The ambience, the greeting at the reception, cleanliness, timely arrival of your order, interaction with the server etc. all form a very important part of the entire experience. If everything else, apart from the food, was questionable, you would feel inclined towards exploring other options for your next family dinner outing. The point I am trying to make is that the supporting elements of an experience play a major role towards the acceptance of a service, and even more so in an industry which is saturated with alternate options.

In today’s shape-shifting business spectrum thriving on digital innovation, the focus is still more on processes and services, and less on the end-user experience. While service level agreements (SLAs) have acted as a crucial tool in defining business relationships over the last few decades, the 21st century enterprises have to focus more proactively on outcomes and experiences, and thereby, forge experience level agreements (ELAs, eXLAs, or most commonly known as XLAs). As was the case with the dining experience, the food was delectable, but the overall experience left much to be desired if the other elements did not live up to the same standards. While the quality of the outcome can be on point, the overall experience needs to match those standards, if not surpass them.

XLAs: A Must for New-age IT Environments

To better understand the need for XLA-defined outcomes, we must first revisit SLAs and how they have evolved over time. In a distributed digital landscape, SLAs have ensured that decided service targets are met. SLAs have synergized companies and their service providers with the aim of delivering high-quality, timely IT services while minimizing the possibilities of disruption. However, with the advent of smart devices, internet of things (IoT), and high-speed, low-latency connectivity, customer expectations are constantly and radically increasing. As customer experience (CX) becomes the centerpiece of business strategies, SLAs are proving to be inadequate, and instead, XLAs are emerging as a more meaningful, future-facing alternative.

As customer experience (CX) becomes the centerpiece of business strategies, SLAs are proving to be inadequate, and instead, XLAs are emerging as a more meaningful, future-facing alternative.

SLAs act as a standard operating procedure that factor various metrics to maintain latency, bandwidth, uptime, and incident response time, allowing companies to impose penalties upon providers if they fail to meet agreed-upon targets. However, SLAs are becoming increasingly restrictive in dynamic IT environments where services and processes are determinants of the outcome and not the outcome themselves. A lot of factors define the customer experience, and it is harsh to impose penalties on providers when companies do not meet end goals even after the providers have successfully delivered the promised set of IT services. In short, the inadequacies of SLAs in the fast-changing paradigm are opening doors for XLAs, and a seamless transition is key to achieving business success.

Experience is the True Outcome

I came across an analogy in a blog I read recently, which sums up the SLA vs XLA discussion the best. The analogy equates SLAs to watermelons – green, heavy, and hard on the outside, while being red, light, and soft on the inside. Much like watermelons, in the current IT environment, SLAs are somewhat disjointed from the outcomes they offer. In contrast, XLAs are like kiwis – small, green, and light. With XLAs, you get what you see. Instead of overly relying on hard numbers and arbitrary expectations, as is the case with SLAs, companies must take an outcome-orientated approach to elevate the customer experience.

Flexibility, streamlined processes, and incremental improvements must be the bedrock for future-facing XLAs. While companies focus on developing well-rounded XLAs to vitalize existing SLAs, it is important to do so gradually and not abruptly. The existing contracts must be honored with the aim of changing critical elements of those contracts year on year. For instance, outcome parameters can form 20% of the contract, while process and service parameters form 80% in the first year. In the second year, the contract can see a 50-50 emphasis on services and experiences. Finally, if the changed arrangement results in seamless growth, the third year can see a complete shift to outcome-based XLAs, with customer experiences getting precedence over arbitrary expectations.

While companies focus on developing well-rounded XLAs to vitalize existing SLAs, it is important to do so gradually and not abruptly.

A Collaborative Future

Customer satisfaction and user experience are critical to business success. As businesses focus on creating value propositions around end-user experience, service providers can no longer work in silos. One of the biggest handicaps of SLAs is keeping companies and providers separated. This model has worked for years with vendor-specific outsourcing activities being commonplace. In such an arrangement, companies have executed critical tasks in-house, while outsourcing repetitive, non-critical tasks to third parties. The driving factors of such arrangements have been the ambition of reduced operational expenses and time-to-market, and enhancing productivity and efficiency. However, with the advent of digital innovations and emergent technologies, the gap between the companies and third-party service providers has reduced remarkably. As vendors upped their game to stay competitive with the aid of emergent technologies, companies started outsourcing more critical front-end and back-end tasks.

As the lines thin and cross-domain, cross-channel operations increase, XLAs must be developed with the aim of greater collaboration. Vendors and service providers must be knowledge partners to forge a greater cooperation that would ultimately drive business innovations with the help of emergent technologies. Only when service providers are entrusted with more critical responsibilities will they become more accountable for the overall outcome and not only the services they provide. The bigger picture has user experience in the center, and XLAs can help achieve people-centric results only through a collaborative approach. After all, we have already embarked on a digital innovation journey to the new normal that values relationships beyond the contract.

Read the HCL and ISG joint whitepaper to find out the best practice for enterprises that intend to take the XLA route.