Providing top-quality service to customers is a significant challenge that involves a broad range of legal implications. So what does it take to define service quality and to make effective use of the IT Infrastructure Library (ITIL) framework?

Is service quality just about having an appropriate service level agreement (SLA)?

It is a universal truth that an IT services contract needs a service level and service credit regime. Simply putting an SLA in place is an assurance that the arrangement has been set up to deliver quality service, and the IT lawyers and contract managers can rest easy.

An interesting scene witnessed during some recent IT outsourcing negotiations on a particular SLA served as a timely reminder that a casual approach needs to be challenged.

The scene involved an executive from the customer organisation, his lawyers, the supplier and the supplier’s lawyers, who had been debating the SLA for a number of days.

Late one evening, the frustrated customer executive brought the team back to earth with the simple statement that all he wanted – ­ in fact, all he ever wanted ­ – was good service, and “not to be bought off for the price of a pint of lager”.

The team had been working long and hard to produce the SLA, which was comprehensive and included measures and metrics imported from nearly all the previous deals they had worked on.

The SLA had, however, assumed a life and status of its own and the point the executive was making was that the focus on a set of metrics and the accompanying behaviour-enforcement mechanisms had become completely detached from his concept of “service quality”.

In that case, what is the reason for having an SLA?

From a legal perspective, the reason for having an SLA is to specify the standard of the supplier’s performance in a manner that has contractual effect. This means that if the standard is not satisfied, contractual remedies may be available to the customer.

Remedies might include an adjustment of the contract price (for example, by way of credits against invoices), pre-agreed amounts to compensate for loss (often called “liquidated damages”) or ­ – the ultimate sanction – ­ a right to terminate the contract for breach and claim damages.

Customer lawyers will advise that having SLAs and their accompanying remedies is a good thing, and that, at the very least, they give the customer good leverage in discussions with the vendor. Supplier lawyers will focus on the worst case scenario for the provider and seek to quantify the supplier’s exposure or total amount at risk.

Such discussions may take place, as they were in the incident we witnessed, without a great deal of regard for whether the definition of service quality being created is actually appropriate.

From a business perspective, reducing cost and improving service quality are very common reasons for outsourcing and, in fact, any purchase of IT services. What is perhaps less common is a focus on what service quality really means to an organisation.

As in the scenario outlined ­ – although often with the very best of intentions ­ – there is a tendency to recycle SLAs or simply to recite percentage availability targets for servers in a datacentre, and other similar measures that do not bring to bear the relevant business objectives.

This is the outcome that our executive was so keen to guard against ­ – the “work of art” SLA; one that does not establish standards of service that would truly be valuable.

How do we actually get an SLA that is useful?

Once the business objectives or key performance indicators (KPIs) have been identified, a major challenge is to dedicate sufficient management resources to defining how the services should support business KPIs ­ – that is, translating the business KPIs into SLAs.

Some of the SLAs that are defined may well include traditional measures, such as availability, accuracy, completeness, response time and fix time. And it is important when defining SLAs to consider and ensure consistency with approaches, including the ISO 20000 IT service management standard, ITIL and other good industry practices.

It may be, however, that traditional SLAs cannot adequately define service quality in the particular context. Under those circumstances, more bespoke standards will be appropriate, such as a decreased use of customer management time, integration and productivity gains.

Do not assume that meeting this challenge is purely for the benefit of the customer. In our experience, a supplier benefits by knowing clearly what is valuable to the customer and by being able to direct energies to the activities that can create that value, without having to manage a large number of arbitrary service levels that need to be reflected in arrangements with sub-contractors.

Most suppliers are also very keen to avoid a situation where they know they have met the metrics but will still face criticisms for perceived failings in the monthly relationship management meeting, or even in the press.

As such, there is much to be gained on both sides by approaching SLAs from the perspective of what service quality really means in the particular context, particularly with regard to the organisation’s business KPIs.

In the context of service quality, we hear a lot about the need to comply with ITIL. Where does ITIL actually come from?

In our experience, the number of times ITIL crops up when negotiating IT service or outsourcing contracts is on the increase. But what is ITIL and why are so many businesses keen to see their suppliers signed up to it in some way, particularly in relation to IT service management?

Originally named the Government IT Infrastructure Management Method, the IT Infrastructure Library was created by the UK’s Central Computer and Telecommunications Agency (CCTA) in the mid 1980s.

It is claimed that many of the concepts involved in ITIL originated outside the CCTA. Such claims probably stem from the way that ITIL was set up, and fuel some of the misconceptions that surround it. By capturing best practices from many sources, the intention behind ITIL was to provide a consistent, reliable approach to IT service management that would promote operational efficiency.

The Office of Government Commerce (OGC) has long since taken over from the CCTA. The ITIL trademark is owned by OGC and the OGC controls its direction. But the day-to-day accreditation role and publications strategy is undertaken by the APM Group and The Stationery Office.

What is ITIL concerned with?

It is easy for the uninitiated to be confused about what ITIL is. There is a wealth of information ­ – and some misinformation –­ on the web, and plenty of commentary.

There are products and services that claim to be “ITIL compliant”, suggesting ITIL sets an achievable and auditable standard, which it does not. ITIL is often described as a framework for IT service management, suggesting it provides a coherent model, but not everyone agrees it does that.

The “official” ITIL web site, www.itil-officialsite.com, which is probably the best place to start, describes ITIL as the most widely accepted approach to IT service management in the world, providing a cohesive set of best practices, from the public and private sectors internationally.

The latest version of ITIL (version 3) has five volumes: service strategy, service design, service transition, service operation and continual service ope ration. ITIL is supported by a comprehensive qualifications scheme, accredited training organisations and implementation and assessment tools.

The perceived benefits include predictable, repeatable and reliable outcomes in IT, and that it provides standardised terminology, reduced costs, improved use of skills, productivity, efficiency and service levels. In short, it delivers the potential for a better quality service at a lower price.

It is easy, therefore, to see the attraction of ITIL from a customer perspective, and there are potentially other advantages for the organisation procuring IT services. If IT services are based on standardised processes ­ – performed repeatedly, as ITIL proposes ­ – such services should be easier to understand and describe, and there should be a broader range of comparison for benchmarking.

In theory at least, this approach gives the customer the possibility of greater flexibility and the opportunity to replace an underperforming or over-priced supplier with another supplier using the same “standard” approach to service delivery.

The theory sounds fine, but how do we put ITIL into practice? Why can’t we just say services must be “ITIL compliant”?

It is wrong to rely on the sometimes expressed notion that it is sufficient to state in the contract that the services supplied, or the tools used to support those services, will be ITIL compliant.

As stated above, ITIL is a set of best practices, not a standard that can be achieved. Tools might be ITIL compatible or support the implementation of ITIL, but not compliant with it. Indeed, the OGC warns against listening to vendor claims of ITIL compliance.

There is no getting away from the need to describe in the contract the services that are required, and the necessary components of service management, at an appropriate level of detail.

The service descriptions will need to be written to be consistent with ITIL, and use ITIL terminology correctly, recognising that the ITIL approach needs to be adapted and applied to meet the customer’s IT and business needs ­ – and underwritten by appropriate service levels.

There is a standard that can be applied in relation to service management, namely ISO/IEC 20000. A contractual warranty may be given that this standard has or will be achieved, from which the customer may draw comfort. But it does not mean ITIL compliance.

Achieving ISO/IEC 20000 can be based on an effective ITIL implementation, but full ITIL implementation is not a prerequisite. Once again, to ensure that ITIL is implemented, the means by which that is carried out will need to be appropriately described. Some judicious due diligence to establish a supplier’s ITIL credentials would certainly help.

Myles Blewett is partner and Belinda Bell is senior associate at law firm Pinsent Masons