Introduction
An Operational Level Agreement (OLA ) is an internal agreement between different departments or groups within an organization, defining how they will work together to support the delivery of a service. An Underpinning Contract (UC) is an external agreement between an organization and a supplier that supports service delivery. By implementing OLAs and UCs, you can ensure that both internal and external partners deliver their parts of the service according to agreed service levels (SLAs).
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Understand the difference between OLA, SLA and UC
Before you start implementing OLAs and UCs, it is important to understand their relationship to each other and to Service Level Agreements (SLAs):
- SLA: An agreement between IT and the business that describes the level of service to be delivered.
- OLA: An internal agreement between different parts of the IT organization (or between IT and other internal departments) that defines how they will support the SLAs.
- UC: An agreement between the organization and external suppliers that describes the services or products needed to support the SLAs.
Example:
An organization has an SLA with the business that specifies that IT should provide an email service with 99.9% availability. To fulfill this SLA, an OLA is created between the IT infrastructure team and the Service Desk team that defines how incidents related to the email service should be handled. In addition, the organization has an Underpinning Contract with an external internet service provider that guarantees a certain network performance to support the availability of the email service.
Analyze the needs of OLAs and UCs
To create effective OLAs and UCs, you need to understand the internal and external dependencies for each service you deliver. Identify which internal departments or teams support the services and which external suppliers provide components or services that are critical for you to deliver the service according to the SLA.
Suggestions for activities:
- Map out which internal departments or teams contribute to each IT service.
- Identify all external suppliers that play a role in the delivery of the service, such as hardware suppliers, software suppliers or network suppliers.
Example:
A company delivering a cloud-based ERP service identifies that their internal network team, server team and application developers are all critical to the functioning of the service. They also identify that they rely on a cloud provider for data storage and a support company for server maintenance.
Create operational level agreements (OLAs)
Once you have identified the internal groups responsible for different parts of the service, the next step is to create OLAs. An OLA specifies what each department will deliver, what service levels are expected, and how they will work together to support the SLAs.
Suggestions for activities:
- Define the roles and responsibilities of each team or department involved in the service delivery.
- Create clear measurable goals for each team, such as response times, action times and availability of internal services.
- Establish a process to monitor and report on compliance with OLAs.
Example:
The company's OLA between the IT network team and the server team specifies that the network team will resolve network incidents affecting the ERP service within one hour. The server team commits to restore a server within two hours if there is a problem with the server infrastructure. Both teams will communicate and escalate incidents if they cannot resolve the issues within these timeframes.
Designing Underpinning Contracts (UCs)
For each service you deliver, external suppliers are likely to provide key components or support. A UC defines what services or products the supplier should deliver, what levels they should meet and how these support your SLAs.
Suggestions for activities:
- Conduct a thorough review of all supplier contracts to ensure that their services support your SLAs.
- Include specific service level requirements in the UCs, such as availability, response times and performance.
- Establish a process to regularly monitor and review UC compliance and provider performance.
Example:
The company signs a UC with its cloud provider that guarantees 99.9% availability of its data storage services. The UC also states that the cloud provider will respond to support requests within two hours and that they will resolve any storage capacity issues within four hours. This supports the company's SLA for ERP service availability.
Ensure that OLAs and UCs support the SLAs
The purpose of OLAs and UCs is to support the fulfillment of the SLAs. It is therefore important to ensure that all agreements, both internal and external, are synchronized with the overall service levels you have promised to the business.
Suggestions for activities:
- Ensure that the service levels defined in the OLAs and UCs are sufficient to meet the agreed SLAs.
- Review all existing contracts to ensure that external suppliers meet the requirements set out in the UCs and that internal teams can deliver according to the OLAs.
Example:
The company's SLA for the ERP service requires an availability of 99.9%. The cloud provider's UC specifies the same level of availability, and the OLAs with internal teams ensure that the network team and server team have response times that support this. Everything is synchronized to ensure that IT can keep its promises to the business.
Monitor and measure the performance of OLAs and UCs
To ensure compliance with both OLAs and UCs, it is important that you have a process to regularly monitor and report on performance. This can include KPIs for internal teams and suppliers as well as regular audit meetings.
Suggestions for activities:
- Create key performance indicators (KPIs) to measure the performance of both OLAs and UCs, such as response times, resolution times and violations.
- Implement regular audits and reports showing how well internal teams and external suppliers are meeting their respective commitments.
Example:
The company uses its ITSM tool to monitor how quickly the network team and server team respond to incidents according to the OLAs. They also monitor the cloud provider's response times and availability through automated reports. If SLAs are not met, the results are reviewed to determine whether the problem lies with an internal team (OLA) or an external provider (UC).
Adapting and improving OLAs and UCs over time
Both OLAs and UCs need to be dynamic and adaptable to meet changing business requirements and new technologies. Through regular reviews, you can ensure that these agreements are up to date and continue to support your SLAs effectively.
Suggestions for activities:
- Establish a process to regularly review and update both OLAs and UCs based on changing business requirements, technological changes or new business strategies.
- Involve internal teams and external suppliers in the review to ensure that all parties have a common understanding of the requirements and delivery expectations.
Example:
As the company starts to expand their ERP service to more regions, they realize that their current UC with the cloud provider no longer covers their global needs. They renegotiate the UC to include better support in new regions and adjust the OLAs to ensure internal teams can support the global expansion.
Closure
Operational Level Agreements (OLA) and Underpinning Contracts (UC) are critical components to ensure that your services are delivered according to agreed levels (SLA). By implementing and continuously improving these agreements, you can effectively manage both internal and external dependencies and ensure high-quality service delivery.