Sana’a Community College

CNET Dept. 2nd Year

Module: Tactical Processes of ITSM

Contents
Headlines.............................................................................................................................2
Introduction..........................................................................................................................2
Definitions...........................................................................................................................2
Basic Concepts.....................................................................................................................3
IT Service Providers and Customers...................................................................................3
Objectives............................................................................................................................6
Benefits................................................................................................................................6
Process.................................................................................................................................7
Relationship with the other Processes and Functions..........................................................9
1. Relationship with the Service Desk..............................................................................9
2. Relationship with Availability Management................................................................9
3. Relationship with Capacity Management.....................................................................9
4. Relationship with Incident & Problem Management...................................................9
5. Relationship with Change Management.....................................................................10
6. Relationship with Release Management....................................................................10
7. Relationship with IT Service Continuity Management..............................................10
9. Relationship with Configuration Management..........................................................11
10. Relationship with Financial Management for IT Services.....................................11
Activities............................................................................................................................12
1. Identification..............................................................................................................12
2. Definition....................................................................................................................12
3. Contract......................................................................................................................15
4. Monitoring..................................................................................................................17
5. Reports........................................................................................................................17
6. Review........................................................................................................................18
Functions and Roles...........................................................................................................19
Costs..................................................................................................................................20
Problems............................................................................................................................20

Lecture#2: Service Level Management

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Sana’a Community College
CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

Lecture#2: Service Level Management

Headlines
 
 Introduction
 Definitions
 Basic Concepts
 Objectives
 Benefits
 Process
 Relationship with the other Processes and Functions
 Activities
 Process control
 Costs
 Problems

Introduction
 
Service Level Management is the process of negotiating, defining, measuring, managing
and improving the quality of IT services at an acceptable cost. 
All of this must take place in an environment of rapidly changing business needs and
rapid changes in technology.

Definitions
 
Service Level Management aims to find the right balance between quality supply and
demand, customer-friendliness, and cost of IT services. 
It is important that both the provider and the customer realize that a service is being
provided and respectively being received.
This is formalized by designing, agreeing, and maintaining the Service Level
Agreements (SLAs), Operational Level Agreements (OLAs), Underpinning
Contracts (UCs) and Service Quality Plans. 

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Sana’a Community College
CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

Basic Concepts
IT Service Providers and Customers
In theory, anyone who obtains IT services is a customer. In most cases, the IT
Organization will be the provider.
As the IT organization itself generally also obtains IT services, and the IT organization is
therefore a customer of IT Service Providers at the same time, there can be a complex
web of relationships.
In the context of Service Level Management we use the following definitions of customer
and provider:
 The customer is the representative of an organization who is authorized to make
agreements on behalf of that organization about obtaining IT services. Hence, they
are not the same as the end-user of the IT services.
 The provider is the representative of an organization who is authorized to make
agreements on behalf of that organization about the provision of IT services.

Service Level Requirements (SLR)

Service Level Requirements covers the detailed definitions of customer needs, and are
used to develop, modify and initiate services. The Service Level Requirements can serve
as a blueprint for designing a service and its SLA, and may also be used as a design
assignment.

Service Specification Sheets (Spec Sheets)

Service Spec Sheets describe the relationship between functionality (as agreed on with
the customer, and therefore externally directed from a provider point of view) and
technology (implementation within the IT organization, and therefore internally directed)
and provide a detailed specification of the service. The Spec Sheets translate Service
Level Requirements (external specifications) to technical definitions needed to provide

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Module: Tactical Processes of ITSM

the service (internal specifications). The Spec Sheets also describe any links between the
SLAs, the UCs and the OLAs.

Service Catalog

Developing a Service Catalog can help the IT organization to profile itself and to present
itself as an IT Service Provider.
It provides a detailed description of the operational services in the customer's language,
along with a summary of the associated service levels which the IT organization can
provide to its customers.
This document is derived from the external specifications in the Spec Sheets and should
therefore be written in the customer's language, and not in the form of technical
specifications.

Service Level Agreement (SLA)

A Service Level Agreement is an agreement between the IT organization and the

customer, which details the service or services to be provided. The SLA describes the
services in non-technical terms, in line with the perception of the customer, and during
the term of the agreement it serves as the standard for measuring and adjusting the IT
services.

Service Improvement Program (SIP)

The Service Improvement Program is often implemented as a project, defines the

activities, phases and milestones associated with improving an IT service.

Service Quality Plan (SQP)

The Service Quality Plan is an important document as it contains all management

information needed to manage the IT organization. The Service Quality Plan defines the
process parameters of the Service Management processes and operational management.

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CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

The SLA is "what" we would deliver as opposed to the SQP being "how" we would
deliver. It includes targets for each process, in the form of Performance Indicators. For
example, for Incident Management it contains the resolution times for various impact
levels, and for Change Management it contains the cycle times and costs of standard
changes such as a relocation. Reports and reporting intervals are defined for all processes.
The Performance Indicators are derived from the Service Level Requirements and are
documented in the Spec sheets. If external providers contribute to the provision of
services, for example when the Service Desk or PC maintenance are outsourced, then the
Performance Indicators are also defined in the Underpinning Contracts.

Operational Level Agreement (OLA)

An Operational Level Agreement is an agreement with an internal IT department

detailing the agreements about the provision of certain elements of a service, such as an
OLA about network availability or the availability of print servers. For example, if the
SLA contains targets for restoring a high priority incident, then the OLAs should include
targets for each of the elements in the support chain (targets for Network Support to start
to investigate and to resolve network related errors assigned to them, etc.). OLAs support
the IT organization providing the services.

Underpinning Contract (UC)

An Underpinning Contract is a contract with an external provider defining the agreements

about the provision of certain elements of a service, for example troubleshooting
workstations, or leasing a communications line. This is similar to the external
implementation of an OLA. In many organizations, an internal IT department provides
the IT services. SLAs and OLAs are often descriptions of what was agreed between
internal departments, rather than legal contracts. However, a UC with an external
provider will normally be in the form of a formal contract.

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CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

Objectives
Service Level Management is a process that links the IT service provider and the
customer for those services. The Service Level Management process has several
objectives:
 To integrate the elements required for the provision of IT services.
 To document the services by clearly describing the elements in various documents.
 To describe the service provided to the customer in a terminology that they
understand and can relate to.
 To align IT strategy with the business needs.
 To improve IT Service Delivery in a controlled manner.

Benefits
 
The Service Level Management will have the following benefits:

 IT services are designed to meet the expectations, as defined in the Service Level
Requirements.
 Service performance can be measured, which means that it can be managed and
reported on.
 If the IT organization charges customers for the use of IT services, the customer can
draw a balance between the required quality of service and the corresponding costs.
 As the IT organization can specify the services and components required, it can get
in control of resource management and costs could be reduced over the long term.
 Improved customer relationships and customer satisfaction.
 Both the customer and the IT organization are aware of their responsibilities and
roles, so there will be fewer misunderstandings or omissions.
 

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Sana’a Community College
CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

Process
 
Service Level Management has a central role in IT Service Management processes, and
has close links with the other Support and Delivery processes. Service Level
Management forms a bridge with the customer, as it provides an opportunity to discuss
the business needs of the customer without getting bogged down in technical details. The
IT organization then translates these business needs into technical specifications and
activities within the organization. The extent to which the customer need not be
concerned about technology is a good measure of the success of Service Level
Management.
Service Level Management demands effective and productive cooperation with
customers, as the definition of appropriate service levels requires the contribution and
effort of the customer. If the customer (the business) is not familiar with the subjects at
hand, then this will have to be addressed first. Figure 2.1 shows the Service Level
Management process workflow. It shows two component processes, which are largely
parallel: the upper one is about making agreements, and the lower one is about ensuring
that these agreements are fulfilled.

Service Level Management includes the following activities:

 Identifying - identifying the customer's needs, relationship management, and

promoting the IT organization. Understanding the business processes and needs of
the customer.
 Defining - defining the services to be provided to meet the needs and requirements
of the customer. These services are defined in Service Level Requirements and
Service Spec Sheets. A Service Quality Plan will be created as a result of this
activity.
 Finalizing - finalizing the contract, i.e. negotiating with the customer about the
required service level, in relation to costs involved, and defining it in Service Level
Agreements (SLA). Underpinning the SLAs with Operational Level Agreements

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Module: Tactical Processes of ITSM

(OLA) and Underpinning Contracts (UC). Writing or revising the Service Catalog
specifying the services available to the customer.
 Monitoring - monitoring the service levels.
 Reporting - drawing up Service Level Reports. Regularly reporting to the customer
and the IT organization about the actual service levels, compared with the Service
Level Achievements.
 Reviewing - reviewing the service together with the customer to determine
opportunities for improvements. A Service Improvement Program may be initiated,
if necessary. Frequent communication with the customer about their experience and
ideas about the service provided. This may result in new or revised SLAs.

Figure 2.1 Het Service Level Management-Processes

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Module: Tactical Processes of ITSM

Relationship with the other Processes and

Functions
1. Relationship with the Service Desk

The Service Desk is the initial point of contact for users and, through Incident
Management; it aims to recover the agreed service levels as soon as possible in the event
of an error. Because of its direct contact with the users of the IT services, the Service
Desk can often provide valuable information about the quality perception (user
satisfaction) of Service Level Management by the users.

2. Relationship with Availability Management

Availability Management is responsible for realizing and optimizing the availability of
the services. Service Level Management provides Availability Management with input
about the required availability of the IT services, whereas Availability Management
provides information about the actual availability to Service Level Management.

3. Relationship with Capacity Management

Capacity Management supports Service Level Management by providing information

about the impact of a new service or extension of an existing service on the overall
capacity. Capacity Management also indicates if the use made of a service is within the
agreed limits. Service Level Management provides information to Capacity
Management about the expected current and future use, which Service Level
Management has agreed, or is about to agree, with the customer.

4. Relationship with Incident & Problem Management

Incident Management and Problem Management are good indicators of the effective
implementation of the SLA agreements. Incident Management in particular has an
important role in restoring the services as soon as possible after an error. Problem
Management aims to optimize the stability of the services by taking permanent measures

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Module: Tactical Processes of ITSM

to ensure that the errors do not recur. Resolving incidents and problems is essential to
providing a high-quality service. Service Level Management uses information from
reports provided by these processes when reporting to the customer.

5. Relationship with Change Management

The SLA can define the changes that can be requested by the customer organization, and
the agreements for responding to these changes (whom to address the changes to, cycle
time, costs, informing the organization, etc. Any changes to a service and the associated
SLA are controlled by Change Management.

6. Relationship with Release Management

Many IT services amount to the provision of infrastructure hardware together with

custom-made or off-the-shelf software. Release Management monitors the agreements
made by Service Level Management regarding the provision of hardware and software.
Service Level Management reports on the quality of the IT service on the basis of
information from Release Management reports.

7. Relationship with IT Service Continuity Management

IT Service Continuity Management is concerned with the rapid recovery of IT services

in the event of a disaster, and monitors the appropriate measures and procedures. The
agreements about this with the customer are made in the Service Level Management
process. The measures and costs are then included in the SLA.

8. Relationship with Security Management

The security measures associated with the IT service can also be essential to effective
Service Level Management. Both the IT organization and the customer will have certain
security requirements. The corresponding agreements are defined in the SLA. Security
Management ensures that the agreed security measures are implemented, monitored, and
reported to Service Level Management.

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Sana’a Community College
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Module: Tactical Processes of ITSM

9. Relationship with Configuration Management

Configuration Management is responsible for entering details of the components (CIs)

and documentation (SLA) related to a service in the CMDB, and providing information
from this database. Hence, the creation or modification of a service or SLA will affect
the CMDB. The Service Desk uses the CMDB to determine the impact of an error on the
services, and to check the agreements about the response and solution times. The CMDB
is also used to report about the quality of the CIs, so as to enable Service Level
Management to report about the quality of the service provided.

10. Relationship with Financial Management for IT Services

If the customer is charged for services incurred by the IT organization for the service
provided, then this is also included in the SLA. These may be one-time charges, or
charges for special or additional services. Financial Management provides Service Level
Management with information about the costs associated with providing a service. It
also provides information about charging methods, and the rate to be charged to cover
the costs of a service.

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Sana’a Community College
CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

Activities
 
The process steps are described in detail below, including the process workflow and the
activities.

1. Identification

The best way to provide the appropriate quality is to first discuss the issue with the
customer.
Past experiences show that customers are often not clear about their expectations
themselves, as they simply assume that certain aspects of the service will be provided,
without having any clear agreements. These assumed (implicit) aspects of the IT services
are often the cause of much confusion. This once again underlines the need for Service
Level Managers to know their customers well, and to help their customers clarify their
thinking about what services and service levels they really need, and at what cost.
Service Level Management plays a key part in understanding and defining what the
customer wants. The first step in concluding SLAs about the IT services provided today
or in the future should be to identify and define the customer needs in the Service Level
Requirements. Besides doing so once within the course of the process, this activity
should also be carried out regularly, initiated by reports and reviews, at the request of the
customer or for the benefit of the IT organization. This activity may cover either new or
existing services.

2. Definition

Defining the scope and depth of the customer's requirements is considered as a design
process within Service Level Management. The design process should be managed to
ensure that the results at the end of the process correspond with the requirements of the
customer, the term 'external' refers to communication with customers, and 'internal' to the
technical underpinning within the IT organization. The design process includes a number

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Module: Tactical Processes of ITSM

of steps, from detailing the customer's requirements and defining them in standards, to
developing the technical requirements to provide the service.
Defining external standards

The first step of quantifying new or existing IT services is defining or redefining the
customer's expectations about the service in general terms. These expectations are
formalized in documented Service Level Requirements (SLRs). This should involve the
whole customer organization. This step is generally considered as the most difficult part
of Service Level Management.
At the beginning of this stage, the Service Level Manager must prepare for the meeting
with the customer organization. The first questions to be asked are: 'What is required of
the IT service and what elements should this service consist of?' A service could entail
the use of a limited infrastructure, such as a Wide Area Network (WAN). Such a service
can contribute to a composite service, such as access to a full information system,
including the full underlying infrastructure (WAN, LAN, workstations, applications, etc.)
During these meetings, the users must be divided into groups. The Service Level
Manager draws up a list of the user groups, and their requirements and authority. The
following information is needed to define the Service Level Requirements:
 A description, from the customer's perspective, of functions to be provided by the
service.
 Times and days on which the service must be available.
 Service continuity requirements.
 IT functions needed to provide the service.
 References to the current operational methods or quality standards to be considered
when defining the service.
 A reference to the SLA to be modified or replaced, where relevant.

The design stage will produce a Service Level Requirements document, which is signed
by the Service Level Manager and the customer. The Service Level Requirements can
still be modified while the department is working on the design, procurement and

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Module: Tactical Processes of ITSM

implementation. Such changes may relate to the practicability of the envisaged functions
or costs. Both parties must approve any such changes.

Translation to internal standards

During the specification phase, the Service Level Requirements are developed in detail.

This stage aims to provide the following information:

 Unambiguous and detailed description of the IT services and required components.

 Specification of the way in which the service will be implemented and provided.
 Specification of the required quality control procedure.

Figure 2.2 Specification Stage

In the specification phase it is recommended to distinguish between elements of the
documentation for internal use and those for external use (Figure 2.2). Specifications for
external use relate to objectives agreed with the customers, and the design process is
controlled by these objectives. These specifications are drawn up in cooperation with the
customer organization, and form the input for the specifications for internal use.

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Sana’a Community College
CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

Specifications for internal use refer to the internal objectives of the IT organization,
which have to be fulfilled to meet customer demands. A separation between internal and
external specifications can be most useful once the Service Level Management process is
under way. This ensures that the IT organization does not bother its customers with
technical details. From that time on, managing the service levels relates to keeping the
internal and external specifications aligned. Document Control and Internal Reviews
contribute to this by keeping records of related documents, managing versions and
organizing regular audits.
Spec sheets (service specifications) describe in detail what the customer wants (external
element) and how this will impact the IT organization (internal element). Spec Sheets
need not be signed by both parties; however they are subject to Document Control. The
Service Catalog can be drawn up on the basis of the service specifications; hence,
changes in the service levels can be included immediately in the Spec Sheets and Service
Catalog. The SLA is then revised in line with the revised Spec Sheets.

Service Quality Plan

It is recommended to include all management information (key performance indicators)

and specifications for internal and external providers in a single document to provide
comprehensive information about the contributions made to the IT services by each
Service Management process.

3. Contract

Once the specification phase has been completed, the IT organization has effectively
translated the business needs into IT resources and configurations. This information is
then used to draw up or modify the following documents.

Service Level Agreement

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Sana’a Community College
CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

When developing the SLA structure, it is recommended to first define the general
aspects, such as network services for the whole company and developing a general
service-based SLA model, before the negotiations begin. The SLAs could have a
hierarchical structure, like that of the customer organization, in the form of a framework
agreement with a number of tiers. Each tier has its own level of detail. The top tiers
include agreements about general services to be provided to the organization. The lower
tiers contain information relevant to specific customers.

The structure of a SLA depends on a number of the variables such as:

 Physical aspects of the organization:

o Scale
o Complexity
o Geographical distribution
 Cultural aspects:
o Language(s) of the document (for international organizations)
o Relationship between the IT organization and the customer
o Charging policy
o Uniformity of the business activities
o Profit or non-profit organization
  Nature of the business activities:
o General terms and conditions
o Business hours - 5 x 8 hours or 7 x 24 hours

Underpinning Contracts and Operational Level Agreements

Any existing UCs or OLAs must be revised during the design process. Everyone involved
should be aware of any UCs or OLAs that apply to the provision of a specific service.
The Document Control indexes can help clarify the links to the Spec sheets.

Service Catalog

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Sana’a Community College
CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

The following tips can be helpful when writing a Service Catalog:

 Use your customer's language. Avoid technical jargon, and use terminology
corresponding to the relevant business.
 Try to look at things from the customer's point of view and use that approach to
identify relevant information.
 Provide an attractive layout as the IT organization uses this document to present
itself to its customers.
 Ensure that the document is available to the largest number of potential stakeholders,
for example by publishing it on an Intranet site or on CD-ROM.

4. Monitoring

Service Level Management can only be monitored if the service levels are clearly defined
in advance and correspond with the externally agreed objectives. The service levels must
be measured from the customer's perspective. Monitoring should not be limited to
technical aspects, but should also include procedural matters. For example, until the user
has been informed that the service has been restored, they will assume that it is
unavailable.
Availability Management and Capacity Management generally provide the information
about the implementation of the technical objectives associated with the service levels. In
some cases, information will also be provided from the Service Support processes,
especially to Incident Management. However, measuring internal parameters is
insufficient, as this does not relate to the user's perception. Parameters such as response
time, escalation time and support must also be measurable. A complete view is only
obtained by combining management information from both the systems and Service
Management.

5. Reports

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Sana’a Community College
CNET Dept. 2nd Year
Module: Tactical Processes of ITSM

Customer reports (Service Reports) must be provided at the intervals agreed in the SLA.
These reports compare the agreed service levels and the service levels that were actually
measured. Examples include reports about:
 Availability and downtime during a specified period
 Average response times during peak periods
 Transaction rates during peak periods
 Number of functional errors in the IT service
 Frequency and duration of service degradation (services do not reach the agreed
level)
 Average number of users during peak periods
 Number of successful and unsuccessful attempts to circumvent security
 Proportion of service capacity used
 Number of completed and open changes
 Cost of the service provided

6. Review

Service levels must be reviewed at regular intervals. The following aspects should be
considered:
 Service level agreements since the previous review
 Problems related to the services
 Identification of service trends
 Changes to services within the agreed service levels
 Changes to procedures and estimates of the cost of additional resources
 Consequences of failure to provide the agreed service levels

If the IT services fail to meet the agreed service levels, actions may be agreed for
improvement, such as:
 Developing a Service Improvement Program
 Allocating additional personnel and resources
 Modifying the service levels defined in the SLA

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Sana’a Community College
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Module: Tactical Processes of ITSM

 Modifying the procedures

 Modifying Operational Level Agreements and Underpinning Contracts

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Module: Tactical Processes of ITSM

Functions and Roles

Roles: Service Level Management needs to be controlled by a process manager. This

manager should ensure that the process is effective and provides the envisaged benefits.
This does not necessarily mean that this role is fulfilled by one person. Many
organizations have several Service Level Managers, each being responsible for one or
more services or customer groups.

Responsibilities:
The Service Level Manager is responsible for:
 Creating and updating the Service Catalog
 Defining and maintaining an effective Service Level Management process for the
IT organization, including:
o SLA structure
o OLAs with internal providers
o UCs with external providers
 Updating the existing Service Improvement Program
 Negotiating, concluding and maintaining SLAs, OLAs and UCs
 Reviewing the performance of the IT organization and improving it where
necessary

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Module: Tactical Processes of ITSM

Costs
 
The costs of implementing Service Level Management can be divided into the following
categories:

 Personnel costs (Service Level Manager and project team)

 Training costs
 Documentation costs
 Costs of accommodation, hardware and software
 Costs of operational activities related to updating the Service Quality Plan, the
Service Level Agreements and the Service Catalog

Problems
 
The following problems may be encountered:
 Service Level Management results in a businesslike relationship with the customer
and requires that all IT personnel adhere to the agreements. This may require a
culture change in the organization.
 Customers may need help specifying the Service Level Requirements.
 It can be quite difficult to express expectations of the customer in terms of
measurable standards and associated costs.
 The Service Level Manager should be wary of over-ambitious agreements whilst
the planning, measuring and monitoring tools, procedures, Service Quality Plan,
and the Underpinning Contracts have not been developed. It is better to use a
strategy of gradual improvement.
 The overhead costs associated with monitoring and measuring the service levels
are easily underestimated. In a large organization this may require several
dedicated staff.
 In practice, many IT organizations start by drafting Service Level Agreements and
skip the analysis of the requirements of the customer, the design stage and the

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Module: Tactical Processes of ITSM

development of the Service Quality Plan. This can result in a process which is
difficult to manage and which does not provide clear, measurable standards.
 The Service Level Management documents and process could end up becoming
ends in themselves, as opposed to a means to a better relationship between the IT
service provider and the customer the process, disciplinary measures may have to
be taken.

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