Three questions about experience level agreements

An interview with Dierk Soellner about experience level agreements (XLA), their relationship to SLA, their introduction and integration into outsourcing contracts

Service level agreements (SLA) are established in many companies. They define what an IT service provider must deliver and what customers and users can expect. However, as customers and users become more demanding, there is now a new concept: experience level agreements (XLA).

Experience level agreements are agreements between an IT service provider and a customer based on the user’s experience of the provider’s services. They not only measure the quantitative aspects of the service, but also the qualitative aspects such as satisfaction, user-friendliness and emotions.

Dierk Soellner has many years of extensive professional expertise in IT method frameworks. He runs the podcast ‘Business Akupunktur’, has a teaching assignment on ‘Modern design options for high-performance IT organisations’ at the NORDAKADEMIE Hamburg and has published the reference book ‘IT-Service Management mit FITSM’. This makes him the right person to answer the following three questions:

Do XLA replace existing SLA?

Dierk Soellner: No! Experience level agreements (XLA) supplement service level agreements (SLA) where it makes sense to do so. To explain this, I would first like to briefly explain service level agreements and the differences between XLA and SLA.

All of us have signed SLA in our private capacity when using online services such as e-mail, portals or cloud storage. In companies, SLA are a common tool for working with service providers. A service level agreement sets out the level of a service and defines criteria against which the work of the service provider is measured. Among other things, it regulates which service is to be provided to customers and at what quality. SLA contain the contractual agreement between the service provider and the service customer regarding the quality of the services to be provided (IT services).

SLA therefore measure the output or a process result (availability of systems/services, network performance, accessibility/response times of the service desk) from the service provider’s point of view. XLA measure the outcome (value), i.e. the result achieved from the user’s point of view, the ‘experience’. SLA ask ‘What was the system availability this month?’, XLA go further and put the user first. They ask, ‘How productively could employees work with the system and complete their tasks?’ The corresponding experience level agreement could be: ‘Reduce the time spent on administrative tasks by 25%, giving employees an extra 90 minutes per day for value-adding tasks.’

The advantages of experience level agreements are clear. Because they put the user at the centre, they contribute to greater employee loyalty at the service customer. On the other hand, IT employees’ appreciation increases significantly when their work directly leads to increased customer satisfaction. XLA can increase productivity for the customer by contributing to a better understanding of the customer by IT employees and (re)promoting a customer-oriented mentality in service management. Experience level agreements also enable a service provider to measure the business value of its activities. XLA make it possible to show the direct impact of customer-oriented activities on the end users or their companies.

Using XLA provides a clear advantage in terms of motivation to improve by creating a rewarding environment. In contrast to SLA, which mainly focus on the fulfilment of certain performance indicators, XLA focus on the experience and satisfaction of users. By agreeing on XLA, service providers can better align their services with the needs of their customers, thus increasing customer satisfaction and loyalty.

How easy is it to implement experience level agreements?

Dierk Soellner: That depends on how intensively a service provider or the client of services wants to deal with the topic and what goals they are pursuing. Service level agreements are a well-established and good approach, but they need to be developed further in today’s world so that all parties benefit and current requirements for IT services are covered. The aim of experience level agreements is to prioritise the user experience. Ultimately, this means making changes to the business model, processes and the self-image of management and employees in many areas. It is therefore possible to turn this into a larger change project and use established models for approaching transformations, such as John Kotter’s eight-step model.

In practice, I tend to recommend a step-by-step approach: supplementary XLA are agreed for selected SLA. This allows both sides to gradually gain experience. It is important to link a clear objective to the introduction of experience level agreements. Achieving this objective requires trust and a willingness to change on the part of everyone involved, because it is not simply a matter of adding another key figure to a contract. This iterative approach can be applied to selected customers or services. In doing so, customers can be selected who are willing to change or services that have a high impact on the productivity of the service customer’s employees.

While service level agreements are traditionally used to measure performance and control providers, experience level agreements offer the opportunity to focus on the actual user experience. XLA should provide real insight into the IT service experience and show clear benefits for end users. A combination of SLA and XLA could be ideal, with SLA measuring the output at the service provider and XLA capturing the experience and results at the customer. This advancement would lead to a more progressive orientation at the IT service provider and bring positive changes for end users and service desk employees. Customers who demand or support this development are predestined for discussions about XLA.

In contrast to SLA, which are often created without the involvement of end users and focus on easily measurable metrics, XLA should directly address the needs and problems of end users. By continuously adapting to changing requirements and identifying potential for improvement, XLA could serve as a driving force for positive change, thus sustainably increasing the quality of service for all parties involved. When developing XLA, both end users and IT staff should be involved from the outset.

How can XLA be incorporated into outsourcing contracts?

Dierk Soellner: The goal of improving the user experience and increasing productivity should motivate both parties to the contract to regulate XLA in outsourcing contracts. Effective XLA require collaboration between different teams and stakeholders, including customer support, product development and various IT departments. The alignment with the user or customer is the connecting element here. XLA provide clear objectives for IT service providers, because they set clear goals that are aligned with business goals for improving the customer experience. Often, XLA goals cannot be achieved by the service provider alone, but require collaboration (co-creation) with the service customer.

In practice, there are various contract options: First, there is the option of committing to an XLA outcome. In this case, an actual XLA result value or several result values are promised. The commitment is to always be above a certain value or, as with SLA, to state that the value will be above a certain value for a certain percentage of the time. In this case, the IT service provider commits to continuously achieving certain XLA values, but this may not lead to optimal results in the long term. It is recommended that targets for experience should not be set more than a year in advance, as expectations and priorities change. XLA scores should be measured continuously and reviewed every six months or a year, with the contractual evaluation being set up fairly. It is important to remember that the development of the XLA score is more meaningful than individual measurements, as the experience is cumulative and subject to natural fluctuations.

One extension is to commit to a specific fixed value for experience. This could be 10 points or a percentage, for example. This means that the IT service provider commits to a certain level of experience and will not fall below it. The IT service provider must determine this value using appropriate tools. This value can be set as a contractual target, whereby the provider can commit to improvements and penalties/bonuses can be agreed. Although easily measurable and contractually implementable, this option has disadvantages: it does not represent a comprehensive XLA, the metrics can be manipulated by the provider, and not all tools take into account satisfaction or experience data, which can lead to a purely technical evaluation.

A next level is to commit to improving the experience. In contrast to a fixed score or percentage, the service provider commits to continuously improving the experience or at least to a non-decreasing experience (i.e. the experience never gets worse). The IT service provider is committed to continuously improving the experience, with a focus on the value curve over time. The XLA are measured and analysed monthly to recognise trends.

In short, there are various possibilities, with the contractual mechanism depending on the maturity level and the needs of both parties. Outsourcing contracts can cover various aspects, such as annual improvement targets or bonus arrangements. It is important to note that responsibility for the experience is often shared and that an agreement to prevent deterioration can be made initially with inexperienced providers or when starting out from a high baseline.

Notes:

Would you like to discuss experience level agreements with Dierk Soellner? Do you have any questions or comments? For more information, see https://www.dierksoellner.de/xla/.

Here you will find the podcast “Business Akupunktur“.

Here you will find the book “IT-Service Management mit FitSM“.

And here you will find information about the 8-step model for leading change according to John Kotter.

Dierk Soellner has published a two-part series on experience level agreements in the t2informatik Blog.

More information about experience level agreements can be found at the XLA Institute.

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