Does your SLA measure up?
CORPORATE companies
and travel management
companies (TMCs)
continue to formulate and
enter into service level
agreements (SLAs) with clear
expectations, conditions
and measurements prior
to the commencement of
their partnership to improve
and maintain service
levels. But according to
a recent postgraduate
study conducted by Tanja
Lapersonne, tourism lecturer
at Varsity College in Port
Elizabeth, fewer than half
of the respondents in her
research had entered into a
formal SLA with their TMCs.
Her study was conducted
through Nelson Mandela
Metropolitan University as
part of her BCom Honours:
Tourism degree, with her
primary objective being to
formulate a ‘21st-century
SLA that would ensure
service delivery of key
performance indicators
(KPIs) within the corporate
travel management process’.
Interestingly, Tanja’s finding
was echoed in an ABTA snap
survey about TMC service
level challenges, the results
of which were presented at
a Buyers Breakfast event in
Johannesburg in June.
Of the ABTA survey
respondents, 89% said
they had an SLA in place
with their TMCs and as
many as 11% said they did
not have such a contract.
Of respondents who rated
themselves “extremely
happy” with their TMC, all
had SLAs, 60% met monthly
to review these (40% met
twice a year), 80% had
KPIs and all worked very or
fairly closely with their TMC
regarding KPIs.
Kananelo Makhetha,
md of BCD Travel SA, says
these statistics are more
or less correct in terms of
his company’s dealings with
clients. “SME customers
are not very particular about
SLAs and in the instances
where these agreements
are in place, clients are not
strict about them and often
pass over the opportunity
to utilise the SLA to derive
better value from the
relationship with the TMC.”
He says most multinational
clients operating in African
countries do insist on
formalised SLAs but this
is not the case with local
clients, particularly SMEs.
Advocate Louis Nel of
Benchmark, who attended
the ABTA event, says in
his experience, there are
still a lot of corporates and
TMCs in the market who
do not have SLAs in place
and if they do, there is not
enough focus on them or
enough clarity regarding key
performance areas (KPAs)
and KPIs as well as how to
link these with performance
and breach of contract.
Are SLAs still relevant
in today’s corporate
travel office?
Yes, says Merrill Isherwood,
SARS specialist: travel
management, who spoke
at the event and offered
practical guidance for
managing the TMC
relationship more effectively.
“But that said, while we
have a clear SLA in place
with our TMC, with precise,
measurable KPIs and a fancy
scorecard, both parties –
TMC and corporate client –
won’t reach their objectives
if a key factor, ‘The Personal
Touch’, is not achieved.”
Merrill says because the
travel industry is so process
driven and documented,
it is easy for travel buyers
and their teams to get so
absorbed in efficiencies
that they forget travel is
still an emotional issue
for most people.
Internal stakeholder
satisfaction is a key focus
area for the SARS Travel
Management Office. “For us,
happy travellers are our most
important priority. Will they
be any happier if a booking
is done in ten minutes as
opposed to 15 minutes? No!
The only thing they want is
that the travel experience
runs smoothly for them. For
example, if a traveller tells
me ‘I’ve missed my flight!’
my first response should not
be ‘I’ll get you on to the next
flight’ but rather ‘Are you
okay?’.”
For this reason, honesty
is critical to ensure
all communication is
understood, Merrill says.
In addition, to achieve
success, the TMC and
travel buyer must both have
mutual goals that are also
aligned to their company’s
objectives and staff KPIs
– and more importantly,
they must have mutual
respect for each other’s
roles and responsibilities.
“Do I fully understand my
TMC’s mandate from their
management and do they
understand mine? How do
we assist each other? This
contributes towards external
stakeholder satisfaction,
another key priority,” she
says. If this framework is
not in place, the SLA will not
have as much relevance or
clout, Merrill believes.
For Kananelo, SLAs are
still relevant because they
set service performance
expectations at the outset
and allow the TMC to
allocate resources and price
them in line with service
level expectations.
In Tanja’s view, the SLA
framework defines the
KPIs and service levels
expected from the TMC,
which are linked to financial
incentives and penalties for
exceeding or falling short of
these agreed expectations.
“The SLA provides a clear
understanding of both
parties’ values and goals
to assist in excluding future
questions or challenges.
To ensure that an SLA is
effective, it should comprise
seven to ten measurable
metrics that are managed,
tracked and audited on a
monthly or quarterly basis.”
How often should SLAs
be reviewed?
In her studies, Tanja
assessed the idea of an
SLA as an instrument to
ensure service delivery and
found that while research
indicated that corporate
travel procurement managers
were becoming more reliant
on SLAs to manage their
relationship with their TMCs,
only a small percentage of
38% were using their SLA as
a relationship management
tool.
“The SLA framework
defines the KPIs and levels
of service that are expected
from a TMC and while 87%
of respondents agreed that
KPIs should be linked to
the SLA, only 46% felt that
an SLA should be revisited
annually, with a mere 4%
opting for a monthly review.”
Merrill suggests at least
a biannual review, if not
quarterly, in the event of
changing requirements.
Louis agrees it should be
a dynamic, ongoing process.
“There should be quarterly
performance management
meetings and, at these,
compliance should be
reviewed. In fact I believe
SLAs should rather be called
performance management
agreements (PMAs) and it is
always useful when drafting
such an agreement to look
at benchmarks in other
industries.”
Kananelo says most formal
SLA reviews are quarterly,
although the performance
indicators are tracked
monthly. “Limit the number
of service performance
measures and have them
measurable. Ensure
that they drive customer
satisfaction of all main
stakeholders.”
To avoid nasty
surprises, what should
SLAs include?
Tanja has seen how
in recent years the
procurement departments
of corporate companies
have become involved and
influenced by the travel
procurement process
through the introduction of
new measurable KPIs that
impacted on travel costs and
service elements.
“A KPI is a key buying
factor that travel
procurement managers will
evaluate during the selection
process of a TMC. Basic
KPIs, such as response time
and speed and quality of
reservation, still form part of
today’s KPIs, however travel
procurement managers are
now including metrics that
will improve and escalate
their travel management
programmes.”
While elements do
differ according to client
preferences, Kananelo says
the common elements
relate to response times to
bookings as well as general
communication, service
error ratios, customer
satisfaction indexes, data
and documents accuracy and
query resolution.
He points to an
Advito White Paper
on improving travel
programme management
through strategic KPIs
and meaningful savings
measurements, which
states the optimum number
of strategic KPIs for a
corporate travel programme
is eight to 12, balancing
comprehensiveness with
avoidance of over-complexity.
For this reason, Merrill says
SLAs must include clearly
defined expectations that
have been discussed and
agreed to by both parties
prior to inclusion in the SLA.
Do corporates currently
make optimal use of
their SLAs?
In Merrill’s opinion, no.
“SLAs are seen to be a
measuring instrument used
more for punitive measures
than as a working document
that is regularly reviewed and
adjusted as business needs
dictate.”
Louis agrees: “There
should be a distinct link
with breach and contract
termination. What is
also common is the
misperception that an SLA
is not a contract. It can be
a stand-alone contract or
attached to a contract as an
addendum. It is imperative
that this is addressed and
linked to mediation to avoid
costly litigation when things
don’t work out.”
According to Tanja’s
study, she has found that
while SLAs are standard
documents in the majority
of corporate organisations,
corporate travel procurement
managers are propelling
past traditional targets
and metrics that measure
service delivery and are
shifting their focus towards
SLAs that will reduce costs
and reflect intricate service
key performance indicators.
“This development is due
to organisations having
their own quality assurance
programmes and expecting
TMCs to adhere to similar
standards and continual
technology development.”
