JSSM  Vol.6 No.1 , March 2013
From Theory to Practice—When and How to Implement Service Value Agreement
ABSTRACT

Traditionally, a Service Level Agreement (SLA) is used as an appendix in IT Service Management agreements to set expectations and delineate the service delivery description as well as the terms and conditions of delivery. However, SLAs are unable to imply and guarantee the added values expected by the customer. Service Value Agreement (SVA) is a newly developed framework that identifies the deliverable added values along with metrics to measure the quality and quantity of achievements in terms of business added values. The objective of this study is to expand the concept of SVA for Application Management (AM) services and suggest guidelines for its implementation in real business cases. This goal is fulfilled through the case study approach and outsourcing industry contributions. Authors suggest discussing the concept of SVA from early stages of the sales lifecycle and implementing it gradually during the steady state phase. Combination of Service Value Mapping approach and Piloting method is suggested for SVA proposition as an option with successful practical history.


Cite this paper
M. Ziyarazavi and C. Magnusson, "From Theory to Practice—When and How to Implement Service Value Agreement," Journal of Service Science and Management, Vol. 6 No. 1, 2013, pp. 127-142. doi: 10.4236/jssm.2013.61013.
References
[1]   S. Cullen, P. Seddon and L. Willcocks, “Managing Outsourcing: The Lifecycle Imperative,” MIS Quarterly Executive, Vol. 4, No. 1, 2005, pp. 229-246.

[2]   M. Kotabe, “Global Sourcing Strategy and Sustainable Competitive Advantage,” Industrial Marketing Management, Vol. 33, No. 1, 2004, pp. 7-14. doi:10.1016/j.indmarman.2003.08.004

[3]   K. Krishnamurthy, D. Jegen and B. Brownell, “Strategic Out-Tasking: Creating ‘Win-Win’ Outsourcing Partnerships,” Information and Management, Vol. 46, No. 1, 2009, pp. 42-51. doi:10.1016/j.im.2008.11.004

[4]   M. C. Lacity, S. A. Khan and L. P. Willcocks, “A Review of the IT Outsourcing Literature: Insights for Practice,” Journal of Strategic Information Systems, Vol. 18, No. 3, 2009, pp. 130-146. doi:10.1016/j.jsis.2009.06.002

[5]   W. L. Tate, L. M. Ellram, L. Bals and E. Hartmann, “Offshore Outsourcing of Services: An Evolutionary Perspective,” International Journal of Production Economics, Vol. 120, No. 2, 2009, pp. 512-524. doi:10.1016/j.ijpe.2009.04.005

[6]   K. E. Pearlson, “Strategic Management of Information Systems,” John Wiley & Sons, Hoboken, 2009.

[7]   E. Brynolfsson and S. Yang, “Information Technology and Productivity: A Review of the Literature,” Advances in Computers, Vol. 43, 1996, pp. 179-214. doi:10.1016/S0065-2458(08)60644-0

[8]   J. J. M. Trienekens, J. J. Bouman and M. V. D. Zwan, “Specification of Service Level Agreements: Problems, Principles and Practices,” Software Quality Journal, Vol. 12, No. 1, 2004, pp. 43-57. doi:10.1023/B:SQJO.0000013358.61395.96

[9]   J. Goo, R. Kishore, H. R. Rao and K. Nam, “The Role of Service Level Agreement in Relational Management of Information Technology Outsourcing: An Empirical Study,” MIS Quarterly, Vol. 33, No. 1, 2009, pp. 119-145.

[10]   K. D. Larson, “The Role of Service Level Agreement in IT Service Delivery,” Proceeding of Information Management & Computer Security, MCB University Press, Bradford, 1998, pp. 128-132.

[11]   I. S. Hayes, “Metrics for IT Outsourcing Service Level Agreement,” White Paper, Clarity Consulting Inc., Chicago, 2004.

[12]   M. Ziyarazavi, C. Magnusson and T. Tergesten, “Qualifying and Quantifying IT Services Added Values in Outsourcing Assignments—Service Value Agreement,” Journal of Service Science and Management, Vol. 5, No. 4, 2012, pp. 318-330. doi:10.4236/jssm.2012.54038

[13]   P. Strassman, “Outsourcing: A Game for Losers,” Computerworld, Vol. 29, No. 34, 1995, p. 75.

[14]   P. Strassman, “Most Outsourcing Is Still a Game for Losers,” Computerworld, Vol. 38, No. 4, 2004, p. 19.

[15]   J. N. Lee, M. Q. Huynh, K. R. Chi-Wai and S. Pi, “The Evolution of Outsourcing Research: What Is the Next Issue?” Proceeding of the 33rd Hawaii International Conference on System Sciences, Hawaii, 4-7 January 2000, 10p.

[16]   J. Fisher, R. Hirschheim and R. Jacobs, “Understanding the Outsourcing Learning Curve: A Longitudinal Analysis of a Large Australian Company,” Information Systems Frontiers, Vol. 10, No. 2, 2008, pp. 165-178. doi:10.1007/s10796-008-9070-y

[17]   L. M. Ellram, W. L. Tate and C. Billington, “Offshore Outsourcing of Professional Services: A Transaction Cost Economics Perspective,” Journal of Operations Management, Vol. 26, No. 2, 2008, pp. 148-163. doi:10.1016/j.jom.2007.02.008

[18]   R. M. Monczka and R. J. Trent, “Worldwide Sourcing: Assessment and Execution,” Internal Journal of Purchasing and Materials Management, Vol. 28, No. 4, 1992, pp. 9-19.

[19]   J. Spohrer and P. P. Maglio, “The Emergence of Service Science: Toward Systematic Service Innovations to Ac- celerate Co-Creation of Value,” Production and Operations Management, Vol. 17, No. 3, 2008, pp. 238-246. doi:10.3401/poms.1080.0027

[20]   N. Bowen and J. Spohrer, “Viewpoint: The Future of Computing Practice and Education,” IEEE Computer Society, Vol. 43, No. 1, 2010, pp. 86-89. doi:10.1109/MC.2010.83

[21]   R. M. Monczka and R. J. Trent, “Global Sourcing—A Development Approach,” Internal Journal of Purchasing and Materials Management, Vol. 27, No. 2, 1991, pp. 2-8.

[22]   M. D. Aundhe and S. K. Mathew, “Risk Mitigation in Offshore IT Outsourcing Contracts: A Service Provider Perspective,” European Management Journal, Vol. 27, No. 6, 2009, pp. 418-428. doi:10.1016/j.emj.2009.01.004

[23]   J. Spohrer, P. P. Maglio, J. Bailey and D. Gruhl, “Steps Toward a Science of Service Systems,” IEEE Computer, Vol. 40, No. 1, 2007, pp. 71-77. doi:10.1109/MC.2007.33

[24]   “ITIL Service Strategy,” Office of Government Commerce, TSO, London, 2007.

[25]   K. Wüllenweber, D. Beimborn, T. Weitzel and W. K?nig, “The Impact of Process Industrialization on Business Process Outsourcing Success,” Information Systems Frontiers, Vol. 10, No. 2, 2008, pp. 211-224. doi:10.1007/s10796-008-9063-x

[26]   C. Rosenkranz, S. Seidel, J. Mendling, M. Schaefermeyer and J. Recker, “Toward a Framework for Business Process Standardization.” 5th International Workshop in Business Process Design, Springer, Berlin, Heidelberg, 2010, pp. 43-53.

[27]   M. Sch?fermeyer and C. Rosenkranz, “To Standardize or Not to Standardize? Understanding the Effect of Business Process Complexity on Business Process Standardization,” 19th European Conference on Information Systems (ECIS2011), Helsinki, 9-11 June 2011.

[28]   H. V. Leijen, “The Role of Contextuality in Process Standardization,” In: W. Baets, Ed., Knowledge Management and Management Learning: Extending the Horizons of Knowledge-Based Management (Integrated Series in Information Systems), Springer Science and Business Media, USA, 2005, pp. 251- 286.

[29]   B. Martorelli, E. Rose and C. F. Ross, “Application Outsourcing Clients Are Satisfied, but Want More,” Forrester, Cambridge, 2010.

[30]   P. Matthyssens and K. Vandenbempt, “Moving from Basic Offering to Value-Added Solutions: Strategies and Alignment,” Industrial Marketing Management, Vol. 37, No. 3, 2008, pp. 316-328. doi:10.1016/j.indmarman.2007.07.008

[31]   I. Oshri, J. Kotlarsky and P. Willcocks, “Outsourcing Global Services,” Palgrave Macmillan, New York, 2008. doi:10.1057/9780230227415

[32]   A. Dagenhardt, A. Godard and F. P. Rauch, “Top 10 Pitfalls of Application Management Services,” White Paper, Siemens IT Solutions and Services, Berlin, 2010.

[33]   “ITIL Service Design,” Office of Government Commerce, TSO, London, 2007.

[34]   I. C. Ng, R. Maull and N. Yip, “Outcome-Based Contracts as a Driver for Systems Thinking and Service- Dominant Logic in Service Science: Evidence from the Defense Industry,” European Management Journal, Vol. 27, No. 6, 2009, pp. 377-387. doi:10.1016/j.emj.2009.05.002

[35]   S. L. Vargo and R. F. Lusch, “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, Vol. 68, No. 1, 2004, pp. 1-17. doi:10.1509/jmkg.68.1.1.24036

[36]   S. L. Vargo, P. P. Maglio and M. A. Akaka, “On Value and Value Co-Creation: A Service Systems and Service Logic Perspective,” European Management Journal, Vol. 26, No. 3, 2008, pp. 145-152. doi:10.1016/j.emj.2008.04.003

[37]   M. C. Lacity and L. P. Willcocks, “Information Systems and Outsourcing,” Palgrave Macmillan, New York, 2009.

[38]   J. C. Anderson, J. A. Narus and W. V. Rossum, “Customer Value Proposition in Business Markets,” Harvard Business Review, Vol. 84, No. 3, 2006, pp. 91-99.

[39]   N. Levina and J. W. Ross, “From the Vendor’s Perspective: Exploring the Value Proposition in Information Technology Outsourcing,” MIS Quarterly, Vol. 27, No. 3, 2003, pp. 331-364.

[40]   M. Dier, “Accenture Merger, Acquisition, Divestiture and Alliance Services,” White Paper, Accenture, Dublin, Chicago, 2012.

[41]   Deloitte, “Strategies for Going Public,” White Paper, Deloitte M&A Consultative Services, 2010.

[42]   IBM Global Technology Services, “Transition and Transformation, Transitioning Services with Minimal Risk,” White Paper, IBM, 2007.

[43]   M. Walsh, A. Ramchandran and S. Nolen, “Ignorance is not Bliss, IT Due Diligence is Fundamental for Effective Post-Merger Synergy Capture,” White Paper, Deloitte M&A Consultative Services, New York, 2008.

[44]   “ITIL Service Operation,” Office of Government Commerce, TSO, London, 2007.

[45]   M. Lacity and L. Willcocks, “An Empirical Investigation of Information Technology Sourcing Practices: Lessons from Experience,” MIS Quarterly, Vol. 22, No. 3, 1998, pp. 363-408. doi:10.2307/249670

[46]   “ITIL Service Transition,” Office of Government Commerce, TSO, London, 2007.

[47]   L. Willcocks, D. Feeny and G. Islei, “Managing IT as a Strategic Resource,” McGraw Hill, Maidenhead, 1997.

[48]   L. Mathiassen, “Collaborative Practice Research,” Information Technology & People, Vol. 15, No. 4, 2002, pp. 321-345. doi:10.1108/09593840210453115

[49]   E. Gummesson, “Relationship Marketing and A New Economy: It’s Time for De-Programming,” Journal of Services Marketing, Vol. 16, No. 7, 2002, pp. 585-590. doi:10.1108/08876040210447315

[50]   M. Myers and D. Avison, “Qualitative Research in Information Systems,” SAGE, London, 2002.

[51]   R. Stake, “The Art of Case Study Research,” SAGE, Thousand Oaks, 1995.

[52]   H. Simons, “Towards a Science of the Singular: Essays about Case Study in Educational Research and Evaluation,” Centre for Applied Research in Education, University of East Anglia, Norwich, 1980.

[53]   R. K. Yin, “Case Study Research: Design and Methods,” SAGE, Newbury Park, 2003.

[54]   A. Hochstein. G. Tamm and W. Brenner, “Service Oriented IT Management: Benefits, Cost and Success Factors,” Proceedings of 15th European Conference on Information Systems, Regensburg, 26-28 May 2005.

[55]   B. C. Potgieter, J. H. Botha and C. Lew, “Evidence that Use of the ITIL Framework is Effective,” Proceeding of the 18th Annual Conference of the National Advisory Committee on Computing Qualifications, Tauranga, 10- 13 July 2005.

[56]   J. Van Bon, G. Kemmerling and D. Pondman, “IT Service Management, an Introduction,” Van Haren Publishing, San Antonio, 2002.

[57]   J. Zeng, “A Case Study on Applying ITIL Availability Management Best Practice,” Contemporary Management Research, Vol. 4, No. 4, 2008, pp. 321-332.

[58]   G. Ritchie, “Introducing ITIL Availability Management,” Serio Ltd., Edinburgh, 2008.

[59]   S. Zacks, “Introduction to Reliability Analysis: Probability Models and Statistics Methods,” Springer-Verlag, New York, 1992. doi:10.1007/978-1-4612-2854-7

[60]   M. Rother and J. Shook, “Learning to See: Value Stream Mapping to Create Value and Eliminate Muda,” The Lean Enterprise Institute—One Cambridge Centre, Cambridge, 2008.

 
 
Top