Chapter2.Service Level Management

Chapter 2. Service Level Management

Service Level Management (SLM) is a key for delivering the services that are necessary to remain competitive in the Internet environment. Service quality must remain stable and acceptable even when there are substantial changes in service volumes, customer activities, and the supporting infrastructures.

Superior service quality also becomes a competitive differentiator because it reduces customer churn and brings in new customers who are willing to pay the premiums for guaranteed service quality. Customer churn is an insidious problem for almost every service provider.

The competitive market increases customer acquisition costs because continuous marketing and promotions are necessary just to replace the eroding customer base. Higher customer acquisition costs must be dealt with by either raising prices (a difficult move in a highly competitive market) or by taking longer to amortize the acquisition costs before profitability for each customer is achieved. Improving customer retention therefore dramatically increases profits.

This chapter covers the basics of SLM and lays part of the groundwork for the rest of the book:

• An overview of SLM

• An introduction to technical metrics

• Detailed discussions of measurement granularity and measurement validation

• Business process metrics

• Service Level Agreements (SLAs)

Note that the chapter ends with a summary discussion in the context of building an SLA. Use of metrics in combination with the SLA's service level objectives to control performance is discussed in Chapter 6, "Real-Time Operations," and Chapter 7, "Policy-Based Management."