InterviewSolution
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InterviewSolution
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Can The Service Level Agreement Include Penalties For Various Reasons? |
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Answer» While a penalty paid out of profits may work in the PRIVATE SECTOR, the financial model in the public sector is different. All costs still NEED to be recovered for services funded by an Internal Service Fund. IT shared services cannot make a profit or loss on an annual basis. If penalties were ENACTED, it would not reduce the total cost as there is no profit margin; expenses and revenues need to be equivalent each fiscal year for a service. While a penalty paid out of profits may work in the private sector, the financial model in the public sector is different. All costs still need to be recovered for services funded by an Internal Service Fund. IT shared services cannot make a profit or loss on an annual basis. If penalties were enacted, it would not reduce the total cost as there is no profit margin; expenses and revenues need to be equivalent each fiscal year for a service. |
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