Cost Matrix, SLA and ROI

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Cost Matrix, SLA and ROI

Cost Matrix is the part of e-commerce projects and is used when there are misclassification errors. They are also used when some classification errors are more severe then the other problems. In cost matrix each corresponding element represents the cost of the outcome. If it is a profit then the outcome will have a negative value. The cost matrix is used for diagnostic analysis as the user doesn’t expect any profit and wants to minimize the expense incurred. The cost of each diagnostics outcome depends on application as well as user.

Service Level Agreement (SLA) is a legal document between the service provider and the customer. SLA becomes essential when the customer comes forwards to take the advantage of services of service provider. The SLA is used to define the parameters of service provided by service provider and which are agreed by service consumer or simply the customer. There are three types of SLA. First one is ENTERPRISE SLA; it is between the service provider organization and its entire customer. Second is CUSTOMER SLA; it is between the service provider organization and a specific customer or group of customers. In this every customer may have different SLA for the same facility provided by the organization. And the last one is SERVICE SLA; it is between the service provider organization and the entire group of people who consumes that service. In this, every customer is treated in the same manner for the same service.

A good SLA always has following key features.

Descriptions of service: The bottom line is, an organization provides the service and the customer consumes its services. So a good SLA always contains the description of services provided and considered within it. This help customer to understand easily what they will get when they agree to a particular organization services.

• Service Standards: Once you are finished with the task to describe all the services in your SLA, the next task is to define the standards of service. This may include the reliability and availability as well as response and resolution time. Service standards also contain the clause like in case of customer urgency what will be the parameters considered by service provider organization, the minimum time take to response to the customer query, the estimate time interval within which it can be resolved.
• Duration: When the services and standards are mentioned within SLA, the next and very important point is to be mentioned is the duration of service period. Your SLA must contain the information about the beginning of the services and expire of the same. The duration of SLA may vary from organization to organization and from product to product.
• Roles and Responsibility: The roles or responsibility of the customer are well as organization must be mentioned within the SLA. For example, in case of an electronic good, the organization specify user that it must not be physically damaged. This is the responsibility of customer on the same time, if there is some other issue who is going to resolve (like in case of PC a hardware engineer will solve only hardware related problems and a software engineer deals with software and OS level issue where as and network administrator deals with network level issues) it must be mention within the SLA.
• Contact Information: In the end of SLA, a contact list must be provided to customer so that he/she can contact the right person for the resolution of their problem. It must include the technical representative contact information, the management level representative information and the usual help desk contact information.

Return on Investment (ROI) is one of several available tools in market for the calculation of financial consequences of business investment. The ROI is used to measure how effectively and organization uses it capital to generate profit. Most of the ROI metric analysis compares the cost invested to the profit generated for the investment returns. The result is usually in the form of ratio or in the form of percentage. If the ration is greater then 0.0 (or more than 0%) then it means investment return more than it cost to the organization.

Calculation of ROI

But using only ROI as the decision making tool for an organization is not advisable as it doesn’t inform anything about the risk on investment. It only predicts the expected return but nothing about the risk. But using ROI as a part of decision making for organization is the best practice.