What Is Service Level Agreement (SLA)?
According to Statista report, in 2019, 92 percent of organizations engaged in information technology outsourcing (ITO) services have an active contract. Some examples of businesses that establish SLAs include IT service providers and managed service providers, as well as cloud computing and internet service providers.
What is SLA?
· A Service Level Agreement defines the level of service you expect from a vendor, setting up the metrics by which the service is measured, as well as remedies or penalties should agree on service levels are not achieved.
· It is an essential component of any technology vendor contract.
· For example, a telecom company’s SLA, may promise network availability of 99.999 percent, and allow the customer to reduce their payment by a given percentage if that is not achieved.
What are the 3 Types of SLA?
SLA is usually divided into 3 categories. They are:
1. Customer based SLA
· This type of SLA is aimed for individual customers and includes all services they request. The document includes details about service quality to let customers know what level of service delivery they should expect.
· A good example could be telecommunication companies. Their services comprise messaging, internet connection, and voice calls. However, all of them fall into one agreement.
2. Service based SLA
· This document gives a single identical service for all clients. It is based on a single set of guidelines which makes this type of SLA the most appropriate one.
· For example, users sign the service level agreement regarding information technologies helpdesk. That means that the same service is applicable for all users.
3. Multi-level SLA
This agreement is based on demands from end-user companies. It is a customizable contract that makes it possible to play with various standards and conditions to make both sides benefit from the final description of the document. This type of SLA can be divided further into subcategories:
· Corporate — No regular updates are needed for such an agreement. The points included in the contract usually remain unchanged. This type of document is applicable to all customers of the company.
· Client — This type of agreement covers all service aspects related to a certain category of customers. At the same time, the type of services is not considered.
· Service — This document involves all elements attributed to a specific service regarding a certain group of customers.
Now that you know what an SLA is, you might have few questions in mind which you need to clear, before documenting one for your business. So, let’s look at some of the most common questions which you might be thinking of.
What should Service Level Agreement include?
Many elements can be monitored as part of an SLA, but the plan should be kept as simple as possible to avoid confusion and excessive cost on either side.
· Detailed service overview
· Speed of service delivery
· Plan for performance monitoring
· Description of the reporting procedure
· List of penalties that will be applied in case of breaches
· Constraints
Let’s look at a sample SLA that you can use for creating your own SLAs. Remember that these documents are flexible and unique. Make changes as necessary if you include the relevant parties, particularly the Customer.
There are several ways to write an SLA. Below is the table of contents, which you can use as a beginning template for writing your own service level agreements.
1. Service Level Agreement
The first page of your document should include:
· Version details
· Document change history
· Document approvals
2. Agreement Overview
The agreement overview section should include four components:
· SLA introduction
· Definitions, convention, acronyms, and abbreviations
· Purpose
· Contractual parameters
3. Service Agreement
This section can include a variety of elements and subsections under the following components:
· KPIs and metrics
· Service levels, rankings, and priority
· Service response
· Exceptions and limitations
· Responses and responsibilities
· Service Management
4. References and Glossary
Include reference agreements, policy documents, glossary, and other relevant details in this section. This might include terms and conditions for both the parties, service provider and the customer, and any additional reference material, like third-party vendor contracts.
5. Appendix
The appendix is a good place to store relevant information that does not fit elsewhere, such as pricing models and charges.
Why are SLAs important?
· Service providers need SLAs to help them manage their customer expectations and define the severity levels and circumstances under which they are not liable for outages or performance issues.
· Customers can also benefit from SLAs because the contract describes the performance attributes of the service which can be compared with other vendors SLAs and sets forth the means for rectifying service issues.
Who needs a service-level agreement?
· SLAs are believed to have originated from network service providers but are now widely used in a range of IT related fields.
· Corporate IT organizations, particularly those who have embraced IT service management, enter SLAs with their in-house customers which includes users in other departments within the enterprise.
· An IT department produces an SLA so that its services can be measured, justified, and perhaps compared with those of outsourcing vendors.
Why do I need an SLA?
· SLAs are a central part of an IT vendor contract.
· An SLA draws together information on all the contracted services and their agreed-upon expected reliability into a single document.
· They clearly state metrics, responsibilities, and expectations so that, in the event of concerns with the service, neither party can plead ignorance.
· It ensures both sides have the same understanding of needs.
· The SLA protects both parties in the agreement.
Conclusion
· Though your SLA is a documented agreement, it does not need to be lengthy or too complicated.
· It is a flexible, living document.
· Putting together an SLA can be a difficult process, but if you keep your business objectives in mind and follow the tips in this article, any SLA produced should enhance the business relationship with your service provider and help you receive the expected service.
· You can revisit and tweak the SLA when needed as unforeseen instances are certain.
