What is a Service Level Agreement (SLA) is a contract between a service provider and its customers
that documents the services that the provider will provide and defines the
service standards to be met.
A service level commitment (SLC) is a broader and more common
form of an SLA. The two differ because an SLA is bidirectional and involves two
teams. On the other hand, an SLC is a unidirectional obligation that
establishes what an organization can guarantee to its customers at all times.
Why are SLAs critical?
Service providers need Service Level Agreements to help them manage customer expectations
and define the levels of severity and circumstances under which they are not
responsible for interruptions or performance issues. Customers can also benefit
from SLAs because the contract describes the performance characteristics of the
service, which can be compared with the SLAs of other providers, and
establishes the means to correct service problems.
The SLA is usually one of the two necessary agreements
that service providers have with their customers. Many service providers
establish the main service contract to develop the terms and conditions under
which they will work with customers. The SLA Agreement is usually incorporated by reference in the service provider's
main service contract. Between the two service contracts, the SLA adds higher
specificity about the services provided and the metrics that will be used to
measure its performance.
When IT outsourcing first appeared in the late 1980s,
service level contracts evolved as a mechanism to govern these relationships. Service Level Agreement Template defines
expectations for the performance of a service provider and set penalties for
breaching targets and, in some cases, bonuses for exceeding them. Since
outsourcing projects were once customized for a specific client, outsourcing
SLAs were often created to govern a particular project.
Who needs a service
level agreement?
Service level agreements are believed to come from network
service providers but are now widely used in several IT-related areas. Some
examples of industries that establish Service Level Management include IT service providers and managed service
providers, as well as cloud and Internet service providers.
Corporate IT organizations, particularly those that have
adopted the management of IT services, sign service level agreements with their
internal customers, users of other corporate functions. An IT department
creates an SLA so that its services can be measured, justified, and perhaps
compared with those of outsourcing providers.
What is an SLA?
Generally speaking, an SLA includes typically a statement of
objectives, a list of services to be covered by the contract, and a definition
of the responsibilities of the service provider and the client under the SLA.
The client, for example, will be responsible for providing a
representative to solve problems with the service provider regarding the SLA.
The service provider will be responsible for respecting the level of service,
as defined by the SLA. The performance of the service provider is evaluated
based on a set of metrics. Response time and resolution time are among the main
parameters included in an SLA since they are related to how the service
provider handles a service interruption.
Main components of an SLA
The main elements of a service level agreement are:
General description
of the contract: this first section establishes the basic concepts of the deal,
including the parties involved, the start date, and a general introduction to
the services provided.
Description of
services: the SLA needs a detailed description of each service offered, in
all possible circumstances, with response times included. Service definitions
should consist of how the services are provided if a maintenance service is provided,
what are the hours of operation, where the dependencies exist, a summary of the
processes and a list of all the technologies and applications used.
Exclusions: the
specific services which are not offered must also be clearly defined to avoid
any confusion and to eliminate the margin of the hypothesis of the other
parties.
Service performance:
performance measurement metrics and performance levels are defined. The client
and the service provider must agree on a list of all the parameters they will
use to measure the service levels of the provider.
Repair:
compensation or payment must be defined if a supplier cannot adequately comply
with his SLA.
Stakeholders:
clearly define the parties involved in the contract and define their
responsibilities.
Security: all
security measures that the service provider will adopt are defined. This
generally includes drafting and concluding anti-poaching contracts, computer
security, and confidentiality.
Risk management and
disaster recovery: Risk management processes and a disaster recovery plan
are established and communicated.
