Monday, January 20, 2020

How to Use Service-Level Agreements for Success



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.