The Ultimate Guide to Service level agreement (SLA)

What is a service level agreement?

A service-level agreement is an agreement generally between a network service provider and a customer who specify the terms, that exactly what were the services that the network service provider will deliver. A huge number of Internet service providers facilitate their customers with a Service Level Agreement. Lately, Internet service departments of the major enterprises have opted for writing a service level agreement so that services for their customers can be counted, justified, and also compare with those of outsourcing network providers.

Service Level Agreement

Why are service level agreements important? 

  • Improves Communication:- A properly drafted service level agreement improves the communication between the parties. It helps the parties in understanding the needs, priorities, and concerns of each other.
  • Helps in managing Expectations: –The expectation of each party about the service and service delivery can be clearly stated with the help of service level agreement.
  • Reduces conflicts:- If the needs and priorities of the parties are not clear then it will certainly leave scope for the conflicts to arise. It helps in clarifying the same and reduction of conflicts it also helps in resolving the conflicts.
  • It’s a Living Document:- It gives you a chance to stay updated and adopt the changes as per the convenience of the parties. It also provides the option of continuously reviewing the agreement.

Reason for getting into Service Level Agreement:-

  • It improves service by defining and focusing on the key services required to meet business requirements;
  • To regulate the service provider and to review their ability to meet these requirements;
  • To regulate the customer and examine their requirements for key services;
  • To agree on levels of expectation in all parties as to the levels of service that can be provided on economic rates;
  • It develops a better understanding and working relationships.

Who should get a Service Level Agreement done?

  • Outsourcing of work by companies who want to maintain a level of quality of service from the outsourced vendor
  • Companies in Outsourcing activities:- Who take outsourcing work and want to assure their client to a level of services

The process of making a Service Level Agreement:-

1)  Awareness & Negotiation:- Generally a “broker” is supposed to sit down with both parties and discuss the business requirements and service capabilities. This may not be essential with small services or if the service is only between two areas. A Systems or Business Account Manager is preferably placed to deal with this function – external Facilitators are also very useful. It is suggested that the initial discussion should take place with each party individually. Later, the meeting shall be required.

2)  Documentation:- The negotiation shall lead to the production of the documents of service level agreement

3)  List of services and quality levels:-

  • Description
  • Delivery Point
  • Accessibility
  • Quality Levels
  • Measurement Procedures
  • Escalation Procedures

These are mostly self-explanatory, although care should be observed while distinguishing between a service which is a Mainframe service that may need to be broken down into Application availability, and desktop availability, as it may be tricky to measure the whole service on the basis of both the components. Availability and Quality levels are ought to be clearly described how and when Service Level Agreement breaches and is to be measured.

4) Reports:– Service Level Agreements should only be drawn up where measurement of the performance against the target levels can be precisely and impartially measured. Hence it is necessary to put mechanisms in place to achieve data that will identify any the breach of the Service Level Agreement, such that reports can be produced and used as the basis for discussions involving both the parties.

It is essential to note that the process of capturing and retrieving this data should be recognized from a resource point of view in advance of the process taking effect, in order to identify if this process itself reasonable. Reports should contain information like the reasons why a particular Service Level Agreement was not met, though not essentially the solution to the problem. Where possible the production of these reports should be self-descriptive.

Contents of Report:-

  • Problem management exception reports
  • Systems availability stats
  • User questionnaires (to identify subjective views of the service)
  • System generated response times

5) Reviewing:- Reports should, in general, be produced on a monthly basis and passed to all the parties-providers and customers. They should provide the grounds for discussion and be used to explain why a particular Service Level Agreement was not met. In case the breaches are of recurring then the Service Level Agreement should be altered, or apposite resource re-allocation considered.

General Clauses of Service Level Agreement:-

  • Services
  • Payment
  • Relationship
  • Confidential Information
  • Ownership of Work Product
  • Representations and Warranties
  • Indemnification
  • Liability Limit
  • Termination and Term
  • Insurance
  • Force Majeure
  • Non-Solicitation

 Key Components of a Service Level Agreement (SLA)

  • Agreement Overview. It comprises of details such as the persons involved, date of effective/expiry, etc.
  • Aims and Goals
  • Shareholders
  • Review at regular intervals of time
  • Agreement for service
  • Management of Service

Service level agreement metrics

SLA metrics are criteria which are negotiated between a customer and their service provider which defines a numeric goal that has to be attained for the service provided. 

Service level agreement example

For example, maintenance services are provided by the facility manager for various customers. There is a service level agreement between you and an internal customer (such as another organization, site, or department).

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