A service level agreement, or SLA, is a contract that spells out the level of service you expect when you hire a managed service provider. It also defines how the service will be evaluated and solutions if the service level falls short. It is an important part of any contract that you have with technology vendors. Continue reading to learn all about service level agreements.
When you outsource your technology needs, it is important to define the relationship. The contract will outline exactly what you expect from the vendor and specify how the service will be evaluated. It also lists the potential penalties or remedies in case you don’t receive the service you agreed on. Most of the time, these contracts are between a company and an external vendor, but they can also be made between different departments in the same company.
For example, if you hire a company that commits to your having network availability of 99.999% and they fall short, the SLA could set out a reduction in your payment for each percentage point that it falls below the agreed-upon level. When you have an SLA, you don’t need to negotiate remedies if the vendor doesn’t provide the services they promised.
Do Companies Need an SLA?
It is always a good idea to have an SLA if you have a contract with an IT vendor. It takes all of the services that you contract the vendor to provide, and it places them in one agreement. The SLA goes on to state the metrics, which is how the services will be evaluated, and the expectations. If there is an issue later on, both the vendor and the company have this document to refer to, and it shows that they both knew the expectations.
If you don’t have an SLA, it can cause problems if there is a disagreement. Either party can present a different understanding of the agreement, whether deliberate or by accident. An SLA protects both parties who participate in the agreement, so it is always a good idea. This type of agreement should be specific to the services being offered to make sure that it is completely clear to both sides.
Which Party Draws up the SLA?
Usually, a service provider will have a standard SLA prepared. They will show the services you contract for, and you can review it. If you want to make changes, you can negotiate until you agree on a final draft. Before signing, the customer and their legal team should review it to make sure that it is what they want it to be.
Sometimes, customers request guarantees for service that a service provider finds unrealistic. This is all part of the negotiation process. For example, if the customer wants 99.999% system availability, the service provider may propose a more realistic solution. The key is for both sides to agree to whatever the final draft of the SLA has in it. If you can’t agree, you may need to work with a different provider.
What Is in the SLA?
The SLA has a description of the services that will be provided as well as the level of service. It will also include the metrics, which is how both parties will measure and assess the services. It contains the responsibilities of each party in the agreement, and it should list any remedies or penalties if the expected service isn’t reached.
It is important that the metrics are neutral. They shouldn’t favor either party, so if the client is slow to provide any information the provider needs, the provider shouldn’t be at fault. This is why the SLA should be clear and detailed. The purpose is to avoid any future misunderstandings.
The Main Components of an SLA
The two main components of the SLA are services and management. The service component refers to exactly what services will be provided, any that are excluded, and the conditions surrounding the services. It should be as specific as possible, including any differences between day and night services or any other changes. In addition, it should make any procedures for escalation clear and list the responsibilities of both the client and the service provider. If there are any cost or service trades, those should be listed as well.
For management, the contract should include how service will be measured, including the methods for evaluation, the standards, the process for filing reports, and more. It should clearly lay out any resolution process, and it may include an indemnification clause that protects the customer from any litigation for security issues. There should also be a procedure for updating the SLA so that it can be modified as technology changes.
What Are the Standard Metrics Used for Measuring Services?
The metrics listed in the SLA vary depending on what services are provided. It is important to simplify it so that it isn’t overly expensive to run the metrics. Consider monitoring the following:
- Service availability: this is the percentage of time that the service is up and running. You can break it into times or have an overall percentage that is the target.
- Technical quality: this metric measures any coding defects or the size of the program, and it is measured by analysis tools for commercial operations.
- Defect rate: this metric keeps track of the errors, including incomplete restores or backups, errors in coding, and missed deadlines.
- Security: this metric is for anti-virus updates, patching, and other preventative measures as well as any security breaches.
An SLA is an important contract that accompanies services provided by any technology service provider. It ensures that both parties understand the expectations going into the agreement, and it provides remedies or penalties for any failure on either side. This helps to ensure that problems are resolved quickly and efficiently throughout the term of the contract.
SLAs should be carefully written to cover the specific services being provided, and both parties need to agree. Make sure that all of the details of the service expectations are covered, and include the metrics that will measure the level of service provided.