Complete Information of Service-level agreement (SLA)

Complete Information of Service-level agreement (SLA)


Nitin Gupta

23 June 2020

Are you an outsourcing or technology vendor contractor? Do you only wish to provide your customers with the best possible services? Do you wish to be prepared for the worst possible situation? If the answers to these questions are yes, then setting up a Service-level agreement (SLA) document is extremely important for you and your organization.

But what if you don’t know what a service-level agreement is? If that is the case, then you don’t need to worry as we’ll be discussing everything that you need to know about service-level agreements in this article.

What is a Service-level agreement (SLA)?

A service-level agreement or SLA can be defined as a document that specifies the level of service that is expected by a customer from a supplier or organization. It is important for both parties to lay out various metrics that will help in measuring the quality of service after it has been provided.

This document should contain information related to any type of remedies or penalties that needs to be faced by the supplier if the quality of service is less than what was agreed upon in the document earlier. It is also important to note that a service-level agreement can also be between any two departments that are present within the same organization.

To understand this in a better manner, let’s consider the example of an organization that provides its customers with network services. If that organization decides to enter into a service-level agreement and promises to deliver network availability of 99%, then that is exactly what customers can expect from that organization. However, if that organization fails to deliver on its promise, then this can provide the customers with the option to reduce their payment to a certain level that should be mentioned in the service-level agreement.

Why Do You Need a Service-level agreement (SLA)?

Whether you are an outsourcing firm or an IT vendor contractor, service-level agreements should be an integral part of your business. The primary reason for this is that an SLA leaves no grey area when it comes to deciding on the kind of services and the quality of those services that customers can expect from an organization. Service-level agreements are extremely objective as everything is clearly mentioned in the document, including various metrics, expectations, and responsibilities.

SLAs ensure that in case of an issue, no party can later plead ignorance. It further solidifies the fact that both parties understand the requirements and the kind of expectations that are shared in terms of the services or the quality of products. Service-level agreements also protect the interest of both parties if these agreements are formulated efficiently. It is also advised that a service-level agreement should always be aligned to the business or technology objectives of the engagement. This ensures that both parties have a positive impact in terms of the quality of services delivered, deal pricing, and the experience of the customer.

Who Should Provide the Service-level agreement?

In most cases, service providers often have pre-existing service-level agreements. The exact number of SLAs can depend on the types of services and level of services that are provided by that organization. This should be taken as the initial starting point for negotiation. Changes can be made to the pre-existing service-level agreement until both the parties arrive at a negotiation that is beneficial and fair to everybody who is involved.

It is also recommended that when the customer is sending the Request for Proposal (RFP), then the customer should also include the kind of services and quality that he or she might be expecting. This would allow the other party to decide on the best course of action through which they can fulfill the expectations of the customer in the best way possible.

The Format of a Service-level agreement (SLA)

If you are not sure regarding what exactly you need to mention or include in a service-level agreement, then we have mentioned a template or the basic format of a service-level agreement. You can also choose to edit this template according to what you think works best for your organization. The template is mentioned below.

  1. Service-level agreement
    This is basically the first page of your agreement. And it should include all details regarding the version, change history of the document, and the approvals of the document.
  2. Agreement Overview
    This is the second section of your agreement that is further divided into four main sections. These four main sections are:

    • Service-level agreement Introduction:
      In this section, you need to provide your agreement with a short introduction. Try to mention the names of the parties concerned, the duration of the contract, and the scope of services.
    • Definitions, Acronyms, Conventions, and Abbreviations
      There are various terms and names that you would be using repeatedly in the service-level agreement. In this section, you need to define all the major terms and mention any abbreviations that you might be using.
    • Purpose
      As the title indicates, in this part of the SLA, you have to mention the main aims or purposes of the agreement.
    • Contractual Parameters
      The main aim of this section is to explain and mention the policies and scope of the agreement, including the application, modification, renewal, termination, limitation, and exclusion.
  3. Service Agreement
    This section is the last major part of the service-level agreement. There are many subsections in this part, including KPIs and metrics, service response, service levels, ranking, and priority, expectations and limitations, and responses and responsibilities.
  4.  References and Glossary
    Before concluding the SLA, you also have to include policy documents, agreements, glossary, or any other detail that you think is relevant to the agreement. If there are any third-party vendor contracts, then you also need to include that in this section.
  5.  Appendix
    If there is any information that does not fit properly in other sections of the agreement like information related to charges and pricing model, then you need to mention that information in this section.

Author’s Bio,

Nitin Gupta is a voracious reader and an even passionate writer. Having worked with numerous order booking apps companies and MNCs across the world, he really has very to the point and enthralling insights about the industry and the people working in them.

Nitin writes about technology and how it impacts the various industries such as pharma, hospitality, travel, and many others as well.

With a plethora of industry experience and cutting-edge expertise spread across various industries, Nitin manages to craft articles that are really illuminating for the audience. To keep up with the current scenario of industry, Nitin spends a lot of time so he can stay up to speed with what’s happening in the industry. He then goes on to put his learnings, thoughts, and opinions in the articles he writes.

Because of his crisp language and thoughtful content, he has managed to garner a huge audience that loves to know his thoughts about everything that is happening in the industry and the world in general. Quite responsibly, Nitin takes his followers and readers very seriously. Not only does he spend an ample amount of time in reading and learning about the industry, but he engages in enlightening conversations with people who have unique thoughts to offer.

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