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Service Level Agreement

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About Service Level Agreement

A service-level agreement (SLA) defines the level of service expected by a customer from a supplier, laying out the metrics by which that service is measured, and the remedies or penalties, if any, should the agreed-on service levels not be achieved. Usually, SLAs are between companies and external suppliers, but they may also be between two departments within a company.

The SLA should include not only a description of the services to be provided and their expected service levels, but also metrics by which the services are measured, the duties and responsibilities of each party, the remedies or penalties for breach, and a protocol for adding and removing metrics.

Metrics should be designed so bad behavior by either party is not rewarded. For example, if a service level is breached because the client did not provide information in a timely manner, the supplier should not be penalized.

What Should Be Included in an Service level agreement

Agreement Overview

The agreement overview includes details such as the individuals involved, effective/expiry date as well as a general statement on what other details the particular SLA will cover.

Goals and Objectives

The next section that should be covered is goals and objectives. Here, the purpose of the agreement, including the ability to obtain a mutual agreement, will be outlined.


This section defines the parties involved in the agreement. For example, an IT service provider and an IT customer.

Periodic Review

There should be mention of a periodic review, which will outline the effective/expiry date, as well as the parameters regarding review timelines of a particular SLA.

Service Agreement

Perhaps the largest section of a service level agreement comes next and is called the service agreement, which features many key components for which the service provider takes responsibility. The topics covered in this section include:

  • Service scope, which looks at the specific services offered by the agreement, for example, telephone support.
  • Customer requirements, which includes details on payments at agreed upon intervals.
  • Service provider requirements are also a part of the service agreement and cover areas that include clarification of response times in cases of service related incidents.
  • Service assumptions. Here, protocol on changes to services and the ways in which they are communicated to the stakeholder(s) is discussed.

Service Management

The final portion of a service level agreement deals with service management. In this section, both service availability and service requests are covered. A concise SLA will feature information on the availability of telephone support, response time for service requests, as well as options regarding remote assistance. Whether you are creating a service level agreement or just looking one over, ensuring that it includes many, if not all of the above noted sections and subsections, is important to a successful relationship between service provider and service consumer.

What Kind Of Metrics Should Be Monitored

The types of SLA metrics required will depend on the services being provided. Many items can be monitored as part of an SLA, but the scheme should be kept as simple as possible to avoid confusion and excessive cost on either side. In choosing metrics, examine your operation and decide what is most important.
Depending on the service, the types of metric to monitor may include:

Frequently Asked Questions

A mistake I encounter repeatedly is that people create a statement of services and mistakenly think they've created a service level agreement. While these service statements are useful, they are not SLAs. In particular, they lack information concerning the terms and conditions of service delivery, and often fail to describe how the SLA will be managed; that is, how compliance with the agreement will be tracked, reported, and reviewed, and how changes to the SLA will be handled.
When reviewing an SLA, the first thing I look for is the presence and adequacy of the service and management elements. When I'm told that that an SLA isn't “working very well,” I frequently find that it lacks one or more of these elements, and an agreement that lacks the necessary elements is typically ineffectual.

Internal SLAs typically serves as an ongoing mechanism, and as such have no end date. The parties to the SLA meet regularly to review service performance and to make adjustments to the terms and conditions of the SLA as deemed necessary. Such SLAs continue in effect until the parties to it agree to terminate it, as may happen if the services described are no longer needed or no longer available, or the organization undergoes a complex reorganization that renders existing SLAs obsolete.
Internal SLAs for which pricing or others provisions must be renegotiated on a set schedule, such as is the case in many governmental SLAs, typically have one-year terms. SLAs that are part of a legal contract have terms of one year or longer, in sync with the terms of the contract.

Before entering into negotiations or making commitments to providers, customers should conduct a service assessment. This assessment entails gathering information from as many service recipients as feasible and as many sources of service data as possible, so as to answer such questions as:

  • What services are you currently receiving?
  • What aspects of these services are confusing or unclear?
  • What services are you not currently receiving that would be beneficial?
  • In what ways has service delivery been on target?
  • In what ways has it fallen short?
  • What aspects of the service need improvement?
  • What changes in service delivery would be desirable?
  • The information gleaned from this assessment helps customers enter the SLA effort knowledgeably and better-prepared

Important problems, issues and concerns invariably surface during periodic service reviews, even when service delivery has been on target during the review period. Therefore, holding service reviews regularly, with both provider and customer representatives participating, is essential to SLA success. In fact, the intention to conduct these reviews should be documented in the SLA. I recommend holding a formal review meeting at least monthly when the SLA is new, when service delivery has been below acceptable levels, or when the service environment is complex or undergoing significant change. When service has been stable and at acceptable levels, quarterly review meetings may suffice. Of course, interim review meetings can be held as warranted, such as if significant concerns arise regarding the adequacy of service delivery. In addition to these periodic reviews, an in-depth annual review should be conducted in light of changing business or service needs.

Start by trying to determine management's reasoning. An understanding of their perspective will help you build a case that's targeted to their specific concerns. In doing so, watch for problems that might not have occurred if SLAs had been in operation , such as customer confusion about service availability or conflicts between providers and customers about service quality. Point out to management the cost of lost productivity while wrestling with these situations.
Happily, many of the steps involved in creating an SLA can be carried out without a formal SLA effort. For example, one of the biggest tasks in establishing an SLA is creating a service description or service catalog to clarify service offerings. Another task is defining and communicating service standards that document the time frames and conditions of service delivery. A third task is gathering customer feedback to service as a baseline for assessing service effectiveness. If management supports these and the other individual steps involved in implementing an SLA, you may be able to achieve the benefits of an SLA without ever calling it that. I call this process How to Succeed by Not Quite Establishing a Service Level Agreement.

Although everything in an SLA is eligible for change, changes should not be made casually or frivolously. Typically, it's best to limit changes to significant circumstances such that those arising from changing business or service needs, significant variations from agreed-upon service standards and unanticipated events. Whatever conditions are determined to warrant making adjustments to the SLA should be articulated in the SLA.


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