Introduction to SLAs
SLAs are a crucial component of any outsourcing or technology vendor contract. Beyond listing service type and quality expectations, an SLA also provides remedies when requirements aren't met.
Understanding SLA (Service Level Agreement)
A service-level agreement (SLA) describes the level of service required by a client from a supplier. This helps with setting out the metrics by which service is checked. It also defines the remedies or penalties.
For example, a telecom company's SLA may guarantee network availability of 99.999% and permit the customer to decrease their payment by a certain percentage usually depending on the extent of the breach.
Importance Of SLA
- SLAs are a major part of an IT vendor contract. An SLA gets information on all services and their agreed-upon reliability in a document. They declare expectations so that neither party can plead ignorance in the event of issues with the service. It assures that both sides have similar understanding of requirements.
- Any significant contract without any associated SLA is open to deliberate or unintentional misinterpretation. The SLA protects both the parties in the agreement.
Critical Components Of SLA
Service elements: include the specifics of services presented, conditions of service availability, standards such as time window for any level of service responsibilities of any party, escalation procedures, and service tradeoffs.
Management elements: include definitions of measurement standards and methods, contents and frequency, reporting processes, a dispute resolution process, an indemnification clause guarding the customer against third-party litigation emerging from service level breaches and a mechanism for updating the agreement.
This last item is essential; service requirements and vendor capabilities change, so there has to be a way to ensure the SLA is kept up-to-date.
