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In the world of a large variety of services, it becomes crucial to establish the “rules of the game” meaning to define what services your provider will supply you, under what conditions, what KPIs will be used to assess the quality of the service, and what will happen in case of the downtime. A Service Level Agreement (SLA) is exactly what orchestrates these questions.
In this article, we will discuss what an SLA is, the types of it, in what situations you would need an SLA, how to write it, and the consequences of not meeting SLA requirements.
SLA is short for Service Level Agreement. It is an agreement between a service provider and its customers that outlines the services that the provider will provide and the standards that it must meet.
When it comes to any contract with outsourcing or technology vendors, SLAs play a crucial role. They not only define the type and quality of services that are expected but also specify the actions that can be taken if those requirements are not met. Essentially, an SLA serves as a mechanism for addressing service failures, including the time frames when it must be done.
There are different types of Service Level Agreements that aim to suit different service scenarios and meet the specific needs of customers and service providers.
To understand what type of an SLA is better for you, you need to consider what kind of provider you have, the type of service, expectations, and objectives.
The need for an SLA is not defined by the industry as it can be used in different situations whenever you have a service provider regardless if it is a third-party one or an internal one. Having an SLA is never extra since it not only defines the objectives and expectations you set regarding your service provider but also establishes the consequences that follow in case the requirements are not met by either party. It grants security to both the customer and the vendor.
Here are some of the cases where signing a Service Level Agreement is highly recommended:
The structure of a Service Level Agreement depends on the chosen type, who are the stakeholders, to what extent flexibility is allowed, what KPIs are used to evaluate service quality, and so on.
However, the following structure can be used for the general outline (and then can be tailored for the specific needs of the signatories):
Defining the measures and actions that need to be undertaken gives the customer and service provider a degree of responsibility and obligation. Service Level Agreement’s breach is a serious matter and should be defined in an agreement by both parties. Unless it was not in the provider’s control, a complete outage of the service – with no acknowledgment of it by the provider – may be considered an SLA breach and lead to:
A Service Level Agreement is an important mediator between the customer and the service provider especially if it is a long-term partnership. It needs to be composed carefully so the interests of both parties are taken into account and in case of a dispute, there is a clearly defined procedure fortis regulation.