First things, first.
What’s an SLA?An SLA or Service Level Agreement is a document spelling out the terms under which a service is to be supplied or provided. This can be between a customer or client organisation and an external provider, such as an IT or telecoms supplier. But service level agreements can also apply between different sections or departments of the same company. The SLA defines agreed levels of service, such as availability and extent of provision, together with measures to be taken when service levels aren’t being met, and any penalties that might apply in this case. By guaranteeing certain levels of service and defining the roles to be played by both parties to the contract, an SLA helps to define the relationship between customer and supplier.
Why is an SLA Necessary?The short answer is, to ensure that you have something to fall back on, if a supplier fails to provide services, maintenance, or support. An SLA document sets out all the services to be provided within a supply contract, how reliable they should be, and what measures should be taken, in the event of failures or unanticipated circumstances. It clearly defines the requirements and duties of both client and provider – so neither party can claim they didn’t know what it contains. What’s more, an SLA that’s associated with a contract which has been reviewed by counsel is legally binding. Deviations from its terms can lead to further (legal) action.
What Should Be In an SLA?A service level agreement should fully describe the services which the supplier is contracted to provide, and how reliable and/or available the supplier is expected to make them. The SLA should go further, to establish how these service levels will be measured and assessed, what each party to the agreement is expected to do, to sustain these levels, and what remedial actions are to be taken if the levels drop below agreed thresholds. In addition, an SLA should describe any penalties that apply, if service levels aren’t met – and the conditions under which these penalties become valid. Typically, an SLA will incorporate elements from two aspects:
1. ServiceThis section should go into the details of what services are to be provided, and which are not. It should spell out the conditions under which services will be available, and the service levels which should be expected at given times. Each party’s role and responsibilities in sustaining the service should be described, as should the procedures and protocols to be followed in the event of service level breaches.
2. ManagementThe management section should set out the methods and standards by which service levels will be measured and monitored. This should include the frequency of measurement, reporting methods, and the mechanisms put in place for resolving disputes. The procedure for updating or amending the agreement should also be explained here.
What Happens if Service Levels are Breached?An indemnification clause should be part of the SLA, whereby the supplier agrees to make amends or pay compensation for any breach of its guaranteed levels of service. This also applies to legal action initiated by third parties, in the event of a breach. So the clause extends a measure of protection to the customer. Note that in the standard SLAs issued by most suppliers, this clause will not appear. It’s something you’ll need your legal adviser to draw up – probably in consultation with the service provider’s own legal department. You’ll need to consult with them too, in matters concerning penalties. The penalty clauses stipulated in an SLA should cover the financial and other commitments for which a provider is liable, in the event that they fail to deliver the service they’re contracted to supply under an agreed condition, or for a specified time period. Rather than a flat-out payment, compensation is usually made as a credit to the customer’s account, deductible from their subscription for the next month’s services. The SLA should also include provisions for the client to end the contract, if the provider consistently falls below the agreed levels of service.
Watch for These Elements…Before signing an SLA, make sure these details are covered:
- Time for Resolution: Most service providers will guarantee a maximum time for responding to queries and support requests. Getting a definite figure for the time it will take to resolve an issue is another matter. The most a supplier may commit to is to resolve issues as quickly as possible.
- Problems Excluded from Liability to Penalties: These may include quick-fix scenarios, or occasions when a provider has to make an on-site visit, or order replacement parts to effect a repair.
- Limits to Compensation: A cap is usually set for account credits payable, due to penalty clauses. If you’re not satisfied with the levels agreed, you may need to negotiate a termination clause, for when the maximum is reached.
- Costs, and Measurements: If an SLA only covers normal working hours, 24/7 operations may incur additional charges.
- Client Obligations: An SLA isn’t a one-way street. Both provider and customer have certain responsibilities under its terms. Be sure that these are spelled out – and that you adhere to them.
SLA Design TipsA well-crafted SLA should take the following form:
- Describe the services on offer.
- Specify the standards of service you commit to achieve.
- State when the agreement begins and ends.
- Explain the roles of the client and the supplier, with respect to each other, and their obligations under the agreement.
- Establish the criteria by which the provider and the customer will measure and evaluate the levels of service.