Business success largely depends on an organization's ability to understand and meet customer expectations. But managing customer expectations can become very difficult when those expectations are unclear or when customers don't fully understand what they can expect from a service provider. To solve this problem, companies rely on SLAs.
Concept of an SLA?
The SLA acts as a written understanding between the entity providing the service and the entity receiving the benefit of the service. While traditional SLAs define service expectations between vendors and customers, they can also apply to multiple departments within the same organization. within the context ITIL ® refers to the design of the service negotiated in SLM.
Why are SLAs important?
Service providers need SLAs to help them manage customer expectations and define severity levels and situations for which they are not responsible for outages or performance issues. Customers also benefit from SLAs because the contract describes the performance characteristics of the service, which can be compared to other vendors' SLAs, and establishes methods for correcting service issues.
An SLA is usually one of two basic agreements a service provider makes with its customers. Many service providers establish a master service agreement that sets out the general terms and conditions under which they will work with their customers. Among the benefits that SLAs can bring, we can highlight:
- best customer experience: Customers who invest in a service provider take risks, act in good faith and expect the provider to meet their needs. The SLA provides a safety net for these customers; the customer knows that if the supplier fails to perform the agreed service or fails to fulfill its obligations, the customer will have legally binding documentation to help it seek compensation. By managing expectations and providing customers with the insurance they need, SLAs can improve the overall customer experience.
- Better employee experience: When obligations are clearly defined and metrics are transparent and quantifiable, everyone involved benefits. This includes employees who have a clearer understanding of what is expected of them and how their performance will be measured.
- Established and reliable source of information: In many ways, the SLA acts as a go-between, ensuring that everyone's best interests are served. It is something that can be trusted by both parties, acting as a trusted and legally verified source of information relevant to service standards and other guidelines.
- Higher productivity and performance: The metrics established in SLAs offer their own built-in advantages. With clear expectations, employees have a 'north star' to guide their performance. This leads to greater productivity and increases personal fulfillment.
How does SLA delivery work?
SLAs are created and provided by service providers. This allows organizations to customize their various SLAs to meet specific customer and service requirements. In fact, in some cases, a company may offer multiple SLAs for a single service, with each SLA reflecting different levels of service at different price points. However, as SLAs are often vendor-prepared, they can favor the service provider over the customer. Therefore, it can be helpful to encourage clients to review the SLA and even consider hiring an attorney, where appropriate, to ensure the SLA is satisfactory before making any formal commitments. This will help to avoid problems with customers feeling cheated.
Main components of an SLA
The main components of a service level agreement include:
- Contract overview. This first section sets out the basics of the contract, including the parties involved, the start date and a general introduction to the services provided.
- Description of services. The SLA needs detailed descriptions of all services offered, under all possible circumstances, including response times. Service definitions should include how services are delivered, whether maintenance service is offered, what the hours of operation are, where dependencies exist, a summary of processes, and a list of all technologies and applications used.
- Exclusions. Specific services that are not offered should also be clearly defined to avoid confusion and eliminate room for guesswork by other parties.
- Service performance. Performance measurement metrics and performance levels are defined. The customer and the service provider must agree on a list of all the metrics they will use to measure the levels provider's service.
- Repair. Compensation or payment must be set if a provider cannot adequately meet its SLA.
- Interested parts. Clearly defines the parties involved in the agreement and sets out their responsibilities.
- Safety. All security measures that will be taken by the service provider are defined. This typically includes drafting and agreeing on anti-poaching, IT security and non-disclosure agreements.
- Risk management and disaster recovery. Risk management processes and a disaster recovery plan are clearly established and communicated.
- Service tracking and reporting. This section defines the reporting structure, follow-up intervals, and the interested parties involved in the agreement.
- Periodic review and change processes. The SLA and all key performance indicators ( KPIs ) established should be reviewed regularly. This process is defined, as well as the appropriate process for making changes.
- Termination process. The SLA must define the circumstances under which the contract can be terminated or will expire. The notice period for both sides must also be established.
- subscriptions. Finally, all interested parties and authorized participants from both parties must sign the document to show their approval of every detail and process.
What are the types of SLAs?
As stated earlier, most SLAs cater to the vendor/customer relationship. However, there are three different types of SLAs, categorized by their specific use cases:
- Customer SLAs: The most common (or at least the best known) type of service level agreement, the customer SLA is a contract between a service provider and an external customer. This is sometimes also called external service contract.
- Internal SLAs: Internal SLAs are designed to establish and adhere to service standards within a specific company or organization. They can work across teams or departments and help ensure that different groups that depend on each other within the company achieve vital goals.
- Multi-Level SLAs: For occasions where there is more than one service provider or more than one end user, a multi-level SLA can split the contract into multiple levels. These can apply to internal or external customers and can also cater to different price ranges for different levels of service within a single product.
What is included in a service level agreement?
Contract summary: Your SLA typically contains a summary of the service, who is receiving the service, and how the service's success will be measured.
Objectives of the parties: For an external SLA between a company and the customer, the objectives included in the contract will typically be those of the customer. Your business should include measurable goals that you can regularly achieve for your customers. If the SLA is internal, goals for all parties must be outlined.
Description of what is needed to achieve the goals: The SLA should include descriptions of what each party to the agreement needs to achieve its goals. This could include things like technical maintenance, consulting or reporting. If you're putting together an internal SLA, it should describe what different departments need from each other to achieve their goals.
Reporting procedure: The SLA should include how and to whom any issues should be reported and what the reporting process should be.
Consequences: The SLA should always indicate what the consequence will be if the specified target is not met. As an example, your company may issue service credits or other forms of compensation.
Circumstances of Termination: Finally, the SLA must contain formal conditions so that the parties can terminate the contract in search of a better one. This can happen with an internal SLA, for example, if the SLA you've put together isn't getting the buy-in you need from all parties involved, or if you frequently miss those targets.
Examples of SLA
A specific example of an SLA is a service level agreement for datethe center. This SLA will include:
An uptime guarantee that indicates the percentage of time that the system is available. Anything less than an uptime of 99.99% should be considered acceptable for modern enterprise-class data centers.
A definition of suitable environmental conditions. This should include supervision and maintenance practices, as well as heating and cooling standards.
The promise of technical support. Customers must be confident that the data center staff will respond quickly and effectively to any issue and be available at any time to resolve it.
Detailed security precautions that will keep customer assets safe. This may include measures to cyber security that protect against cyber-attacks, as well as physical security measures that restrict access to the data center to authorized personnel. Physical security features may include two-factor authentication , locked entrances, cameras and biometric authentication .
Another specific example of an SLA is an Internet service provider's service level agreement. This SLA will include an uptime guarantee, but will also define package delivery expectations and latency. Packet delivery refers to the percentage of data packets received compared to the total number of data packets sent. Latency is the amount of time it takes a packet to travel between clients and servers.
What SLA metrics are important to look at?
SLA metrics should be easy to follow and data can be collected accurately and effortlessly. Again, as the service provider will be responsible for these metrics, they must be absolutely under the provider's control to have a direct impact. It is also important to choose the right number of indicators. Many different metrics can generate more data than is easy to analyze, and few metrics provide enough information to prove that a contract is being performed. Ultimately, every metric needs a reliable and reasonable baseline to measure. These baselines can be reviewed during regular SLA reviews. The metrics that can be included in the SLA are as follows:
Service Availability: This metric measures the amount of time the service is available for use. Service availability can be very demanding under certain types of SLAs, which means that service providers will have to work hard to ensure near constant uptime with very little room for error. This can be especially true for e-commerce sites where even a brief delivery service can result in massive amounts of lost revenue.
Technical quality: There are metrics that can be used to measure the technical quality of certain services. For example, if the service includes the creation and delivery of digital applications, the SLA may need to establish quality standards, possibly measured by program size or number of coding defects.
Error rates: This metric can encompass a number of other metrics and is best described as a measure of how often major deliverables have defects or errors. These can include coding errors, missed deadlines, production failures, etc.
Safety: For many IT services, one of the most important metrics to track to ensure user success is the security. In the event of an incident, security metrics such as the number of unclosed vulnerabilities, antivirus updates, and the application of other relevant security measures are critical to proving SLA compliance.
Business results: Using KPIs to determine how service provider contributions affect business performance.
When to review an SLA
A service level agreement is not a static document. Instead, an SLA should be regularly updated and revised with new information. Most companies review their SLAs annually or semi-annually. However, the faster an organization grows, the more often it must review and revise its SLAs.
Knowing when and when not to make changes to an SLA is a key part of managing the customer/service provider relationship. The two parties should meet on a set schedule to review your SLA and ensure it still meets both parties' requirements.
An SLA should be reviewed:
- when the customer's business requirements have changed, for example, their availability requirements increase because they have established a website of commerce electronic;
- if there is a change in workloads;
- whether measurement tools, processes and metrics have improved;
- when the service provider stops offering an existing service or adds a new service; It is
- when the service provider's technical capabilities change, for example, new technology or more reliable equipment allows the provider to provide faster response times; however, the service provider should review its SLA every 18-24 months, even if its features or services haven't changed much to reduce inaccurate or outdated content.
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