Basics of Service Level Agreements

IT outsourcing agreements, where service provider compensation is tied to business outcomes, have gained popularity as companies move away from time- and hardware-based or full-time, employee-based pricing models. The SLA should include not only a description of the services to be provided and their expected service levels, but also the measures against which the services are measured, the duties and responsibilities of each party, the remedies or penalties for violations, and a log for the addition and removal of measures. This type of SLA takes place between a company and a customer. It is also known as an external service contract. It includes: Service level agreements serve as a set of formal guidelines between a user and a provider. Often, this agreement can minimize customers` confusion regarding many aspects of the service they sign up for. Since an SLA is time-critical, it is also beneficial for the provider that the onboarding of new customers takes place quickly. Metrics should be designed in such a way that bad behavior is not rewarded by both parties. For example, if a service level is not met because the customer did not provide timely information, the provider should not be penalized. Service level credits, or simply service credits, should be the only recourse available to customers to compensate for service level outages. A service credit deducts an amount of money from the total amount payable under the contract if the service provider does not meet service delivery and performance standards. Now that you`ve learned the basics, dive deeper into vendor contract management. Download the eBook.

Here are some service level agreement templates that you can use to define the service you will provide to end users: However, for critical services, customers should invest in third-party tools to automatically capture SLA performance data that provides an objective measure of performance. Most service providers provide statistics, often through an online portal. There, customers can verify that SLAs are being met and whether they are eligible for service credits or other penalties as stated in the SLA. Cloud providers are more reluctant to change their default SLAs because their margins are based on providing basic services to many buyers. In some cases, however, customers can negotiate terms with their cloud providers. Many SLAs follow the specifications of the Information Technology Infrastructure Library when applied to IT services. If a customer is not satisfied with the quality of the service they have received, it is usually because the company has not met their expectations in terms of response time or finding a solution. These expectations are explicitly set out in the SLAs, so a client does not have to wonder if a request has been received. SLAs define customer expectations for service provider performance and quality in a variety of ways. Here are some metrics that can specify SLAs: This type of SLA describes what is expected of different parties when there is more than one end user or service provider. You can use it as a way to support customers or as part of an operational strategy. For example, your marketing and sales departments may also involve the customer service team as part of the SLA to incorporate customer loyalty into the agreement.

Tools that automate the collection and display of performance data at the service level are also available. If both parties agree to include refunds in the SLA, the process should be carefully defined at the beginning of the negotiation and integrated into the service level methodology. It`s also a good idea to review your SLA as your business evolves and grows, as the SLA should reflect its changing needs and capabilities. If you need help creating a service level agreement or want to review an agreement you currently have in place, Contract Counsel can help. We are happy to put you in touch with a fully approved lawyer who can help you create or revise your Service Level Agreement. Contact us today to get started. An SLA defines the provider`s performance obligations in relation to the services it provides to the customer in a measurable and objective manner through defined service level requirements. It is also important to provide a reasonable baseline for the measures, or a number that the company commits to at least respect. This baseline can be moved as more data is collected and the service provider better understands what is possible for the customer. A indemnification clause is an important provision in which the service provider undertakes to indemnify the client company for any breach of its guarantees. Indemnification means that the supplier must pay the customer all third-party litigation costs resulting from the breach of warranties.

If you are using a standard SLA provided by the service provider, it is likely that this provision is missing. Ask your in-house counsel to draft a provision that is simple to include, although the service provider may wish for further negotiations on this point. SLAs are an integral part of an IT vendor contract. An SLA summarizes information about all contractual services and their agreed expected reliability in a single document. They clearly state the parameters, responsibilities and expectations, so that in case of problems with the service, neither party can invoke ignorance. It ensures that both parties have the same understanding of the requirements. IT service providers and managed service providers, as well as cloud and Internet service providers are examples of industries that use SLAs. Given the wide use and relative importance of service level agreements (SLAs) in various contexts, this blog post provides an overview of the fundamentals of SLAs and what they should address. An SLA is an important part of any contract with a provider of technology products or services. Customers and vendors use SLAs to set performance expectations for a variety of services, ranging from software as a service (SaaS), maintenance, hosting, support, or other cloud-based services to delivering tangible assets. Another concrete example of an SLA is a service level agreement of an Internet service provider.

This SLA includes a guarantee of availability, but also defines the expectations and latency of package delivery. Packet delivery refers to the percentage of data packets received in relation to the total number of data packets sent. Latency is the time it takes to transfer a packet between clients and servers. There are several ways to write an SLA. Here`s a simulated table of contents that you can use as a startup template to write your own service level agreements. Your support team will be more consistent if you set clear criteria. If a customer contacts your help desk for any reason, your goal should be for them to know exactly what to expect. .