Introduction
In a world of globalization, services are available to us at our convenience. The only thing is a customer needs to be well aware of the terms and conditions involved while seeking service from a service provider. If this conditions are not followed strictly this can ultimately lead to tussle between the parties. The internet providers or the businesses are involved in providing services at different levels and hence there arises the need for service level agreement. Such agreements help to maintain a healthy relationship between a service provider and a customer. This article has looked after the concept of service level agreement and the components to be considered while drafting the agreements.
Service Level Agreement
Service Level Agreement (SLA) is a contract between a service provider and their customers which mentions the services to be provided by the service provider; like the guarantee and warranty, the methods of operation and the most important being the responsibilities of the parties involved. SLA can be issued to all the customers of a company or a certain group of customers. Service Level Agreements are either informal contracts without legal restrictions or binding contracts. Service level agreement can be revised with the mutual consent of the parties involved. An SLA is drafted so that the companies keep their promises and do not get back from delivering the service. This ensures that a customer enjoys a service. Network service provider is assumed to be the originator of SLA. Service level agreement are usually found in business outsourcing companies, internet providers and telecom companies.
For internal service level agreement, SLA ensures internal service rather than external. It includes services like help desk services in an organisation. For example, in an organisation where different departments function, one department may be dependent on other department and hence there arises the need for an SLA to monitor the performance.
SLA in Outsourcing
Outsourcing means hiring an outside service provider to handle some responsibilities in an organisation. Outsourcing among businesses has become a common concept. Businesses outsource their responsibilities to the ones who provide them services related to their work. This make their work simple by contributing in providing services. The SLA has to be drafted to avoid any kind of tussle between parties. Service level agreement helps to make a strong relationship between service provider and the customer. When a business function is delegated to external service provider certain agreement like an agreement to terminate a contract, force majeure clause, financial penalties and the time duration is considered in an agreement. Outsourcing involves one or more service level agreement.
Components of SLA[1]
The service level agreement may vary as per the services are covered. However, most of the SLA covers these elements:
1. Type of service – It states the type of service, the service provider would be providing. For example, an internet provider would be mentioning the connection, maintenance of networking equipment.
2. Reliability and responsiveness – A reliable service is the one which is available most of the time and suffers minimal disruption and a service can be called responsive when it acts promptly or shows punctuality whenever a customer needs it.
3. Service level monitoring – It looks after the monitoring of the services as to how and who would be monitoring the services and also the procedure to be followed in reporting the monitored services.
4. Problem reporting – It mentions if any customer suffers any problem with the services how they can approach the service provider (contact details), when and the process involved.
5. Resolution time-frame – This mentions the time period when the investigation for the resolution of the problem would begin.
6. Breach of contract – If the service provider does not fulfil the requirements stated in the service level agreement, the customer can terminate the contract and ask for a refund. If the failure to provide any service by the service provider does not involve any penalisation, then it must be clearly stated in the agreement.
Types of SLA[2]
There can be different types of SLA depending on the services rendered to different clients. There are 3 main types of Service level agreement.
1. Customer-based service level agreement
This type of agreement is between a service provider and an external individual customer. The external customers are the ones who are not the part of same organization as that of the service provider and hence customer-based SLA is also known as ‘external service agreement’. This type of agreement includes all the services in one contract. It is as per the specific customer.
Example – Telecommunications service which includes providing internet, message delivery system and voice calls would all come under same contract.
2. Service-level SLA
This kind of agreement are for all the customers. All the customers receive identical service. This kind of agreement are more straightforward for the vendors. Internal service level agreement comes under service-level SLA in which parties inside the organisation are involved.
Example – Dominos Pizza which guarantees delivery in 30 minutes to the customer from the time the order has been placed. Such agreements is for all. The 30 minutes delivery criteria would be applicable to every customer.
3. Multi-level SLA
This type of agreement is generally used as it allows negotiation between the parties involved, letting both the parties satisfy their needs. Customers can add the requirements or conditions as per their wish and finally different conditions are set into one single agreement.
Multi-level SLA has three levels –
a. Corporate level
This kind of agreements are made after discussing all the relevant aspects of the agreement. Corporate level SLA does not require frequent changes. It is applicable to all the customers in end user organisation.
b. Customer level
This type of agreement does not consider all the users but the service is enjoyed by all of them due to a certain section of group. As in an organisation security is strengthened for a particular person or department but such service is enjoyed by the organisation.
c. Service Level
Under service level, all the aspects that are attributed to a particular service with regard to a customer group are included.
Is SLA Negotiable?
SLA is a negotiated agreement as a customer can negotiate with the service provider over the requirements. For example, the fees payable for that service or duration of time can be certain areas over which negotiation can be made. Negotiation can help to avoid disputes and satisfy both the service provider and the customer.
General Format[3]
| Table of contents | Pg. No. | |
| 1.0Service Level Agreement 1.1Version Details 1.2Document Change History 1.3Document Approvals 2.0Agreement Overview 2.1SLA Introduction 2.2Definitions, Conventions, Acronyms and Abbreviations 2.3Purpose 2.4Contractual Parameters 3.0Service Agreement 3.1KPIs and Metrics 3.2Service levels, rankings and priority 3.3Exceptions and Limitations 3.4Responses and Responsibilities 3.5Service Management References and Glossary Appendix |
1.0 Service Level Agreement
Document details and change history
| Version | Date | Description | Authorisation |
Document approvals
| Name | Role | Signature | Date |
Document change history should include the last reviewed date of the document and the next scheduled review. The ‘document approvals’ should include the name of the candidate and the signature of the authority approving documents.
2.0 Agreement Overview
2.1 SLA introduction should include brief explanation of agreement, parties involved, duration of the contract.
“This is a Service Level Agreement (SLA) between [Customer] and [Service Provider]. This document identifies the services required and the expected level of services between MM/DD/YYYY to MM/DD/YYYY.
Subject to review and renewal scheduled by MM/DD/YYYY.
Signatories: ……..”
2.2 Definitions, convention, acronyms, and abbreviations; this includes brief explanation of the terms used in agreement or mentioning the abbreviation. This helps in better understanding of the terms being used in the agreement and to avoid wrong interpretation.
2.3 Purpose means the goals of the agreement like the criteria for target fulfilment evaluation or the duration, scope and renewal of this SLA contract.
2.4 Contractual parameters will include policies, scope, modification, limitations and termination of the agreement. For instance, “contract renewal must be requested by [Customer] at least 30 days prior to expiration date of this agreement or the amendments to this SLA must be agreed by both signatory parties.”
3.0 Service Agreement
3.1. KPIs and Metrics
| Metric | Commitment | Measurement |
| Availability | ||
| Reliability | ||
| Issue Recurrence |
Key Performance Indicators (KPI) in a service should support the SLA that means a customer must be satisfied with the KPI so that the aim behind this SLA is fulfilled.
3.2 Service Levels, Rankings, and Priority
| Severity Level | Description | Target Response |
| Outrage | SaaS server down | Immediate |
| Critical | High risk of server down | Within 10 minutes |
| Urgent | End user impact initiated | Within 20 minutes |
For instance, an internet provider would mention in the agreement that if there occurs critical severity while discharging services what impact a customer has to face and in what time the problem could be solved.
3.3 Exceptions and Limitations includes exceptions to the SLA conditions or scope like
“[Service Provider] must ensure XYZ service throughout the year but the availability of that service during a particular period dated MM/DD/YYYY to MM/DD/YYYY won’t be available”
3.4 Responses and Responsibilities
The responsibilities of service provider and the customer is mentioned. For instance,
Customer’s Responsibility: [Customer] shall inform [Service Provider] regarding changing business requirements that may necessitate a review, modification, or amendment of the SLA
Service provider’s Responsibility: [Service Provider] will inform [Customer] regarding scheduled and unscheduled service outages due to maintenance, troubleshooting, disruptions or as otherwise necessary.
3.5 Service management
Service provider follows the schedule of on-site support, phone and email support like Email Support: 24-Hours as per Section 2.7 of this agreement. For instance, on site support to be available from 10:00 A.M. to 5:00 P.M, Monday to Saturday between January 15, 2021 to November 21, 2021
References And Glossary
Some relevant information is to be included in references and glossary. This includes terms and conditions applicable to the agreement and provision for third party involvement.
Appendix
The information which is not added anywhere or which do not fit elsewhere are added in appendix like the pricing model and charges.
Conclusion
Providing internet services to the customers or delegating the function of the business to external service provider demands for an agreement on a proper line. Such agreements bring transparency in the services provided and both the parties trust each other and could be held liable as per the agreement. Drafting an SLA can be difficult but to make it a simple process, a business must keep in mind its objective to make a good SLA. A good SLA can help the business grow. Even though the components in SLA may vary depending on the service provided but every SLA has a goal to satisfy its customer and at the same time bring the company to a higher position.
References:
[1] What is SLA, https://tallyfy.com/service-level-agreement-sla/?amp (last visited Sept 10, 2021)
[2] 3 types is SLA, https://www.givainc.com/blog/index.cfm/2018/12/3/3-types-of-service-level-agreements ( last visited Sept 10, 2021)
[3] SLA Examples and Template, https://www.bmc.com/blogs/sla-template-examples/ ( last visited Sept 11, 2021)
0 Comments