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Service-Level Agreement

2 signers
1 Supplier
2 Customer
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Successful businesses depend primarily on understanding customers’ expectations and meeting them. However, if customers’ expectations are not clearly understood and customer expectations aren’t fully informed, it becomes tough to manage them. Across industries, service level agreements, also known as SLAs, help combat these problems. An SLA serves the purpose of documenting the agreement between the provider of services and the person who receives services.
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Free service level agreement (SLA) template to sign and send
An SLA is a contract between a service provider and a customer that outlines the performance expected from a given service. Depending on the supplier, service, and industry, a customer service level agreement typically defines the needed and desired service levels in terms such as speed, availability, and reliability.
When a service provider fails to meet the agreed-upon performance standards in an SLA, this is known as a breach. A breach may be due to several factors, such as poor quality service delivery, insufficient resources for delivering services, or delays in processing requests.

Why Sign an SLA With Your Service Provider

There are many benefits of using service level agreements in business. For example, they help ensure that both the service provider and end user are clear about what is expected from the service and what will happen if performance targets are not met. In addition, SLAs help minimize risks by providing concrete guidelines for resolving disputes or issues related to service failures.

If you are considering signing a service level agreement with your specific service provider, it is essential to do thorough research and carefully review all terms and conditions before committing. This will help ensure that the agreement meets your needs while also protecting you against any potential issues or breaches in the future.

Additionally, it is a good idea to work closely with your provider to establish realistic expectations and KPIs that can be measured over time as both parties work towards meeting their mutual goals. With careful planning and communication, you can create a strong SLA that benefits your business and helps drive success in the long run.

Typical Contents of Service Level Agreements

There are several key considerations when drafting an SLA, including the scope of the agreement and what constitutes a breach. Service providers should clearly define all aspects of their services, including any performance metrics or benchmarks that will be used to evaluate whether the service is being delivered as expected.

You can find SLA examples online, but it is important to tailor the document to your specific needs and requirements. When drafting an SLA, it is also worth considering these key components:

  • Reporting requirements: This can include information about the timing and frequency of reporting, as well as any required data formats or methodologies.
  • Response time targets: These are the target response times for different requests or issues, such as network downtimes or service disruptions.
  • Compensation provisions: This typically outlines financial penalties that will be applied in cases of a breach, such as reduced payments if performance goals are not met on schedule.
  • Escalation procedures: These are used to help resolve disputes or issues related to service failures quickly and efficiently, ideally with customer service team members, including any processes for escalating issues to senior management within each organization.
  • Legal terms and conditions: Many providers also include standard legal clauses and disclaimers to protect themselves in the event of a dispute.
  • Service availability: The amount of time the service is available to be used.
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Scope of services

This section should clearly define what services are included in the agreement and what services are not included. It may also include details about how often you expect to receive these services and how long you expect them to be delivered.

Performance metrics

Your SLA metrics should include clear performance indicators that specify the standard of service that you will receive. An excellent example is the 99.9% uptime guarantee most service providers in the web hosting industry offer.

Dispute resolution process

Your SLA should also include a straightforward process for handling disputes or service failures, including how you will notify your provider of any issues and what steps they need to take in response. This can help ensure that any breaches are addressed quickly and effectively to minimize any potential impact on the business.

Service credits

Your SLA should also include information about how any performance issues will be addressed. This may include details about the types of compensation or credits you can expect if there are delays or other service issues, as well as any specific performance metrics that need to be met for these credits to apply.

FAQ About Service Level Agreements

Service level agreements are contracts between service providers and clients that define the services and standards required for their delivery. One of the main benefits of signing an SLA with your service provider is that it gives you a clear understanding of what to expect from your service.
If the service provider’s performance falls below the agreed-upon level, your SLA should specify the steps to address this issue. This may include compensation or service credit provision for delays or service issues.
An external SLA is a customer agreement between a supplier (IT service provider) and its customers. For instance, a company may have an external IT services provider for accounting. On the other hand, its marketing and sales departments might have entered a separate SLA wherein the marketing department promises to deliver 100 qualified leads to the sales team each month.

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