The Role of Service Level Agreements in Organizations
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The Role of Service Level Agreements in Organizations

By CIOReview | Friday, March 17, 2017

A Service Level Agreement (SLA) is generally a contract between an end-user and a particular service provider that specifies the detailed service and maintenance that a service provider offers to the client. An SLA is made output-based to specifically define what a customer will receive as part of the service based commitments of the provider. Generally, SLA aims to guarantee the following aspects:

1. A Description: A service level agreement should provide a complete description of the maintenance areas that the provider guarantees to perform.

2. Responsive: The fulfillment of service requests, and regularly scheduled services

3. Reliable: Regular and timely services to be made available

4. Problem Reporting: There has to be a procedure for problem reporting and steps to resolve these problems.

5. Monitoring: The complete details regarding who will monitor performance, the collected information processing and performance statistics for clients.

6. Limitations: The details regarding the limitations of the service level agreement including circumstances under which the agreement goes invalid.

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Role of an SLA

The role of an SLA depends on the factors including the service provider, the type of SLA and the areas covered in the agreement. Most of the SLA cover areas including speed, response time, quality of work, and efficiency. Besides covering these areas, an SLA aims to establish a mutual understanding between the service provider and the customer about the responsibilities of the service, guarantees, warranties, and the areas covered including the limitations of the agreement. An SLA will contain technical definitions that quantify the service level with details including mean recovery and response time for a service. The use of SLAs is also common in any service outsourcing including cloud computing, SaaS and other services were the responsibility of an organization is shared or transferred out to another supplier or maintenance service provider. One of the most important criteria for any type of information to be included in the SLA is that the details must be measurable and the languages should be clear, and understandable without ambiguity.

Types of Service Level Agreements

Every Service Level Agreement is assigned with a type that enables to sort or search for SLA by type. The following list describes the common predefined types of SLAs:

  • Customer-based SLA: This type of an SLA is an agreement made with an individual customer group, covering all the services the customer uses. It is detailing the nature, and quality of the service to be provided.

  • Service-based SLA: This agreement is made targeting the customers using the services offered by a particular service provider. 

  • Multi-level SLA: The multi-level SLA is split into three different levels, each addressing a particular set of customers for a service, in an SLA.

    • Corporate-level SLA: It covers all the generic service level management issues appropriate to every customer throughout the organization with whom the agreement is made with. These issues are likely to be less volatile and so the SLA updates are not required frequently.

    • Customer-level SLA: This type of agreement covers all service issues related to a particular set of customers, despite the services that they use.

    • Service-level SLA: It covers all issue relevant to any specific service, in relation to a particular set of customers.

Benefits of an SLA

A perfectly crafted SLA acts as a set of communication guidelines for the customers and service providers. As SLAs are time sensitive, it can drive efficient service with minimal time. SLAs can also help in deriving the performance metrics of each supplier in their service. A complete SLA can decrease down time as well as improve ROI for organizations.