Decoding Service Level Agreement Jargon

When in the market for technology services, you’ll hear the term SLA frequently. Service level agreement (SLA) essentially defines the obligations and parameters of a service an external party provides. 

Here’s how Gartner defines SLA: 

A service-level agreement (SLA) sets the expectations between the service provider and the customer and describes the products or services to be delivered, the single point of contact for end-user problems, and the metrics by which the effectiveness of the process is monitored and approved.

SLAs can be complex documentation with terms a layperson may not know. As SLAs define the commitments of the service provider, it’s crucial to understand everything in the written contract. At the end of the day, SLAs must reflect the quality and availability of service you expect and your business needs. 

This article is a detailed guide on SLAs, explaining the common terms used in agreements and outlining the key things to consider. 

What Does an SLA Include? 

Although SLAs can vary, most follow standard guidelines that stipulate the inclusion of certain components. Having these components in an SLA makes it clearer and more binding, covering all bases for measuring the effectiveness and performance of the SLA. 

Typically, SLAs include the following:

• Intro/Overview: This part is normally the first section of the agreement that mentions the parties (service provider and customer) and other basic information, such as contract start date, place, and the nature of the service/company. 
  
  
• Stakeholders: Name/definition of the involved parties and their responsibilities.  
  
  
• Service Scope: This section in an SLA defines the services for which the provider is responsible under normal conditions. This part should be detailed with criteria such as turnaround time. Furthermore, it should also cover how the service will be provided and the resources used. 
  
  
• Exclusions: The SLA document also includes related services not included for clarity. 
  
  
• Service Metrics: This is the criteria that was mentioned earlier. This part goes into more detail on how the service performance is measured (with metrics). This part lists the agreed-upon metrics or conditions that help define the service levels. 
  
  
• Redressing: This part discusses the agreed-upon compensation should the provider fail to fulfill its responsibilities and not meet the service standards. 
  
  
• Reporting: This part defines when and how the service level will be tracked and reported to all involved parties. 
  
  
• Duration of Contract and Conditions of Renewal: The term of the contract and the possibility/conditions of extension or renewal of the agreement.
  
  
• Termination Process: This part of the SLA discusses the requirements for terminating the contract before or at the expiration date. 
  
  
• Signatures: The signatures of stakeholders that show the understanding and approval of the SLAs. 

Common SLA Abbreviations 

SLA documents often use abbreviations to describe service levels. Here are the most commonly used SLAs in the IT industry, particularly for maintenance and management services:

SLA Metrics

Depending on the nature of the services provided, SLAs can be measured against pre-selected metrics. Simply put, parties can determine performance metrics to determine whether the provider held its end of the agreement and delivered services according to the agreed-upon standards. 

The metric should be relevant to the service and business. Similarly, they should be under the control of the provider. 

Here are some common metrics used to measure service performance in IT SLAs:

• Uptime or Availability: This is a common metric used to indicate the availability of services/resources at all times. It’s often presented in percentage format and can be reported per billing cycle, monthly, or quarterly. 
  
  
• Response Time: This indicates the provider's time to respond to a request or query. Many providers use ticketing systems for requests and record the response time, which can be measured against the agreed response time in the contract. 
  
  
• Resolution Time: This indicates the time it takes for the provider to resolve an issue. It begins once the issue has been submitted. 
  
  
• Error Rate: This metric shows the number or percentage of errors in a deliverable. It is commonly used in development projects. 
  
  
• Business Results: These are key performance indicators (KPIs) that can determine the positive, negative, or neutral contribution to the business performance. 
  
  
• Recovery Time: This indicates the time for services to reopen after an outage. 
  
  
• Security Incidents: This number of security incidents in a given timeframe, often accompanied by the level of severity (critical, non-critical, etc.).

Why SLAs Are So Important?

SLAs serve as a vital part of service contracts with IT vendors. Whether you’re hosting applications on the cloud, outsourcing security management, or using general IT support services from a third party, it’s crucial to establish SLAs that establish an expected outcome. 

Without SLAs, contracts are open to interpretation, and vendors may not be bound to uphold a high standard of services. Without specific terms and conditions describing the service benchmarks, the ambiguity may lead to subpar service that can hurt the business. 

SLAs may be part of the primary contract or referred to in the primary and a separate document detailing the service standards. Either way, SLAs add more specificity to the contract and service quality. It also provides a framework for customers to measure the performance or impact of the service against certain benchmarks. 

SLAs also help establish compensation or indemnification if the service provider fails to meet the expected and agreed-upon service standard. 

SLA Best Practices (For Customers)

When signing SLAs, it’s important to establish clear terms and conditions. Here are some recommendations:

• All stakeholders should be clearly defined along with their scope of service/contribution. 
  
  
• SLAs should ideally align with the business requirements and ultimately benefit the end consumer. Determine service levels that can, in turn, help you improve your customer experience.
  
  
• Set practical, actionable, and achievable benchmarks for measuring service performance. 
  
  
• Include provisions for reviewing and revising SLAs periodically or should major changes occur within your enterprise. 
  
  
• Define terms and abbreviations with detail to avoid ambiguity. 

The Takeaways

SLAs are what make IT services worth the investment. Service levels may include performance indicators like response time, delivery time, resolution time, uptime, availability, and more. Many IT enterprises use SLAs to compare vendors and choose one that provides the SLAs they expect. 

PivIT’s SLAs are binding and help deliver the best customer service. With part delivery SLAs as short as four hours, PivIT’s maintenance and sparing services uphold high standards that ensure customers never face downtime.