SLA | Full Form, Components and Types

What is an SLA?

SLA is defined as an agreement between a service provider and their clients/customers. This agreement provides all the information and details regarding the products and services that the service provider must provide to their customers or clients. SLA also provides the basis on which services can be measured and whether the expectation of the client has been met or not. It also provides remedies for the clients in case the given services in the SLA have not been fulfilled or any partial service is given. These agreements are mainly entered between a company and its external suppliers who supply them with goods or raw materials but depending upon the situation it can be also entered between two distinct departments of the same company as well.

Full Form of SLA

SLA stands for “Service Level Agreement”. It is a document that creates legal liability upon the service provider to provide the services as mentioned in the SLA to their clients. This document provides the details of the services like performance, quality of services, and other related services that the service provider has promised to provide. It also has all the information regarding the warranty of the service, their customer care numbers, and how to measure their performance. SLA acts as a very essential document between the service provider and their clients as it provides the steps and penalties that the customer can use if the service provider does not provide them the services as mentioned in the SLA.

Components of SLA

Various components of a Service Level Agreement are necessary to be included in an SLA to make them a valid legal agreement. Some of the components that must be included in an SLA are discussed below.

1. Overview: Both parties must mention the general details of the agreement like name, and details of the parties, tenure, signing date, etc.

2. Services: The agreement should mention the services that the service provider will provide, the timeline, and the costs associated with it.

3. Metrics: In metrics, the client or the customer will mention how they are going to measure the performance of the services. The service provider can also provide their metrics to lure other customers.

4. Support: It is necessary to mention the details of the contact person whom the client/customer can connect in case they face any difficulty.

5. Dispute Resolution: It is necessary to mention the dispute resolution technique that both parties are going to follow and the maximum timeline for that.

6. Penalty: It is there so that the parties know that in case they are not performing the services then they have to pay the mentioned penalty to the other party.

Types of Service SLA

1. Customer SLA: These SLAs are created between a service provider and their customer. In this type, the customer can be an individual, a group, or a company depending upon the deal between them. SLA between a customer and their internet provider falls under this category. The Service providers make the customer SLA depending upon the needs of the facility of the customer. The services also differ with each customer so the service provider makes a unique SLA for each customer.

2. Service SLA: These SLAs are created by companies for the services they give to a set of customers. The content of these SLAs are same for every customer, and it depends upon the customer whether they want to enter into these agreements or not. The company does not change its services under this SLA irrespective of the customer. An agreement of insurance between a company and its customer can be an example of a Service SLA.

3. Multilevel SLA: These SLAs are created between service provider and client when the services are offered to various level of clients or in cases where more than one service provider are giving the services. The services in this case differ for each level of customers and for each level, a different set of rules has been set in the SLA.

Importance of SLA

Service Level Agreement is a very detailed document and it is important for both the parties i.e. service provider and the client. There are various important points from the perspective of the service provider as well as the client, some of them are mentioned below.

1. Clear Guidelines: All the terms and conditions are expressly mentioned in the SLA, so it is easier for the customer to raise any issue if they face any difficulty.

2. Predefined Quality: The metrics are defined in the SLA, so any party can refer to the same if they have any confusion regarding any services.

3. Alternative Solution: The SLA also helps the parties to find an alternative solution in case one of the parties has not performed the services as mentioned in the SLA.

4. Details of the Parties: The SLA also helps the service provider to know about the details of their customers and to know about all the conditions that they have agreed upon.

5. Timeline: The SLA also provides a timeline to both parties for addressing any issues present between them.

6. Disclaimer: The SLA also provides a part in which the services are mentioned that are not the liability of the service provider.

7. Liability of the Service Provider: The service provider can show their customers the liability defined in the SLA if the client is demanding more services or any service that is not theirs in the SLA.

Who Needs SLA?

Every business organisation that is providing any kind of services to another person works upon an SLA. The companies use their Service Level Agreement (SLA) to facilitate negotiation with clients or other organisations. This document plays a critical role in finalising any deal with other organisations. Various clients also need SLA to compare the services given by the service provider with other players in the market. SLA defines the services of both the service provider and the client, so it is also important that the client agrees to the terms mentioned in the SLA.

How to Set Metrics of SLA?

Metrics in an SLA depend upon the services given by the service provider and it will differ in each case. Metrics usually refer to the criteria for the services given by the service provider that can be measured. It is essential that the metrics of the SLA are easy to follow and the data can be also collected without any effort. The metrics should be made in a way that the customers can easily understand the services that they are going to get in the SLA. Some of the important metrics that need to be included in an agreement are as follows.

1. Availability of the Services: This metric measures the amount of time that the service provider is providing the services.

2. Error Rates: This metric is used to count how many times there has been an error while performing the services and how the service provider is going to address that issue.

3. Technical Advancement: This metric will measure the technical services provided by the service provider. In this, they also have to mention the technology that they are going to use while providing the services.

4. Confidentiality: How the service provider is going to protect the confidential information regarding their clients.

5. Results: The service provider needs to mention their successful services in other organisations that they have already completed or they are working on it.

Examples of Service Level Agreement (SLA)

The examples of SLA differ with each service as different services requires different level of SLA. Some of the examples are provided below.

1. If an Internet-providing company is providing its services to another company, then it shall have an SLA that caters to the needs of that company specifically. If the same internet company is providing its services to an individual, then it shall have a different SLA that caters to the needs of that individual specifically.

2. If an insurance company is providing its services to another company, then it shall follow the SLA created for corporate companies. Even in that SLA, the terms discussed between these companies shall be there. If the same company is selling its insurance via an online medium, then the general SLA that is there for the customer will prevail.