Running a successful business requires high-quality systems to process all financial and organizational data. Today, many companies are using new methods & agreements to enhance their work and ensure that the production process is as planned.  

One of the most important ways is to set a service level agreement with their customers. Learn more about this What is a Service Level Agreement through this article. 

What is an SLA 

A service level agreement (SLA) is a written contract between an internal service provider and an external customer which defines exactly the services required, the degree of service expected, and the provider who will offer the services.

The SLA is generally a part of an outsourcing or other agreements for the provision of services.  Service providers should attend to the differences between internal output and customer outcomes, which helps define service expectations. 

Who Needs a Service-Level Agreement

An SLA came into existence thanks to network service companies but has now spread to a variety of sectors. For example, IT companies establish SLA with their internal customers that can be justified, assessed, and compared to those of external contractors.

IT service providers and managed service providers, as well as cloud computing and internet service providers, are examples of sectors that use SLA. 

What are the Types of SLA 

There are three basic types of SLA:

  • A Customer Service-Level Agreement

is between a customer and a service provider. They come to a negotiated agreement on the services that will be provided, including: 

  1. Details of the service 
  2. Standards for each level of service 
  3. Provisions of the service 
  4. Escalation procedures  
  5. Responsibilities for each level 
  6. Terms for cancellation 
  • An Internal SLA 

Internal SLA is between an organization and its internal customer, department, or site. This service level agreement includes four weekly reports sent from marketing to the sales department to ensure that the teams can achieve their goals. 

  • A Multi-Level SLA

Multi-Level SLA will divide the agreement into various levels that are specific to a series of customers using the service. Every level of service will be layered into the multi-level SLA. 

Why is SLA Important 

The Service Level Agreement (SLA) is necessary for service providers to meet customer expectations and specify the risk and conditions for performance issues.

Customers also benefit from SLA because it determines the service's performance characteristics.  It is one of two basic contracts that service providers have with their customers. 

The SLA adds further clarity to the services offered and the criteria that will be used to assess their performance between the two service contracts. Many providers create a master agreement to set the general terms to engage with their customers. The services that are included in the service offering are defined by service obligations. 

Here we present to you the five most important reasons why you should consider implementing an SLA service in your organization. 

1- Define clear and measurable guidelines 

An SLA is vital to ensure you and your service provider are on the same runner in terms of norms and service. By creating a service station agreement, you and your provider can work through your prospects.

Establishing clear and measurable guidelines is important as it reduces the chances of failing the punter and provides the punter with a resource if scores aren’t met. 

2- Set realistic expectations for your customers 

When a client is dissatisfied with the quality of service they received, it's usually because the company didn't fulfill their expectations for reaction time or finding a solution. These expectations are explicitly stated in SLAs, so a client does not have to question whether an inquiry was received.

If your policy states that you will react within 24 hours, the client understands that it will take at least that long. Therefore, it's important to set up an online SLA tracker so you can see when a ticket is filed and respond appropriately within the agreed-upon timeframe. 

3- Provide a redress mechanism for unfulfilled service obligations 

If your service provider fails to fulfill its responsibilities, it can have serious ramifications for your company's reputation and bottom line.

If performance criteria are not reached, you should incorporate repercussions and a backup plan in your SLA. You might impose monetary penalties that could help your company if it suffers losses. This will assist you in safeguarding your company in times of crisis. 

4- Consistent assistance 

Your support team will be more consistent if you define clear criteria. When a client contacts your support service for any reason, your objective should be for them to know exactly what to expect.

A well-written Service Level Agreement will compel your team to maintain consistency to satisfy the agreement's requirements. 

What are SLA Components

            A service-level agreement should have the following elements: 

  • Agreement Overview:

This section sets forth the basics of the contract, including brief, start date, and the services provided. 

  • Description of Services:

The SLA needs descriptions for all services, including how the services are delivered, whether maintenance service is offered, the operation hours, an outline of the processes, and a list of all applications used. 

  • Risk Management: 

This section is responsible for developing a plan to recover from disasters if they occur and setting a plan for how to avoid them. 

  • Signatures

All stakeholders must sign the document to show their approval of every detail. 

  • Service Performance: 

The customer should agree on a list of all metrics which will use to measure the performance and service levels. 

  • Redressing: 

It should be defined if a provider cannot fulfill their SLA. 

  • Service Tracking and Reporting

This section defines the report structure and tracks intervals and stakeholders in the agreement. 

  • Exclusions:  

Specific services that are not offered should also be clearly defined to avoid confusion and eliminate room for assumptions from other parties. 

  • Periodic Review and Change Processes: 

The SLA and all establish KPIs should be regularly reviewed. 

  • Termination Process

The SLA should define the circumstances under which the agreement can be terminated. 

 
An SLA is essential for safeguarding your business and ensuring a positive relationship with your supplier. Mutual awareness of performance expectations is critical for all parties involved to have a pleasant experience. Any service provider you pick should be eager to work with you to develop an SLA. Having an SLA, though, isn't enough.

Always remember to re-evaluate your contract as your company expands or changes. Your needs may vary over time, and your service level agreement SLA should constantly reflect those changes.