What Is SLA — Service Level Agreement?

The term “SLA” is hard to define because of its wide scope. Internet service providers use SLAs to set standards for up-time. Commercial suppliers use SLAs to determine production costs. And customer service teams use them to set expectations for service performance, response time, and satisfaction.

What is SLA?

An SLA (Service Level Agreement) documents the agreed-upon service level between a vendor and a client. Mathematical metrics are often assigned to determine success or failure of the agreement, along with clear consequences for failing to meet the service level standards. It is mostly used by technology and customer service providers.

Why is an SLA important?

· SLAs establish clear-cut goals: Just as you track revenue and costs for your product, use SLAs to verify your support needs and keep up with demand.

· Clients respect the idea of SLAs: Use real metrics to set customer expectations and answer potential client questions around response time to close more deals.

· Tracking SLAs will tell you when it’s time to grow: If you’re a founder handling support, constantly missing the mark on your desired metrics signals a need for outsourcing.

Service Level Agreement Best Practices

Regardless of the size or type of your business, the best practices behind service-level agreements can help you achieve customer support success.

First, you should write SLAs in simple, jargon-free language. This is to ensure clarity for all parties involved, so customers who may not be technical can still understand exactly what they are agreeing to when entering a contract with a service provider.

Second, you should clearly define the processes and methodologies related to how you measure, enforce, and balance service levels. While in many cases, that responsibility falls on the Managed Service Provider (MSP). Working collaboratively with customers during the process of contract negotiation will help to avoid misunderstandings and ensure that both customer and service provider are on the same page.

These defined processes are especially important for SLA management in cloud computing because cloud-based service providers tend to be hesitant about making alterations to their boilerplate SLA agreements.

This is because cloud-based profit margins are stricter, and thus businesses rely on providing services to large customer bases. Overall, regardless of what type of service you are providing, an SLA helps define expectations and ensure the customer-provider relationship remains satisfactory for all involved parties.

Common Service Level Agreement Metrics

The details of individual SLAs will vary depending on the type of services a customer requires, and the metrics used to measure how well the customer and service provider are meeting their service targets. SLA metrics relate to specific SLA objectives, which are essentially the reason why each metric is important.

Here are a few of the most common metrics used to measure how service provider’s performance meets customer expectations:

· Abandonment Rate: The percentage of queue up calls customers abandon while waiting for an answer.

· Uptime: The percentage of time that provided services are operational and accessible to the customer.

· Average Speed of Answer: The average amount of time required for the service desk to answer a call.

· Business Results: The use of KPI to calculate how the contributions of service providers affect business performance.

· Defect Rate: The percentage of faults in deliverables.

· First-call Resolution: The percentage of incoming calls resolved at the first call itself without expecting a call back from the help desk to resolve the case.

· Mean Time to Recovery: The time required to recover following a service outage.

· Security: The number of antivirus updates installed. Even if an incident occurs, MSPs can demonstrate they have taken preventative measures.

· Time Service Factor: The percentage of queued calls answered within a defined time frame.

· Turnaround Time: The time required to resolve a specific task once the service provider receives it.

Beyond establishing the relevant performance metrics, SLAs can stipulate contingencies for how the services provider can compensate for potential contract breaches. The agreements will also include a clause detailing situations and events outside the service provider’s control such as natural disasters interruptions of service won’t be penalized.

What Is SLA Management?

SLA management is the constant process of ensuring all provided services and processes including the underlying contracts are in alignment with the agreed-upon service level targets stipulated by the contract. From the creation of help desk tickets to fair reporting and regular customer feedback, SLA monitoring helps to protect your business and ensure your customers are satisfied.

Conclusion

An SLA is key in safeguarding your organization and ensures you have a successful relationship with your provider. Any service provider you select should be more than happy to create an SLA with you. However, having an SLA isn’t enough. Always consider reviewing the contract as your business grows. Your requirements may change over time and your SLA should always reflect your organization’s evolving needs.