Before diving in to SLA best practices & crucial elements of service level agreement let’s understand what is an SLA and how is it important for your IT company.
SLA Stands for Service Level Agreement
A service-level agreement (SLA) best described as “contract between a service provider and its internal or external customers that documents what services the provider will furnish. SLAs measure the service provider’s performance and quality in a number of ways.”
SLAs originated with network service providers, but are now widely used by telecommunication service providers and cloud computing service providers.
Corporate IT organizations, particularly those that have embraced IT service management (ITSM), enter SLAs with their in-house customers (users in other departments within the enterprise). An IT department creates an SLA so that its services can be measured, justified and perhaps compared with those of outsourcing vendors.
Also Read : Work life Balance Tips for Employees
This question keeps concerning us a number of times when we enter into such agreements.
A properly drafted and well thought out SLA should have the following elements:
Ultimately it will give the customer the right to terminate the contract where performance standards fall consistently below an acceptable level.
Also Read: Payroll Taxes In India
Here are best 5 practices & elements for creating and fulfilling service SLAs.
The SLA should set out the overall objectives for the services to be provided. For example, if the purpose of having an external provider is to improve performance, save costs or provide access to skills and/or technologies which cannot be provided internally, then the SLA should say so.
This will help the customer craft the service levels in order to meet these objectives and should leave the service provider in no doubt as to what is required and why.
Also Read: Legal Compliance Services Benefits
The SLA should include a detailed description of the services. Each individual service should be defined i.e. there should be a description of what the service is, where it is to be provided, to whom it is to be provided and when it is required.
Then, taking each individual service in turn, the customer should state the expected standards of performance. This will vary depending on the service. Using the “reporting” example referred to above, a possible service level could be 99.5%. However this has to be considered carefully. Often a customer will want performance standards at the highest level. Whilst understandable, in practice this might prove to be impossible, unnecessary or very expensive to achieve.
Also Read: How to Hire Payroll Company
In order for the SLA to have any “bite”, failure to achieve the service levels needs to have a financial consequence for the service provider. This is most often achieved through the inclusion of a service credit regime.
In essence, where the service provider fails to achieve the agreed performance standards, the service provider will pay or credit the customer an agreed amount which should act as an incentive for improved performance.
Also Read: Employee Reward Management in HRM
Critical Failure Service credits are useful in getting the service provider to improve its performance, but what happens when service performance falls well below the expected level?
If the SLA only included a service credit regime then, unless the service provided was so bad as to constitute a material breach of the contract as a whole, the customer could find itself in the position of having to pay (albeit at a reduced rate) for an unsatisfactory overall performance.
Also Read: Stress Management at Work
Also Read: Reward Management in HRM