A Service Level Agreement (SLA) is hugely important for both the person providing a service and the one receiving it.
Nobody likes to resort to legal documents and would much rather get by on a handshake, but here are some reasons having a SLA makes sense.
- It is the final word. Putting what two parties are “really” agreeing upon in a legal document makes a few things happen. Both parties play very close attention to the details making it so there is no room for confusion what needs to be delivered at a future date. It also makes the person offering the service aware of the exact expectations required and makes them seriously consider whether the request is reasonable before final commitment.
- Its what the original negotiators intended. If a SLA is aging and the team who are responsible are changing over time, anyone new to the process can always come back to this document to get realigned. If both parties grow away from the original document, then a new amendment should be made. What is in here is what was agreed upon.
- Guarantees better service and satisfied customer. If “A” issues need to be resolved in 24 hours of reporting and “B” ratings are 72 hour response and so on, it gives something to measure performance on. If a “B” issue takes 60 hours to fix, the customer has no right to be angry or complain.
- Prevent Scope Creep. Customers always want the most for their money and sometimes the will request things that are not in this document and outside of what was promised. Those things are separate and need to be negotiated separately. The safety in this is more in the favour of the service provider.
- May protect HR issues on either side with a no solicit or hire (each other’s employees) clause.
- For the one being serviced, there can also be penalties negotiated within. If we have more than 24 hours downtime, Service Provider will immediately solve the issue or pay a penalty of $5,000 a day until it’s resolved.
- It determines acceptable quality for each issue. What is Considered OK for each issue. a complete fix, a workaround, a bandaid, a warning, no change requirement, just acknowledgement.
- Differentiator – your competition may cost less than you, but they aren’t willing to sign a SLA. If you agree, the security may be worth more than the savings of going with your competitor.