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IT companies strive to streamline business processes, constantly improve product development, optimize personnel policy, modernize the technical base, and ensure the most transparent relationship with customers to improve the efficiency of the work. The SLA helps them in this.

What is the SLA agreement? The term SLA appeared for the first time in the IT industry. In the field of information technology, there is the ITIL (IT Infrastructure Library) methodology; this is where the concept of the service level agreement came from. Although it is now understood much more broadly, IT continues to be the main area where service level agreements are used.

SLA management is a service-level agreement. This is a document with a service level regulation that the provider undertakes to provide to the customer. The SLA establishes the level of service availability.

Additionally, the time of reaction to incidents is indicated. A well-written service level agreement reduces the number of ambiguous statements. The customer and the provider establish clear and understandable rules for cooperation. The parties know their responsibilities and use identical terms.

The SLA necessarily includes the time frame for the elimination of the incidents and their consequences. The contract also states the provider’s penalties when the service quality metrics fall below a predetermined level. During downtime, the customer experiences minimal losses. The loss is covered by the service provider.

SLA benefits both parties. Customers gain confidence in timely resolution of incidents and plan business activities more efficiently. Providers avoid risks from unreasonable service quality requirements.

Why does a business need SLA management?

What is SLA? In IT, an SLA means a service contract. The standard agreement usually stipulates the following points:

• the period of time during which the provider provides the service;
• the procedure for resolving disputes;
• rules for submitting and passing applications for service by the provider’s specialists;
• the responsibility of the parties;
• the number, parameters, location of software and hardware that are involved in the process of providing the service;
• the size and terms of payment for the use of the service.

 

Why does a business need SLA management? SLA offers numerous benefits to IT service customers. After concluding the contract, the provider provides the quality of services at the level specified in the agreement. It is always possible to compare the expected and actual results. For example, to control the processing time of applications and compare with the declared in the document.

• The presence of an SLA guarantees transparency of payment. The customer knows exactly what they are paying for. Depending on the terms of cooperation, the cost of services is set for the use of the service as a whole or with a breakdown by individual levels.
• An understandable mechanism of payment formation also makes it possible to predict the costs of using information technologies. Moreover, it is easy to report expenses to the tax service. The provider provides a full package of accounting documents.
• If downtime occurs due to the fault of the provider, the customer experiences minimal financial losses. The service provider reimburses the costs. The amount of compensation is established by the contract and depends on the specific situation.
• SLA direct cooperation with the provider in a civilized direction. The parties to the agreement have a clear understanding of their rights and liabilities. Disputes and misunderstandings are less common between them.
• It is important that many providers who sign SLA agreements with customers assign personal managers to them. Interaction with the same specialists increases the efficiency of cooperation. Over time, the service provider representatives better understand the specifics of the client’s business and select the most suitable solutions for it.
• The conclusion of an SLA is beneficial for providers as well. Companies specify service delivery details in service level agreements, such as scheduled work or incident response times. With the help of contracts, they define the boundaries of responsibility of the parties, optimize internal business processes and establish closer interaction with customers.

Thanks to SLA, management providers eliminate incidents within the framework of the parameters established by the contract without agreement with customers. Plus, they introduce multilevel service provision, for example, according to the urgency or the selected tariff.

How to create an SLA correctly?

SLA management is compiled, taking into account the specifics of the service. You can use the following template as a guide.

• Service information version history, information about the agreement owner, an approval sheet with fixing comments and suggestions on the agreement’s text
• Introductory (definitive) part name and version of the system, information about the developer, list of modules, and interfaces
• The boundaries of providing services remotely/geographically (city and address) on schedule / around the clock
• The list of services processing customer requests, eliminating the consequences of incidents, consulting on the operation of the service, etc.
• Priorities (low, normal, and high)
• KPIs (Key Performance Indicators) response time and incident resolution based on priority:

 

Short	The problem is not considered critical but needs to be addressed.
Normal	The problem is big, but it can be solved with a manual or another suitable workaround.
High	The problem is critical, but the solution is possible without switching to around-the-clock operation.
Higher	The problem needs to be resolved as soon as possible. Specialists work around the clock until the consequences of the incident are completely eliminated.

 

1. An SLA begins with an introduction or definition. A glossary is provided at the very beginning of the agreement. The glossary briefly describes the information system and lists the roles of the participants.
2. The name is indicated for the information system. If the product is out of the box, the manufacturer is listed. For self-written solutions, the technology stack that underlies them is described.
3. Participants are divided into regular and key users and employees of different support levels (first, second, third, etc.). For greater clarity, it is worth giving the names of the departments and the roles of their specialists involved in the process.
4. The next step is to define the scope of the SLA. Territorials establish how and where the service is provided, for example, remotely or at the customer’s office. Temporary respondents answer the question when services are provided around the clock / at certain times, weekdays/weekends/holidays.
5. Within the functional framework, a major version of the system is specified, which does not change after the installation of updates. If the system is of a modular type, a list of the modules is provided. Finally, the configuration and interfaces are specified.

When drawing up an SLA management agreement, the descriptions of the services that form the service are made concise but brief and understandable. In the future, this will reduce the number of questions from customers.

It is good practice to give examples of services and immediately stipulate what is included in them or, conversely, not included. Services are concisely described and numbered. Numbered lists are much easier to navigate.

The ready-made identifying part should raise a minimum of questions. The fewer obscure points, the better. Ideally, the customer or their representative understands what is written the first time.

SLA metrics

The correct choice of metrics for a service level agreement is directly dependent on knowledge and understanding of the subject area. In the context of information systems, two concepts are most often used, the response time to an incident and the target time for solving the problem.

There are other metrics:

• periods of inactivity;
• support time;
• delayed response from the customer.

 

If the provider regularly conducts scheduled maintenance of the systems responsible for monitoring, there is a possibility of an untimely response to the request. A restriction is introduced into the service level agreement to avoid conflict situations.

When specifying the support time, the period is stipulated when the provider cannot maintain the service. Many organizations are open Monday – Friday and respond to customer inquiries from 9-10 am to 6 pm. A similar schedule is prescribed in the technical support agreement SLA.

Describing downtime should be thoughtful, especially if the provider is financially responsible to the customer due to the unavailability of the service. In some situations, the supplier cannot take adequate measures due to military actions, natural disasters, accidents of trunk communication channels, etc. Unforeseen circumstances should be predicted and specified in advance.

Sometimes, the provider needs additional information from the customer to successfully resolve the issue. Delayed reporting violates timing metrics. Violations are considered permissible because they are outside the area of ​​responsibility of the service provider.

 

Four main requirements for SLA metrics:

• Reflection of the quality of service.
• Versatility or using the same metric across many service level agreements.
• A few metrics.
• Measurable (the easier it is to measure, the better).

 

If more than one metric is specified in the SLA management agreement or a similar document, one of the parameters is designated as the main one. Otherwise, the provider will have to deal with the comparison of metrics and not the critical problems. It is a common practice to consider fines for deviating from the norm of the main parameter.

For a service level agreement to meet customer and provider expectations, the metric must be completely dependent on the service provider’s activities. Otherwise, it stops working. Control is lost, and the SLA loses all meaning.

Cloud computing significantly simplifies, and most importantly, accelerates the process of creating new services, which in turn has a positive effect on the overall results of companies. This is a flexible tool, the functionality of which is being improved from year to year, allowing you to shift some non-core tasks onto the shoulders of providers and focus on your core business. A well-written SLA is an important part of successful work.

Checklist: Important SLA Points

So, you’ve got a general idea of what is an SLA in IT. It’s time to consider what points to pay attention to when preparing an SLA.

• Groups of users. When the system is large, don’t try to grasp the immensity. Take a few groups to get started: let’s say, privileged and regular users. A couple of categories are easier and more efficient to work with. At the same time, you will gain knowledge for further actions.
• Critical services. A striking example of this is the connection to CRM. If the company is actively trading, the lack of communication with CRM risks turning into losses. Salesforce work will stop or slow down dramatically.
• Quality standards. Take into account the functionality of the service and the so-called targets.
• Service quality parameters and standards. The characteristics must meet two requirements. First, it should be compared with the business goals that the company is pursuing. Second, reflect the needs of the business users of the system. 
• Fixing the SLA. After you sort out the previous questions, fix the SLA among the user groups, considering the quality standards for the selected critical services.
• Informing users. All people, no exception, who are affected by the rules from the agreement, are notified about the SLA.
• Measuring SLA Compliance. You cannot rely on intuition for SLAs. Weighted management decisions are possible with an integrated approach to tracking the selected quality parameters. Monitor progress or systematic process disruptions to take adequate action to improve services.
• Analysis and optimization. Take effective action consistently to meet your targets. The service must meet all the needs of end-users.

FAQ

• What is SLA?

SLA is a powerful tool for regulating the interaction between the customer and the provider. SLA helps to minimize conflict situations, ensure the high quality of IT services and clarify business relationships. Be sure to use SLA if you want to streamline business processes as much as possible.

• What does an SLA include?

A typical SLA model should include the following sections: definition of the service to be provided, the parties involved in the agreement, and the terms of the agreement. Days and hours that the service will be offered, including testing, support, and upgrades.

• How is SLA different from KPI?

It is an agreement between the IT service provider and the customer. KPI is a metric used to manage an IT service, process, plan, project, or other activity.

• How is SLA calculated?

The first digit of the service level indicator is the percentage of calls that were processed during the target service time: you take all the requests that were answered during the target service time and divide them by all the calls received during the given period.