What Is a Service Level Agreement (SLA)?

• Service Level Agreement Definition

  Service Level Agreement Definition

  A Service Level Agreement (SLA) is a documented agreement between the client and the service provider regarding the specific and measurable aspects of service offerings, including quality, responsibility, and availability.
• What are the objectives of SLAs and service level management?

  What are the objectives of SLAs and service level management?

  The role of an SLA is to provide specific details and scope of services such as priorities and guarantees on which both parties have agreed. SLAs should include the expected and measurable outcomes, not just operational metrics. SLAs are designed, assessed, and monitored through the practice of service level management. Service level management offers end-to-end visibility of the organization's services, so the delivery of services can be appropriately assessed and managed against defined SLA targets.

  Creating SLAs provides a clear, predetermined set of terms and conditions around the services provided, required, and the expected level of service, agreed upon by both the service provider and the customer. SLA monitoring is crucial to ensure the service provider delivers the services as committed. SLAs can include several critical elements to protect the objectives of both the client and the service provider, including:

  • Service Availability: The amount of time the service is available for the client business. It specifies the type of service offered to the client by the service provider. 
  • Technical Quality: When outsourcing certain tasks or operations such as application development, it’s important to examine certain factors such as coding defects and program size and measure technical quality through commercial analysis tools. SLAs must include the desired level of performance, reliability, responsiveness, and technical quality needed to perform a particular task. Additionally, you can lay out the performance levels to evaluate statistics and actual performance.
  • Security: Network and application security breaches can be costly and impact a business. When outsourcing any service, it’s essential to have a security plan in place. SLAs must include the details about the security measures your service provider will take, like anti-virus updates or patching techniques to safeguard your business-critical information.  
  • Business Results: Incorporating business process metrics or existing key performance indicators into the SLAs helps providers continuously evaluate and deliver better services.
• Common time-based SLA metrics

  Common time-based SLA metrics

  While there are various targets and expectations involved in defining SLAs, two traditional SLAs are reflective of the service performance and user experience: time to first response and time to resolution.

  1. Time to first response: Time to first response, also known as SLA response time, refers to how quickly your service provider responds to a technical issue raised by the client via email, phone call, or other communication methods. Response time ensures tickets aren't missed, and the clients aren't left waiting for a reply or an update regarding the query they raised. The time to first response is an essential SLA response metric and acts as an acknowledgment to the query.
  2. Time to resolution: Resolution time refers to the time taken by the service provider to resolve client issues. As service providers review their range of service offerings, service agent responsibilities and skill sets, and user expectations, they can begin to mold acceptable targets for resolving inquiries. Defining time-based parameters to resolve requests helps ensure users are receiving timely resolutions, mitigating disruptions and helping them remain productive.
• How do you manage SLAs?

  How do you manage SLAs?

  SLAs are created to ensure service providers understand what they need to deliver, what clients expect from them, and the empirical outcome. Effective management of SLAs can be challenging without the right tools. Metrics and key performance indicators are the core elements of the SLA. It’s important to have the right SLA management tool to track these metrics.

  SLA management tools can track service metrics that reflect the end-to-end quality of service or user experience. These tools can process metrics to provide information about the effectiveness and efficiency of critical activities of the service delivery. They also offer technical metrics to help service providers identify issues and seek improvement opportunities.

  Managing SLAs requires monitoring of specific KPIs, such as:

  • Performance of the service
  • Average speed to answer
  • Defect rate
  • Availability and uptime of services
  • Security
  • Mean time to recovery (MTTR)
  • Turnaround time (TAT)

  Additionally, SLA management tools provide insights for effective service level management at both granular and broader levels. Integrating SLAs with other service management practices in a central space such as an ITSM platform enables you to see all your tickets in one place to gain quick insights into elements impacting overall service delivery. Reviewing performance, identifying SLA breaches, setting up automated alerts for proactive responses, and assessing user responses and feedback can contribute to your overall service delivery and strategy.
• Why is a service level agreement important?

  Why is a service level agreement important?

  SLAs are foundational agreements important to build trust between your IT team and the stakeholders. SLAs help meet client expectations empowering your team to respond to and resolve issues quickly by:

  • Strengthening relationships: SLAs are the service-related terms and conditions that streamline the delivery of services and improve trust between both parties, thereby reducing uncertainty.
  • Formalizing communication: Conversations with clients about IT issues can be difficult. SLAs simplify communication and allow both parties to have structured and formalized communication based on agreed-upon terms.
  • Improving productivity: SLAs define tasks and response and resolution times, so it’s easier for IT teams to resolve issues quickly and conveniently. This enhances the productivity of the team and boosts the user experience, helping service providers deliver timely services.