Service Level Agreement (SLA)

A service level agreement (SLA) is a contract between a service provider (either internal or external) and the end user that defines the level of service expected from the service provider. SLAs are output-based in that their purpose is specifically to define what the customer will receive. SLAs do not define how the service itself is provided or delivered. The SLA an Internet Service Provider (ISP) will provide its customers is a basic example of an SLA from an external service provider. The metrics that define levels of service for an ISP should aim to guarantee:

  • A description of the service being provided – maintenance of areas such as network connectivity, domain name servers, dynamic host configuration protocol servers
  • Reliability – when the service is available (percentage uptime) and the limits outages can be expected to stay within
  • Responsiveness – the punctuality of services to be performed in response to requests and scheduled service dates
  • Procedure for reporting problems - who can be contacted, how problems will be reported, the procedure for escalation, and what other steps are taken to resolve the problem efficiently
  • Monitoring and reporting service level – who will monitor performance, what data will be collected, and how often as well as how much access the customer is given to performance statistics
  • Consequences for not meeting service obligations – may include credit or reimbursement to customers, or enabling the customer to terminate the relationship.
  • Escape clauses or constraints – circumstances under which the level of service promised does not apply.[1]

Service level agreements are also defined at different levels:

  • Customer-based SLA: An agreement with an individual customer group, covering all the services they use. For example, an SLA between a supplier (IT service provider) and the finance department of a large organization for the services such as finance system, payroll system, billing system, procurement/purchase system, etc.
  • Service-based SLA: An agreement for all customers using the services being delivered by the service provider. For example:
    • A mobile service provider offers a routine service to all the customers and offers certain maintenance as a part of an offer with universal charging.
    • An email system for the entire organization. There are chances of difficulties arising in this type of SLA as the level of the services being offered may vary for different customers (for example, head office staff may use high-speed LAN connections while local offices may have to use a lower-speed leased line).
  • Multilevel SLA: The SLA is split into different levels, each addressing a different set of customers for the same services, in the same SLA.
    • Corporate-level SLA: Covering all the generic service level management (often abbreviated as SLM) issues appropriate to every customer throughout the organization. These issues are likely to be less volatile and so updates (SLA reviews) are less frequently required.
    • Customer-level SLA: covering all SLM issues relevant to the particular customer group, regardless of the services being used.
    • Service-level SLA: covering all SLM issues relevant to the specific services, in relation to this specific customer group.[2]

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Further Reading