What is a Service Level Agreement (SLA)?

SLA stands for Service Level Agreement. The SLA is an agreement between the customer and the service provider and defines the nature, quantity, delivery time, response and problem resolution times and other similar attributes of the services provided by the service provider to the customer,

SLA establishes the standards of service quality and determines the service that the customer should expect from the service provider company. In this way, it is possible to measure and manage the individual and organizational service quality of the employees of the supporting institution.

SLA is especially important in defining technical support, consultancy services, maintenance and repair agreements. The customer determines the level of service he will receive from the company from which he will receive the service within the SLA agreement he has purchased, in line with its importance. In this way, the level of service received in line with the project budget can be increased or decreased in order to save money.

It enables the determination of priority customers and projects in order of importance for the Service Provider. Priority Customers do not have to wait at the request response stage, as the requests of customers with a high SLA Service Level will be given priority in terms of service provision.

What is the main purpose of a SLA?

Define the customer’s service level requirements and ensure that the supplier meets these requirements. This can be used to measure the supplier’s final performance, consistency (to standard), and composite (the yardstick to complete the agreement). Therefore, SLA is a useful tool for customer-supplier communication and relationship management, expectation and conflict management, cost management, performance monitoring, review and evaluation.

Types of Service level agreements

Service level agreements are divided into categories:

Customer-based service level agreements
Service-based SLAs.

The basic content of a general SLA :

What services are included (and services that are not included, or only included when requested and at an additional cost).

Service standards and levels (such as response time, speed and characteristics of high-quality services).

Assignment of responsibilities for activities, risks and costs.

How to monitor and review services and service levels, what evaluation measures are used, and how to solve problems (if there are problems).

How to manage complaints and disputes.

When and how to review and revise the agreement. (As demand or environment changes, service specifications may need to be changed).

The value-added effect that an effective SLA can bring :

For specific services, clearly indicate customers and service providers.

Focus on the services actually involved and received.

Clarify the true service requirements of customers, reduce unnecessary or non-value-added services or service levels, thereby reducing costs.

It enables customers to better understand what services they get, what they have the right to expect, and what additional services or service levels the service provider can provide.

It can enable customers to better understand what the cost of service or service level is, so that they can conduct a realistic cost-benefit assessment.

It is helpful for daily monitoring and regular review of services and service levels.

It is convenient for customers to report the failure to reach the service level, which helps to solve the problem and improve the plan.

Promote better understanding and trust between service providers and customers.

What you should be aware of?

Need to determine what services and service levels are really required, and to check what services and service levels are actually obtained and whether they add value.

As with goods, it is very important not to make unnecessary and high specifications for services. Setting unnecessary and high specifications, or too high service frequency, too short response time, or too high level of staff will increase costs and not necessarily add value.

Why is Service Level Agreement (SLA) required?

E-businesses are moving towards cloud computing, allowing businesses to go online, while also raising questions; about privacy, data security and more.

In such a case, the Service Level Agreement becomes doubly important.

SLA is an important concept that every business manager needs to master. At the same time, SLA is also a method to ensure the credibility and serious working style to retain customers of businesses.

Service Level Agreement (SLA) is a formal agreement between the service provider and the customer that documents the services expected from the provider and defines the performance standards that must be met.

This formal commitment includes the nature, quality and scope of service, availability and responsibilities to be provided, agreed between the service provider and the service user. Besides listing expectations, it also provides remedies when requirements are not met by the provider.

Implementation of the SLA model

To implement the SLA model for effective business, businesses can perform the following basic steps:

Step 1: Specifying the list of services provided and SLA commitment on service quality to all departments at the enterprise.

Step 2: Standardize professional service management processes according to SLA commitments.

Step 3: Implement solutions to establish commitments in SLA and measure quality.

Step 4: Optimize and improve the SLA model.

What are the advantages of SLAs?

All services of interest to the customer are outlined in the SLA. This means that customers know what they can expect from service quality, ensuring that customers are compensated if the provider fails to meet the agreed service level.

What is a Service Level Agreement (SLA)?