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A service-level agreement is a contract between a service provider and it customer which defines the level of service expected by a customer from the service provider, laying out the benchmarks by which that service is measured, and the remedies or penalties, if any, where the agreed benchmarks of service quality is not achieved. There are mainly 2 types of Service Level Agreements: B2C (Business to Consumer) and B2B (Business to Business)
SLAs are an integral part of an IT vendor contract. An SLA pulls together information on all of the contracted services and their agreed-upon expected reliability into a single document. They clearly state metrics, responsibilities and expectations so that, in the event of issues with the service, neither party can plead ignorance. It ensures both sides have the same understanding of requirements
Any significant contract without an associated SLA (reviewed by legal counsel) is open to deliberate or inadvertent misinterpretation. The SLA protects both parties in the agreement
The SLA should include not only a description of the services to be provided and their expected service levels, but also metrics by which the services are measured, the duties and responsibilities of each party, the remedies or penalties for breach, and a protocol for adding and removing metrics
Metrics should be designed so that bad behavior by either party is not rewarded. For example, if a service level is breached because the client did not provide information in a timely manner, the supplier should not be penalized
SLA Checklist:
An indemnification clause is an important provision in which the service provider agrees to indemnify the customer company for any breaches of its warranties. Indemnification means that the provider will have to pay the customer for any third-party litigation costs resulting from its breach of the warranties
To limit the scope of indemnifications, a service provider can:
The type of SLA metrics required will depend on the services being provided. In choosing metrics, examine your operation and decide what is most important. The more complex the monitoring scheme, the less likely it is to be effective, since no one will have time to properly analyze the data Depending on the service, the types of metrics to monitor may include:
Other metrics include the schedule for notification in advance of network changes that may affect users and general service usage statistics
SLA are not only meant for establishing performance metrics but SLA may also include the clause as to how the service provider will compensate in the event of breach of contract. Penalties may be provided in the SLA if performance falls short of given benchmark
The SLA will also include a section detailing exclusions, that is, situations in which an SLA's guarantees -- and penalties for failing to meet them -- don't apply. The list might include events such as natural disasters or terrorist acts, which are beyond the control of any party to the SLA
Should the service provider be acquired by or merge with another company, the customer may expect that its SLA will continue to be in force, but this may not be the fact. The agreement may have to be renegotiated. Make no assumptions; however, bear in mind that the new owner will not want to alienate existing customers, so may decide to honor existing SLAs
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