ServiceLevelAgreement (SLA) is an agreement between two or more parties, where one is the customer, and the others are service providers. The agreement addresses what is covered by the service in terms of quality, availability, responsibility, and it describes the needs and requirements that the company must have to support its own business. An SLA gives both the supplier and the customer a clear idea of what to expect if you run into problems.
When an SLA is defined, it is important that it is unambiguous, with no room for interpretation. Formulations such as “as soon as possible”, “sufficient”, “to a necessary extent”, “can”, “should”, “etc.” are classic pitfalls within agreements, and should be avoided.
A well-defined and typical SLA will include the following components:
Type of service to be offered The agreement specifies the service and any additional details about which service is offered.
The desired level of performance of the service, especially reliability and responsiveness A service that is reliable is a service that suffers the least amount of interruption during a certain period and is available at almost any time. A service with good responsiveness will perform the desired action immediately after the customer requests it.
Monitoring process and service level reporting This describes how performance levels are monitored. It involves collecting different types of statistics and says something about how often these statistics will be collected and how it will be available to customers.
This component will specify the contact details for reporting issues and details about the issue. The contract contains a time frame for when the problem will be investigated and when the problem will be solved.
Time frame for response and problem solving
Response time frame is the period before the service provider starts the investigation of the problem.
The time frame for problem solving is the period during which the current service problem will be solved.
Consequences for a service provider that does not fulfill its obligations
If the provider is not able to meet the requirements specified in the SLA, the service provider will have to face consequences. Delivery outside or below set requirements usually triggers a financial compensation, or reduction in the contract price.
This type of reimbursement is usually set up as a stair-step model. This means that the reimbursement increases the greater the distance is between the delivery and the SLA requirement.
Many companies will find that the size of the refunds is not close to covering the perceived cost of delivering outside the SLA. To prevent this from happening again, instead of demanding financial compensation, the customer can demand that the supplier spends a corresponding amount to improve and further develop its delivery.
An example of this can be training of employees, reallocation of internal resources, a setup of better support tools, updates of internal databases, and so on. The supplier must in any case document how the funds have been used.
Through our customer agreements, Cegal has defined which SLAs are relevant for the services we deliver. This includes the following types of SLAs:
Availability of the solution
An example is that the solution should have an availability to the customer at 99,9%. If the SLA is breached, the customer will receive compensation. Cloud and Operations in Cegal has this type of SLAs in several of its operating contracts.
Response time defined by priority
For a case with high priority, you have a response time of for example 30 minutes. This means that from the time the request is submitted in the service management platform, the case must be addressed and followed up within 30 minutes. This SLA is configured and set up in Jira Service Management.