Service Level Agreement: What to Keep in Mind

A Service Level Agreement (SLA) is a tool to define the scope of the services provided and the conditions for providing them, by agreeing upon in advance on the indicators that will be evaluated, the actions that will be taken in the event of any disturbance, and how those events will be addressed. The SLA is one of the essential components of any technology service contract.

“We get a lot of questions about the SLA, and we notice that there is a lot of uncertainty in the market: what the SLA is, why it is important for an organisation, and why before dealing with the technology service providers it is recommended to define the company’s needs. We are trying to dispel the mist”, said Dominykas Palsis, Cloud Computing Sales Manager.

In this article, we will answer some of the most frequently asked questions about SLAs.

Why an organisation should care about an SLA?

In most cases, an SLA goes hand-in-hand with a technology services contract. The agreement clearly documents the services to be provided and the agreed and expected reliability of the provision of the services. The agreement clearly defines the measurement indicators, the responsibilities of the parties and the expectations that will be used to deliver the services, so that all the parties of the agreement understand the terms of service provision in the same way.

How to determine the appropriate SLA?

“Ideally, the SLA should reflect the goals of an organisation and its use of technology. The client should evaluate the impact of the technology disruptions on the organisation’s operations – an hour’s disruption could significantly increase production costs or influence customer satisfaction, or the disruption could have zero impact on the usual operations of the company”, advised Dominykas.

Typically, a technology services provider has a set of standard SLAs. These could be a great start for negotiations. When the client indicates their tolerable disturbance period, the provider will propose the most appropriate SLA.

Of course, an extremely rigorous SLA (for example, 99.99% availability with an instant response to any issues) will also affect service pricing. If it’s crucial for the client to work continuously and without any downtime, additional technological solutions may be required – for example, duplicate servers, alternative site locations, preparation of a disaster recovery plan, or other solutions to help ensure interruption-free operation.

What are the components of the SLA?

The agreement should embrace the two elements of the services provided: the constituents of the services and their management. The service section usually details the services provided, the availability of the services and the conditions of use, the response to incidents and inquiries during work hours and after working hours, the responsibilities of each party, and the methods of communicating and recording the issues.

The service management section usually addresses methods for measuring the reliability of services, the content of the reports and their frequency, a dispute settlement procedure, damage compensation, and the procedures for updating the SLA.

What metrics should I choose to track?

“There are no unified metrics that are universal, they should be determined by the type of service provided. It’s important to emphasize – there’s a possibility to measure a lot, but the list of indicators to be measured should be reasonable and really necessary so that neither you nor provider won’t get lost among them and tracking doesn’t cost unreasonable amounts of time and money”, advised Dominykas Palsis.

The most frequently measured indicator is the availability of the services when the service accessibility is measured as a percentage – for example, 99.9% means that 0.1% of the time you might not be able to use the services. Another indicator is units of errors, when not fully completed tasks, overdue deadlines and another type of errors are counted. It is also becoming increasingly common to measure IT infrastructure management as part of the business KPIs – this measurement method is probably the best if a service provider has sufficient leverage and impact on the overall company’s IT infrastructure.

The Service Level Agreement – a way to provide and receive services easier

Negotiations regarding SLAs can last for a while and can become a lengthy process before the start of the provision of services. However, an SLA has undeniable benefits – without this agreement, the service provider and the client could very easily have different expectations as to the services to be provided and the level of responsiveness and end up in endless disputes that would substantially interfere with effective cooperation.

It is also important to remember that the work does not end with the signing of the agreement. To reflect client needs and provider capabilities to the fullest, SLAs should be reviewed periodically, taking account of changes to the business environment, business specifics and so on.

Dominykas Palsis is a cloud computing sales manager who is well versed in technical and business processes and can offer the most suitable cloud computing solution to your organization. Please contact Dominykas directly via email or phone +370 610 11180.

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October 25, 2018


Dominykas Palsis



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