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, 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. An example could be an exemption from meeting uptime requirements in circumstance that floods, fires or other hazardous situations damage the ISP’s equipment.

Though the exact metrics for each SLA vary depending on the service provider, the areas covered are uniform: volume and quality of work (including precision and accuracy), speed, responsiveness, and efficiency. In covering these areas, the document aims to establish a mutual understanding of services, areas prioritized, responsibilities, guarantees, and warranties provided by the service provider.

The level of service definitions should be specific and measureable in each area. This allows the quality of service to be benchmarked and, if stipulated by the agreement, rewarded or penalized accordingly. An SLA will commonly use technical definitions that quantify the level of service such as mean time between failures (MTBF) or mean time to recovery, response, or resolution (MTTR), which specifies a “target” (average) or “minimum” value for service level performance.

SLAs are also very popular among internal departments in larger organizations. For example, the use of a SLA by an IT helpdesk with other departments (the customer) allows their performance to be defined and benchmarked. The use of SLAs is also common in outsourcing, cloud computing, and other areas where the responsibility of an organization is transferred out to another supplier.


Types of service level agreements

When you create a service level agreement, you must assign a type. The type enables you to sort or search for service level agreements by type.

The following list describes the three predefined types for service level agreements:

  • A customer service level agreement is an agreement between you and an external customer. For example, a facilities manger provides maintenance services for various customers.
  • An internal service level agreement is an agreement between you and an internal customer (such as another organization, site, or department). For example, you are the facilities manager and provide maintenance services for the departments in your company.
  • A vendor service level agreement is an agreement between you and the vendor. For example, you hired a vendor to support notebook services. If you have a contract with another vendor that supports your commitments to a customer, you can associate the contract to a vendor service level agreement.

The three types of service level agreements can support each other. For example, you have an internal service level agreement to provide hardware services to support internal departments. You also have a vendor service level agreement for notebook support.

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