Service level agreement

A service level agreement (frequently abbreviated as SLA) is a part of a service contract where the level of service is formally defined. In practice, the term "SLA" is sometimes used to refer to the contracted delivery time (of the service) or performance.

Description

An SLA is a formally negotiated agreement between two parties. It is a contract that exists between customers and their service provider, or between service providers. It records the common understanding about services, priorities, responsibilities, guarantee, and such — collectively, the "level of service". For example, it may specify the levels of availability, serviceability, performance, operation, or other attributes of the service like billing and even penalties in the case of violation of the SLA.

Historically, SLAs have been used since late 1980s by fixed line telecom operators as part of their contracts with their corporate customers. More recently, Information Technology departments in larger enterprises have adopted the idea of using service level agreements with their customers — users in other departments within the same enterprise — to allow for comparing the delivered quality of service with the one promised and potentially consider the alternative of outsourcing IT services to an external company.

The technical specifications of an SLA are commonly described through either a Service Level Specification (SLS) or a Service Level Objective (SLO). An SLS is intended as an operational guideline for the implementation of the service, and anSLO is a subset of an SLS containing some service parameters and goals to be achieved by the SLS.

Common metrics

Service Level Agreements can contain numerous service performance metrics with corresponding service level objectives. A common case in IT Service Management is a call center or service desk. Metrics commonly agreed to in these cases include:

*ABA (Abandon Rate): Percentage of calls abandoned while waiting to be answered.
*ASA (Average Speed to Answer): Average time (usually in seconds) it takes for a call to be answered by the service desk.
*TSF (Time Service Factor): Percentage of calls answered within a definite timeframe, e.g. 80% in 20 seconds.
*FCR (First Call Resolution): Percentage of incoming calls that can be resolved without the use of a callback, or without having the caller call back the helpdesk to finish resolving the case.
*TAT (Turn Around Time): Time taken to complete a certain task.

Uptime Agreements are another very common metric, often used for data services such as shared hosting, virtual private servers and dedicated servers. Common agreements include percentage of network uptime, power uptime, amount of scheduled maintenance windows etc.

Many SLAs track to the ITIL specifications when applied to IT services.

Typical contents

SLAs commonly include segments to address: a definition of services; performance measurement; problem management; customer duties; warranties; disaster recovery; termination of agreement. [An outline of the core elements of an SLA. [http://www.sla-zone.co.uk The Service Level Agreement] .]

In outsourcing

Outsourcing involves the transfer of responsibility from an organization to a supplier.The management of this new arrangement is through a contract that may include a Service Level Agreement (SLA).The contract may involve financial penalties and the right to terminate if SLAs are consistently missed. Setting, tracking and managing SLAs is an important part of Outsourcing Relationship Management (ORM) discipline. It is typical that specific SLAs are negotiated up front as part of the outsourcing contract and they are utilized as one of the primary tools of outsourcing governance.

References