Every sla agreement is different, but there are some best practices that every company should consider. For example, a well-drafted sla should have a regime that provides compensation to both the customer and the supplier for failure to meet service levels.
Metrics should reflect factors within the control of both parties and be easy to measure. Avoid selecting metrics that require manually collating data; this can become a time-consuming process and may be dropped as priorities change.
Overview of the Agreement
A service level agreement (SLA) sets the terms between a client and supplier that define mutual responsibilities. They include metrics for assessing performance and stipulations on how each party will deal with breaches in these responsibilities, such as penalties and incentives.
An SLA can exist between a customer and a vendor or among different departments within a business, such as a marketing department and sales department. In the latter case, an SLA can improve internal alignment and avoid misunderstandings between teams.
An SLA should be clearly written and easy to understand for both parties, so they can reference it when issues arise. The example below from PandaDoc, for instance, uses simple language to outline responsibilities and expectations. It also includes points of contact to avoid misunderstandings and clarifies what’s included and excluded from the agreement. This will help to avoid misunderstandings and confusion about what is expected of each party. It also specifies the terms and conditions for canceling the contract if necessary.
Service Levels
Having clear expectations from your internal teams and vendors allows you to reduce friction between the two parties. It also helps you establish a consistent baseline that can help your team identify and resolve issues. When setting these goals, consider what is reasonable for the company and what would be difficult to achieve with existing technology or capabilities.
You must also define how service levels will be verified and what penalties and incentives will be available if the SLA is not met. Typically, most SLAs make these statistics available through an online portal so clients can check for themselves whether or not their provider is meeting the requirements set out in the agreement. These metrics might include CSAT, ticket resolution times and other important KPIs. Incentives might be discounts, refunds or extra services that the client is eligible for if the SLA is not fulfilled. SLAs should also specify any exclusions that might apply, like natural disasters or terrorist attacks.
Penalties and Incentives
In order to make an SLA effective, both customers and vendors should negotiate penalties that will be imposed in case of minimum performance standards not being met. These penalties should be clearly outlined in the contract to avoid miscommunication and confusion.
It is also important to include incentives in the SLA for meeting and exceeding service levels. This could be anything from preferred seller status to a monetary bonus in addition to the contract payment.
Finally, an SLA should include a list of points of contact that details who is in charge of what aspect of the service agreement. This will prevent misunderstandings and ensure that complaints can be directed to the right person. Some SLAs will even include a section on what conditions would warrant a contract cancelation to eliminate unnecessary terminations. The goal is to create an agreement that will encourage both parties to work together to meet the agreed upon goals. Getting the right balance can be difficult, but it is essential for maintaining a productive relationship.
Cancelation Conditions
A key function of an SLA is documenting the mutual responsibilities between a corporate customer and a service supplier. This means that neither party can claim ignorance of expectations and agreed-upon reliability standards if there are any problems with the services provided.
The SLA also stipulates how a contract can be ended in the event that goals remain unmet over a defined period of time. This is particularly useful for IT managers, as it gives them a clear framework for negotiations in the event that an agreement is not working out.
SLAs can also help IT departments utilize their time and resources more efficiently by enabling them to prioritize tickets and assign appropriate SLAs. This ensures that high priority tickets are addressed and resolved quickly, while low-priority issues can take longer to resolve. Ultimately, an SLA is a vital tool for any IT department looking to enhance its relationship with customers and improve the quality of their services.sla agreements
