Service level agreement

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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.


[edit] Description

A service-level agreement (SLA) is a negotiated agreement between two parties where one is the customer and the other is the service provider. This can be a legally binding formal or informal 'contract' (see internal department relationships). Contracts between the service provider and other third parties are often (incorrectly) called SLAs — as the level of service has been set by the (principal) customer there can be no 'agreement' between third parties (these agreements are simply a 'contract').

The SLA records a common understanding about services, priorities, responsibilities, guarantees and warranties. Each area of service scope should have the 'level of service' defined. The SLA may specify the levels of availability, serviceability, performance, operation, or other attributes of the service such as billing. The 'level of service' can also be specified as 'target' and 'minimum', which allows customers to informed what to expect (the minimum), whilst providing a measurable (average) target value that shows the level of organisation performance. In some contracts penalties may be agreed in the case of non compliance of the SLA (but see 'internal' customers below).It is important to note that the 'agreement' relates to the services the customer receives, and not how the service provider delivers that service.

SLAs have been used since late 1980s by fixed line telecom operators as part of their contracts with their corporate customers. This practice has spread such that now it is common for a customer to engage a service provider by including a service-level agreement in a wide range of service contracts, in practically all industries and markets. Internal departments in larger organisations (such as IT, HR and Real Estate) have adopted the idea of using service-level agreements with their 'internal' customers — users in other departments within the same organisation. One benefit of this can be to enable the quality of service to be benchmarked with that agreed across multiple locations or between different business units. This internal benchmarking can also be used to market test and provide a value comparison between an in-house department and an external service provider.

Service-level agreements are by their nature 'output' based - the result of the service as received by the customer is the subject of the 'agreement'. The (expert) service provider can demonstrate their value by organising themselves with ingenuity, capability and knowledge to deliver the service required, perhaps in an innovative way. Organisations can also specify the way the service is to be delivered, through a specification (a service-level specification) and using subordinate 'objectives' other than those related to the level of service. This type of agreement is known as an 'input' SLA. This latter type of requirement has become obsolete as organisations become more demanding and shift the delivery methodology risk on to the service provider.

[edit] 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 (Abandonment 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.

[edit] Typical contents

SLAs commonly include segments to address: a definition of services; performance measurement; problem management; customer duties; warranties; disaster recovery; termination of agreement.[1]

[edit] 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.

[edit] See also

[edit] References

  1. ^ An outline of the core elements of an SLA. The Service Level Agreement.
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