IT providers need to have a clear understanding of how their customers expect a particular service or system component to be delivered. There are a plethora of details that need to be negotiated between parties when contracting part of a business to an IT vendor. Large sums of money are often involved and clients should know exactly what they are purchasing. Vendors also need to recognize the standards they are expected to maintain when providing their services.
Verbal agreements will not suffice and may lead to confusion over responsibilities if there are issues with the delivered service or product. Various contacts and agreements are required to protect both sides of the business equation. One of the tools widely used is a service level agreement (SLA).
What is an SLA?
An SLA is a component of the contract between a service provider and its customer. It defines specific measurable aspects related to the service being performed. A given contract between a vendor and client may contain numerous SLAs that address specific areas of the overall service. An SLA usually specifies the levels of service output while leaving the details of the methods employed to fulfill customer expectations to the provider.
Some of the features of an SLA include:
- Details regarding the scope and responsibilities of the provided service;
- Stipulating measurable minimum service levels;
- Thorough tracking, reporting, and problem management procedures;
- Customer responsibilities;
- Fees and expenses.
SLAs focus on the service rendered and the management involved in ensuring its accurate delivery. Service elements address the specifics and availability of the service, escalation procedures, and the responsibilities of each party in the agreement. From a management perspective, the SLA needs to define the standards and procedures by which the service will be measured. Reporting and dispute-resolution processes and a method for updating the agreement need to be incorporated into the SLA.
The metrics used to create reports will vary based on the service being offered. Some commonly used categories are:
- Service availability – Most SLAs are concerned with the percentage of time that the service is available to its intended users. Failure to meet the agreed-upon parameters is an SLA failure.
- Security – This critical aspect of the service needs to be monitored and reported on to ensure the customer’s data is protected. Data breaches generally lead to substantial financial penalties.
- Defect rates – Errors are a key metric for SLAs. Most agreements will define an acceptable level of errors after which penalties may be incurred by the provider.
While the specific metrics gathered are determined by the service in question, the point is always to collect information that demonstrates the service levels being provided to the customer.
The Cost of Missed SLAs
The inability to meet service level agreements is usually accompanied by financial penalties. There may also be service credits or extensions offered to the customer to address the failure. In some cases, the relationship between the parties sours and there are attempts to terminate an agreement. The failed agreement can have negative consequences for both the provider and the customer. Here are two recent examples of failed SLAs.
Australia’s National Broadband Network (NBN) technicians missed over 157,268 appointments from July 2017 to June 2018. The company was ordered to begin paying customers $25 for each missed or late appointment. That would have cost them close to four million dollars in rebates to customers for not honoring their service agreement.
Collaborative work platform provider Slack has recently been affected by technical issues that led to customer outages. They paid over $8 million in credits with which customers can pay future bills. The payments resulted in a 5% loss of revenue for the last fiscal quarter.
These are just two small samples of the ramifications of failing to meet service level agreements. It makes sense that using technology to manage this process can be beneficial to service providers.
A Tool for SLA Management
IDERA’s Uptime Infrastructure Monitor is a full-featured monitoring tool that can monitor many aspects of your IT environment. Built into the application are the capabilities to make it an excellent solution for managing service level agreements. Some of Uptime’s SLA-focused features include the ability to:
- Perform SLA monitoring and alerting to help troubleshoot issues and perform root cause analysis before service levels are missed.
- Create customizable reports and dashboards to view SLA status in real-time. Focus your reporting on specific infrastructure elements that may impact SLA delivery.
- Test SLAs before committing your resources. With a few clicks, use historical data to test potential SLAs against past performance. This feature can help you avoid the unpleasant situation of over-promising your delivery capabilities.
Uptime can help you manage your businesses SLAs. Stay ahead of potential issues that may cause you to miss the levels of service for which your customers have paid. Effectively managing your SLAs can only help your company’s bottom line.