What is a Service Level Agreement? Everything you need to know

Are you planning to start cooperating with a business partner to service products or services? Or maybe you are wondering what promises regarding the so-called server uptime means in practice. It is worth getting acquainted with the SLA in time, which defines the conditions for providing certain services or tasks by the other party. So, let’s talk about what SLA is in practice and what you can expect from suppliers.

SLA – what is it? 

A Service Level Agreement (SLA) is a document that defines the level of service that a supplier undertakes to provide to a customer. SLAs are an important part of service contracts, especially in the IT and telecommunications industries, because they allow you to determine what the customer can expect and what—and when—the company or person responsible for the service must deliver.   

What is SLA for? It’s pretty simple: thanks to such an agreement, both parties gain greater transparency in the arrangements and can later enforce compliance with the agreement’s content and draw consequences in the event of failure to meet deadlines.

Service Level Agreement – what is it? What does it determine?

“Service Level Agreement” can be translated as a service level agreement. The SLA specifies the parameters of a specific service that the provider must meet. Therefore, it is not only about the party providing the service, which is the subject of the contract, fixing problem X, but also doing it within a specified time and appropriately. What will you most often find in SLA? They should be selected, for example:

• Service availability – i.e. a specific time during which the service must be available to the user (e.g. 99.9% of the time in a month, although in the case of essential services, there may be a notation of the so-called five nines, i.e. as much as 99.999%!);
• Performance parameters—For some services, we can discuss minimum performance standards that must be met, such as the speed of loading a website.
• Response time – The maximum time the provider should start resolving reported issues. Importantly, it is not about solving the case but, for example, responding to the report and taking the first steps;
• Repair time – This is when the problem should be resolved entirely.
• Next Steps – Steps to take if the issue is unresolved within the set timeframe.
• Liquidated damages – sanctions imposed on the supplier in case of failure to meet the agreed SLA conditions.

Why is SLA important in business?

Signing an SLA is very important for service providers and their customers. And we know this from experience – our field service of hardware and software dedicated to the retail industry is based on a Service Level Agreement. What is included in our SLA? Among other things, provisions stating that:

• we guarantee service availability at the level of 99.5%;
• the time to resolve the request is 12/6/4 hours (for issues of varying levels of urgency);
• specific and required by the Client scopes of the service, communication, recording of activities or the settlement process.

Thanks to this, customers know what to expect and what they can expect from the company, and we regularly improve the quality of our services to ensure that we meet the SLA. Let us also add that transparent terms of the SLA build trust between the supplier and the customer – there are no understatements or inflated expectations. Still, there is certainty that you can count on quick help in case of challenges. This is very important for customers whose industry’s high operational efficiency and availability are essential – for example, in retail. And speaking of this industry – see also our article: Artificial intelligence in the retail sector – huge and still untapped potential.