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service level agreement examplesEver wonder about when you actually use a Service Level Agreement? These days it is becoming more and more necessary to become familiar with SLAs as more folks are diving into owning their own virtual or actual companies. Basically, a Service Level Agreement (SLA) is a contract between a provider of a service or product and a customer that could require inventory restocking, repairs or on-going enhancements. It commits suppliers to having resources ready and it commits the customer to on-going payments. Plus, itgets both parties protected when there needs to be future work done. SLAs are used commonly for custom-built software systems or packages but it can also be applied for different situations such as products stocked on shelves, a fleet of vehicles or for an appliance. The SLA term sometimes refers to the contracted time of delivery of the performance or service. For example, telcos and providers of internet service will usually include service level agreements within their contract’s terms with clients to define service levels being sold in layman’s terms. In cases like this, typically a service level agreement will have technical definitions in terms of mean time to recover or repair (MTTR) or mean time between failures (MTBF). It also includes measurement details like jitter, throughput or various rates of data.

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Let’s look at a few SLA examples:

The transfer of responsibilities to a supplier from an organization is called outsourcing. This new arrangement is managed through contracts that could include more than one SLA. The contract could involve financial penalties if metrics of SLA are consistently missed, or more severe penalties. Managing, tracking and setting SLAs happen to be important aspects of the outsourcing relationship management (ORM) discipline. Typically, there are negotiations done on specific SLAs up front as part of the contract of outsourcing and these are used as one of the main outsourcing governance tools. Here is a course entitled The Ultimate Guide to Outsourcing that will enable you to discover how your business can be outsourced to full time employees and freelancers.

Shared resources is cloud computing’s underlying benefit, supported by a shared infrastructure environment’s underlying nature. Thus, an SLA that spans across cloud computing is offered by providers of service as an agreement that is service-based rather than an agreement that is customer-based. Reporting, monitoring and measuring on cloud performance are based on the ability of the end user to consume resources or the experience of an end user. Relative to SLAs, the downside of cloud computing is the hard time in finding out the root causes for interruptions of service due to the environment’s complex nature. Here is a course entitled Introduction to Cloud Computing you might want to check out as it is a practical guide to cloud computing in easy steps.

Any management strategy considers 2 phases that are well-differentiated, including the contract of negotiation and the real time monitoring of its fulfilment. For this reason, the management of SLA encompasses the definition of an SLA contract according to policies defined: SLA enforcement, SLA monitoring, SLA negotiation and Quality of Service (QoS) with basic schema.

These applications need to achieve even more demanding service levels as classical installations as applications are moved from hardware that is dedicated to the cloud. For cloud services, SLAs focus on data center characteristics and more recently include network characteristics to support SLAs that are end-to-end.

The point is that a new layer is to be built upon the SOA, cloud or grid middleware to create a mechanism of negotiation between consumers of services and their providers. One example is the project VISION Cloud which is a project that is European Union-funded and has provided content-oriented SLA results. Another project is SLA@SOI, which is a Framework 7 EU-funded research project. SLA@SOI is doing research on every aspect of multi-provider, multi-level service level agreements within cloud computing and service-oriented infrastructure. Also, FP7IRMOS has done investigations of aspects of translating SLAs at application levels to attributes that are resource-based in efforts of bridging gaps between Cloud provider resource mechanisms of management and expectations on the client’s side. The European Commission has provided a summary of results for each of these SLA projects ranging from enforcement, management, monitoring and specifications.

One SLA standard is a web service level agreement (WSLA)compliance that monitors services on the web. It lets authors specify the actions that should be performed when performance is not met, the desired target performances and the performance metrics associated with applications of web service.

It is usual for a network service provider or internet backbone providers to state explicitly on its website its own SLA. There is no express mandate that a company have an SLA according to the 1996 US Telecommunications Act but for firms, it does provide a framework to do so in sections 252 and 251.

Terms and Conditions

Typically, key elements of a service relationship covered typically in an SLA include implementation, performance, finances, operations, governance and scope.

Common Metrics

Service Level Agreements can contain many different metrics for service performance as it corresponds to the objectives of service level. A service desk or a call center is an IT service management, which is a common case. By the way you might want to check out this article entitled Agreement Letter Sample: How to Solidify a Negotiation that tells you more about other types of formal contract you might need in the long run as you go about your business.

Commonly agreed metrics in cases like these include:

Levels of SLA

You can also define service level agreements at different levels:

A multilevel SLA is split into varying levels in the same SLA, with each focusing on a different customer set for identical services.

  1. Service-level SLA- covers all the issues of SLM relevant to services that are specific in relation to this specific group of customers.
  2. Customer-level SLA-covers all issues of SLM relevant to a specific group of customers, without regard of the used services.
  3. Corporate-level SLA-this covers all the generic issues of service level management appropriate to each client in the company. SLA reviews and updates are required less frequently because these issues are not usually as volatile.

This is an agreement for every customer using the service that the service provider delivers. For instance:

These are agreements covering all the services that an individual customer group uses. For instance an SLA between an IT service provider or supplier and a large organization’s finance department for services such as purchase systems, procurement systems, billing systems, payroll systems and finance systems.

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Page Last Updated: February 2020

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