Service Level Agreement Examples: A Total Must for Your Business and Mine!

Ever 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:

• Outsourcing

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.

• Cloud Computing

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 [email protected], which is a Framework 7 EU-funded research project. [email protected] 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.

• WSLA

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.

• Backbone Internet Providers

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.

• Implementation- the involved activities in implementing the service and the support that the service provider offers. Typically, this involves each party’s responsibilities, level of effort and timelines.

• Performance- identification of outcomes and outputs expected by the parties from the arrangements.

• Finances-the resource pooling arrangements and the fee structure, cost variance, adjustments, transparency and arrangements of settlements.

• Operations- the daily activities that relate to the service delivery of the provider.

• Governance- questions of: ‘Who does what? Why? Who answers for results? Who decides what?’

• Scope-identifying covered services by the agreement and usually expressed in terms of projects, activities, processes or functions.

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:

• Uptime-A common metric, uptime is used often for services of data such as dedicated servers, virtual private servers and shared hosting. Agreements that are common include network uptime percentage, number of scheduled window maintenance and power uptime.

• Mean Time to Recover (MTTR)-After an outage of service, this is the time taken to recover.

• Turn Around Time (TAT)-Time taken for certain tasks to be completed.

• First Call Resolution (FCR)-Per cent of incoming calls you can resolve without having the caller call the help desk back to finish case resolution or without the use of a call-back.

• Time Service Factor (TSF)-Calls percentage answered within a specific frame of time, such as seventy-five per cent in thirty seconds.

• Average Speed to Answer (ASA)-Usually in seconds, average time taken for a call to be answered by the services desk.

• Abandonment Rate-Call percentages abandoned while awaiting a response.

Levels of SLA

You can also define service level agreements at different levels:

• Multilevel SLAA

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.

• Service-based SLA

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

• An entire organization’s email system. In this type of SLA, there is a chance of a difficulty or two arising as the offered service levels offered does vary for different clients. For example, local offices may use a low speed line of lease while the staff at the head office may use LAN connections that are high speed.
• A provider of mobile service offers routine services to every client and offers specific maintenance with universal charging as part of the offer.
• A car station for service offers all customers routine service and as part of an offer, includes certain maintenance with universal charging.

• Customer-based SLA

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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