A service-level agreement (SLA) is a commitment between a service provider and a customer. When concluding a SLA contract, it is necessary to define mutual expectations and basic requirements, ie the minimum acceptable level of service provided. This agreement may be concluded formally or informally between the two negotiating parties. From very simple and one-time measurements to very extensive ones based on a large number of performance measurement data, these agreements cover a very wide field, and are therefore very present.
When expectations and results are not set correctly, mutual dissatisfaction and failure occur. As a result, costs escalate, services are delayed, and service quality suffers. Full synchronization between the parties is necessary for the engagement to succeed. The SLA agreement also has a positive effect on reducing risk in the company, as it sets clearly defined standards for potential customers. The volume of work, the activities involved in the implementation of services as well as the level of support from service providers, are some of the key factors when implementing this kind of agreement. The great advantage of this type of agreement is the fact that transparency is at an enviable level, especially in financial terms, because all possible costs are listed without unpleasant surprises later. An important item of this agreement is that the provider is always able to measure its performance, ie the level of service. If this was not the case, surely customers would not be able to abide by the warranty. A clearly defined duration of the agreement is also a mandatory part of the document. Describing the most important details of the service provided, can greatly help to avoid misunderstandings or problems between the parties.
There are three types of Service-Level Agreement:
- Customer Service-Level Agreement – represents an agreement with an individual group of customers covering all the services they use. The easiest example of this type of SLA is negotiations between IT service providers and banks over services such as payment systems, online banking and others.
- Internal Service-Level Agreement – it applies exclusively to parties within a firm and not directly to its customers. A firm may also have an SLA with individual clients, but at the same time a separate SLA between its departments. This means that, for example different heads of departments can be in a SLA agreement with one another.
- Multilevel Service-Level Agreement – includes several different forms (corporate-, customer- and service-level). This form of agreement is also suitable for companies, their individual departments as well as the customers of that company. The purpose of this type of agreement is to give as accurate an overview as possible of the expectations from each party in the case that there are several providers and end users.
Great support for SLAs is provided by Key Performance Indicators (Availability, Reliability, Issue recurrence, etc.), but achieving these indicators does not necessarily mean certain success. SLAs typically contain numerous performance measurement measures in accordance with the objectives of a given service. Responsiveness is one of the key factors in running a high-performance service desk. A Must is the customer’s assurance that you will open up to his requests. A well-known metric for measuring responsiveness is the „Time to First Response“ (time required from the moment the customer submits the request to the moment the agent starts reading it) metric. „Time to Resolution“ metric is used to measure the effectiveness of solving customer problems. Some other measure metrics that could be used are: MTTR (Mean Time To Recover) – Time taken to recover after an outage of service and ASA (Average Speed to Answer): Average time (usually in seconds) it takes for a call to be answered by the service desk.
These are only some of the reasons, why SLA could be used as an IT contract. Foremost it offers flexibility and it does not need to be lengthy or overly complicated contract, but a document agreement. Such agreements can enable formalized communication that both the company and its customers agree on, and thus both parties contribute to their success. The SLA provides protection for the entire organization and ensures a successful relationship with the service provider. What is important to note is that this agreement must be updated as the organization grows and changes. Needs and requirements can change over time, and the SLA will easily follow these changes so that the business do not suffer.
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