SLA contract

Explanation and definitions of service-based SLAs

An SLA is divided into three parts. The first part, the „introduction“ section, is where the company introduces itself. The second part, the „description“ section, is where the company describes the services that it will provide and the expectations that they will have, and it describes the services that it will not provide. The „levels“ section, which is also divided into three parts, is where the parties enter into the details of the agreement.
By definition, a service-based SLA includes all the details of the service that the service user will receive, as well as the contractually required level of service. The SLA does not allow for a flexible schedule; rather, the SLA strictly regulates the services that the service provider will provide.
Many companies establish formal processes and procedures for tracking down and resolving service-related issues. For example, if a service level is not met, the IT department may create a formal service-performance measurement process. The process includes developing an agreed-upon standard measurement, monitoring and reporting system, and establishing an appropriate dispute resolution mechanism.
The following explains the different levels of SLA that exist within a company’s SLA agreement.

Service-based SLA

When a company’s SLA is divided into service levels, it means that the service levels are set forth in a consistent manner and are not subject to the whims of the customer. This is especially important in an online environment as it is common for multiple users. A typical example is when a company requests that all users log on to its website every morning.
For example, a web service provider may offer a service level of „99.5% uptime“ but this may not be enough for all of its customers.
For example, one customer may have access to all of the necessary servers but is not satisfied with that level of service. She wants a higher level of service that the company employees can monitor and control. In this case, the service provider can allocate additional servers that are capable of meeting the customer’s increased workload.
For example, if one of its customers has to use a certain amount of disk space, the service provider may allocate additional servers that can support that requirement while still maintaining the same performance that the original customer had.
This allocation of resources is known as a devotional service. When a service provider devotes resources to a certain service level, it is known as a dedication. Devotionals are also sometimes colloquially triggered by purchase orders. A devotional includes a commitment from the customer that she will pay the entire purchase price, regardless of how much is ultimately spent.
For example, if a company purchases a new server for $500,000, the devotional will include a provision that the customer will pay.


In an effort to increase the productivity of the IT department, some organizations offer benefits that are not intended to replace lost productivity. These are calculated using the ratio of the amount of service to the total amount of work that an employee is expected to perform. This includes pay increases, bonuses, and other compensation that is not intended to replace lost productivity.


Treaty-keeping is a provision in which a party agrees to keep certain aspects of an agreement secret. This includes the exact terms of the agreement and their implementation. Titles, definitions, and other contractual details of the agreement are also kept confidential.
The purpose of a treaty-keeping provision is to ensure that the parties maintain their respective professional standards and that both understand the scope and intent of the agreement.
A treaty-keeping provision is also designed to ensure that the parties continue to collaborate and negotiate in good faith. Treaty-keeping provisions allow the service provider to charge a lower price if the SLA is not met.

Soft costs

Soft costs are the costs that a service provider is allowed to charge because the service is not provided. These costs may include discounts or other compensation for service-level agreements that are not legally binding. Soft costs are also included in the SLAs that are not legally binding but are frequently used as a guideline for the pricing of services.
Soft costs are also included in SLAs that are legally binding but are subject to regular reviews. Treaty-keeping provisions allow the service provider to revise the SLA at any time. Soft costs may be added or subtracted from SLAs as needed, but the overall effect is the same.

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