Companies need digital and technological solutions to achieve optimal levels of performance. Although there are many that implement them autonomously, there are also cases in which services are acquired from a provider specialized in a certain field, such as software, digital infrastructure or cloud solutions. This type of contract is known as SLA, Service Level Agreement.
In this text, we tell you more about this agreement, what it is for, what its elements are and the types of sanctions for failure to comply with its obligations.
Concept of Service Level Agreement (SLA)
The service level agreement or Service Level Agreement (SLA) is a contract that links a service provider with a client, generally, in the technological field. As an agreement, it establishes the guidelines and parameters that will allow the beneficiary to be offered a set of products or solutions according to their needs, expectations and tasks. Given this, the SLA is an essential element for companies as it allows them to meet not only internal objectives, but also the quality of the services they offer to their users. That is, it allows maintaining safe and optimal commercial relationships.
What is the SLA for?
This agreement, contract or agreement is essential to establish the following points in the relationship between supplier and client:
- Establishes the responsibilities of both parties.
- It provides a framework for action against possible contingencies (failures).
- Formalizes the commitment to provide the service.
- Provides a formal document that will be useful in claims.
- Establish the conditions of the service, such as the infrastructure or number of professionals available.
- Strengthens relationships between client and supplier.
Hence, the SLA must have clear, realistic clauses adapted to the client’s needs and, of course, implemented according to the provider’s capabilities.
Types of Service Level Agreements
These are the three types of SLA:
SLA – client
The customer-oriented SLA is designed to meet the needs of a particular customer. The contract document contains information about the service, basic procedures, actual conditions of service, coverage, and the circumstances in which the relationship would be terminated.
SLA – service
The service SLA focuses on a specific type of service regardless of the customer; That is, it is part of a single offer for several beneficiaries. It is commonly used when several customers enjoy the same service under the same service conditions.
SLA – multilevel
The multilevel SLA is aimed at contracts in which different levels of performance, ranges or prices of services are offered. When is it used? It is appropriate when the provider has clients that require the same service with varying levels of productivity: a small company will not require the same performance as a larger company.
Base elements of an SLA service level agreement
A well-structured SLA ensures that all parties involved understand the terms of the agreement and are aware of their responsibilities. Let’s see what are the elements that make up the service level agreement.
Agreement details
In this first section, the general data or information of the agreement is collected, such as the dates of the duration of the contract (start and end), the parties involved and a summary of the agreed services. This is essential to know, first-hand, the real scope of the agreement.
Services details
Every contract establishes a detailed list of agreed services. In this case, the SLA describes the types of services, as well as their scope, delivery or work times, incorporated digital solutions, work technologies, application methodologies and processes. Reporting, maintenance and evaluation calendars are also taken into account.
Safety standards
THE SLA establishes the standards that the provider and the client will follow to comply with the protocols, measures or regulations around data protection, client infrastructure and risk prevention. In short, agreements are established around data access and encryption policies. See non-disclosure or confidentiality agreement.
Disaster care
There must be an action protocol in the event of disasters or failures in the provider’s services, such as interruptions or server problems. In this case, it is the provider’s responsibility to specify the procedures, containment measures and other actions to restore services and thus avoid downtime or loss of time.
Service performance
Services must have defined indicators, that is, have specific metrics to define the expected performance. What does it include? Response times, operational efficiency and other indicators are considered to measure service quality. It is known as Service Level Objective (SLO).
Exclusions
Exclusions define the circumstances or cases in which the provider will not be responsible for failures in the provision of the service. Unforeseen situations, changes in the company’s needs or special conditions that are outside the initial agreement are taken into account.
Rescission
The termination details the conditions under which the contract can end before the end date. These conditions include breach of terms, non-payment, notice period for termination of the agreement or other significant changes in the client’s or supplier’s circumstances.
Sanctions and reviews
Sanctions apply in case of non-compliance with the terms of the agreement. Usually, the penalty is economic through compensation or other payments. Now, in any SLA, it is necessary to periodically review the performance indicators, since the service level objectives must be met. In this case, if they were higher than what was agreed, measures could be taken such as termination or limitation of the service.
Signatures
The signatures of both parties are essential to validate the agreement. Signing the SLA represents acceptance of the terms and conditions by the client and the service provider.
Sanctions for non-compliance with the SLA
When a service provider fails to comply with the terms set out in the SLA, it may face various penalties designed to compensate the customer for non-compliance. Let’s see what they are:
- Economic sanctions. It is the most common penalty and will depend on the amounts agreed for this type of case.
- License extension. Suppliers could extend, expand the range or offer additional services of their services to compensate the customer.
- Service credits. These are deductions from the price that the customer should pay to the supplier.
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