An SLA is a service-level agreement that defines the relationship between a customer and a supplier. SLAs are crucial in outsourcing vendor contracts as they outline service expectations and summarize solutions if obligations are not met.
While SLAs typically define the relationship between service providers and customers, sales and marketing teams also use them to mainstream internal operations. The following article outlines everything you need to know about these agreements, from questions like “What is an SLA?” to how to craft contracts that benefit your business.
What Do I Need To Know About SLAs?
An SLA is a contractual agreement that codifies the relationship between a client and an external service provider. These contracts outline client expectations, metrics the customer uses to measure services, and penalties for not fulfilling requirements.
SLAs are generally between organizations and external service delivery partners, but they can also outline internal relationships within a company. For instance, a contract between a company’s marketing and sales departments should outline marketing efforts, sales expectations, and remedies for internal communication issues.
Further, IT consulting professionals in Fort Worth may have internal SLAs to outline technology sales expectations and the departments responsible for meeting those goals.
What Are The Different Types Of SLAs?
There are various service-level agreements, but businesses utilize three kinds most often. Here is an outline of the differences between the different types of SLAs.
Customer service-level agreement
A customer service-level agreement is a document that outlines what services an external organization will provide to a specific customer. These agreements can cover both tangible products and services. An SLA is a framework for client goals and the metrics by which they are measured.
For example, an agreement may outline the types of products the client will provide and on what schedule. IT companies that outsource various aspects of the business may have an SLA with an external service provider that outlines how quickly agents should resolve support requests.
Internal service-level agreement
An internal SLA is between different individuals or parties within a company rather than an external client. For instance, the facilities manager may have an SLA with the company’s various departments to outline the cleaning schedule, access policies, and hours of operation.
While internal agreements are typically not as formal as external contracts, they help maintain accountability and order within a business. An organization may have one or several SLAs to outline company procedures and relationships.
Multilevel service-level agreement
Multilevel SLAs are more versatile than internal or customer-level agreements. A multilevel SLA can facilitate the organization’s internal or external relations. The main point of this type of agreement is to outline the responsibilities of each party if there are multiple end-users and service providers.
What Are The Parts Of An SLA?
Besides wondering, “What is an SLA?” you might be curious what components these agreements have. While sections vary depending on whether the SLA is internally or externally facing, the basic elements are the same.
Summary of agreement
The summary typically appears at the top of the document and outlines the service or product, the end-user, and how success for the product or service is measured. Successful summaries are brief and outline the most critical parts of the relationship in a few sentences or paragraphs, depending on the complexity of the contract.
The objective section should outline the goals of the service provider and client. In external SLAs, the goals of the client are the focus. Internal agreements should consider the objectives of each side equally.
If the client is writing the agreement, the provider should review the objectives to ensure they are realistic. If the provider is composing the SLA, the client should play an active role in the drafting process to ensure it captures their needs correctly.
Resources needed by all parties
This section needs to outline what each party needs to fulfill the agreement. An internal provider may require a specific service availability, quality control process, or delivery schedule. An external provider may require a particular payment schedule, regular feedback, or training.
This section of the SLA ensures each side has the resources needed to execute the contract successfully.
The contact information section of the agreement is typically the shortest part and typically appears at the top or bottom of the document. It should include the point of contact’s name, phone number, and email address. Complex agreements may list several points of contact for various situations.
Expectations and cancellation conditions
This section is one of the most critical parts of any SLA. It briefly outlines the expectations of the agreement and what happens if the client does not meet them. The SLA may also outline remedies or solutions if problems arise.
The section should also summarize the terms of cancellation. This section should outline the circumstances under which the SLA can be canceled and the policies for settling payments in the event of cancellation.
What Are The Benefits Of A Service-Level Agreement In IT Support?
Now that we’ve answered “What is an SLA?” you might be wondering what the benefits are. These agreements are an essential aspect of any business. SLAs outline internal company relationships and objectives of external service providers.
The main benefit of an SLA is eliminating any confusion or ambiguity in a business relationship. An SLA clearly states objectives, expectations, and the terms of cancellation. The client and the service provider should agree on the terms of the agreement before it is executed.
The agreement is an essential document in case disputes arise. If the provider does not fulfill its end of the contract and the client wants to pursue legal action, the SLA is an essential piece of evidence.
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