What is a Service Level Agreement (SLA)?

Last Updated at: Oct 30, 2020
Computer Weekly has recently reported that the COVID-19 outbreak has affected many new deals and contract renewals across the Indian IT industry. Hence, IT suppliers have asked their clients to relax MSAs and SLAs to enable remote service delivery extensively.


A service level agreement or SLA is a documented agreement between a service provider and its external or internal customer that explains the service typically in measurable terms. This kind of agreement creates a common understanding between the two parties of what each expects from the other. This agreement includes expectation relevant to the priorities, responsibilities and services. An SLA can be represented as an expectation managing mechanism. It is important to manage your own anticipations that can be accomplished realistically. However, a few people view a service level agreement as a complaint-stifling mechanism or an immediate fix to a distressed relationship.

But in reality, service level agreement or SLA services are:

Effective communication tool: An SLA serves as an effective communication tool as it helps both the parties involved to communicate efficiently with one another.

Conflict prevention: It also assists them in preventing disputes and conflicts as both the parties are aware of what is anticipated from each other. If in case there are any conflicts, the SLA help in resolving them.

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Living document: In fact, this is one of the most important benefits of service level agreement. As a matter of the fact, SLA is not a dead end document dispatched to the forget forever file. Both the parties of service level agreement can review the document to evaluate the service level and negotiate adjustment on the predetermined frequencies. These include altering service priorities and taking the development of business into account.

Two Important Elements Of SLA:
In order for the SLA to be an effectual business tool, it should incorporate both service elements and management elements into the account.

Service elements should include:
1. Service provided
2. Service standards like the cost of the services and time frame during which the services will be offered.
3. The responsibilities of both the parties
4. Essential escalation procedures
5. Service tradeoffs vs cost
6. Conditions for the availability of services

On the other hand, the management elements will focus on the following things.
1. How the information about the effectiveness of service will be addressed and reported
2. How service effectiveness will be kept on track
3. How disagreements related to service will be resolved
4. How both the parties will be reviewing and revising the agreement.

While both the elements are necessary for an SLA to be effective, many of the SLAs do not have management elements. This may result in malfunctioning of SLAs.

Key Aspects Of Service Level Agreement:
The process of implementing, planning and establishing a service level agreement can take several months as it involves the process of information gathering, evaluating, documenting, presenting, negotiating, education and consensus building. The process also involves customers. If the process does not include customers, then it is not said to be an agreement.

SLAs should not be seen simply as a way of stopping complaints. This would backfire and the complainer may even start to complain about the agreement itself. The SLA should be used as a collaborative tool which can be referred to by both the parties if they feel something is not working as per their desire. If this occurs, the agreement would act as a fundamental to be built on and extended for keeping both the parties happier.

Few Steps To Be Undertaken By Both The Parties:
1. Garner background information to have a better awareness of both the parties.
2. Make certain that both the parties are happier with setting out of the agreement and establishing ground rules towards the functioning partnership.
3. After reaching a successful agreement, the SLA can be written and built on in the future.