Service level agreements are documented contracts between clients and service providers. It outlines the amount of service you should forecast from a vendor.
What Is a Service Level Agreement?
Service Level Agreement (SLA) is an official written contract that specifies a list of deliverables that the service provider has promised to give to an end-user. A service level agreement, or SLA, is a written contract between a company and its end users (workers or customers) that specifies the services that will be provided, how those services will be provided, and the level of quality that can be anticipated.
It establishes a defined number of deliverables that the service provider agrees to provide to the concerned individuals who avail of the services. These agreements can occur between businesses and customers or between two different types of commercial enterprises.
Where Is SLA Used?
These contracts are also ideal for industries in the communications and facilities space. They are worded to clearly identify a client’s expectations and how anticipated issues can be resolved before they take place.
This written document serves as a legal obligation between the recipient of the services and the provider of the services. There are three types of service level agreements that perform different functions. The details of these are indicated in the table given below.
The use of a service level agreement (SLA) can greatly enhance customer and service provider communication. SLAs make it easier for supplier and customer groups to manage expectations, define roles, and reduce disputes.
| Type of Service Level Agreement | Function |
| Customer Service Level Agreement | This is established between a vendor and a customer. It details a specific level of service |
| Internal Service Level Agreement | This is established between two or more divisions within the same business or enterprise, e.g., between the marketing and sales divisions |
| Multilevel Service Level Agreement | This is established between the different internal divisions of a business or between a business and its external clientele. |
Key Elements of a Service Level Agreement
Some of the primary aspects of this agreement include the following:
- Creation of the agreement – The agreement should be established with mutual agreement of both sides and not one side
- Performance measurement – Do not extend the time frame for measuring the level of quality of the services. If you extend it across months, you could experience below par services without being able to rectify the same
- A concise summary of the entire agreement – Details of the services the service provider will provide to the recipient of the services and how will the effectiveness of the services be gauged
- The complete objectives of the said services that are provided – The agreement should clearly state whether the service provider’s goal is to, e.g., furnish a business with technologies they lack, enhance the performance, or help reduce expenses
- Details of the services – The contract should detail the nature of services provided, to whom they will be provided, the location/department, and the time frame. Details about the personnel on each side who will gauge the services which are being rendered
- Specify the standards of services – This forms a crucial part of an SLA as the recipients expect optimal services at all times. The provider of services must indicate changes that could impact the services, e.g., large volumes of workload, unforeseen contingencies, or other situations
- Compensation – The agreement should include a compensation clause by which the recipients avail of some ‘service credits’. This is to protect them if the service providers are unable to fulfill the services as per the desired expectations. This will help the service provider to work towards furnishing clients with better and more effective services
- Cancellation terms and details – The said recipients must convey the most practical and professionally viable conditions under which they can cancel the agreement. Cancellation is often resorted to when the said objectives are not met as per the expected standards mentioned in the agreement
- Constant and acute failure – If the services are disrupted innumerable times within a specific time frame, the recipients of the services can terminate the agreement immediately.
The Importance of Service Level Agreements and What Makes them an Effective Communication Tool
The benefits of Services Level Agreements are invaluable. Some of these are given below:
- They help build trust between the provider and the recipient of services
- They help ease the levels of communication and reduce conflicts
- They enable the smooth execution of the expectations detailed in the document
- The advantages of having a documented contract help establish the relationship between the provider and the receiver of the services
- Failure to comply with the expected levels of quality service is clearly laid down in the agreement, which makes it easy for the client/s to seek compensation
- This type of agreement helps to track the services being rendered at regular intervals.
Conclusion
Service Level Agreements serve as powerful tools in setting benchmarks for customer services. They signify timely commitment and support within the framework of the agreement. The details of these agreements help the service providers understand the specific requirements of their clients.
This sets the foundation for becoming familiar with their client’s business goals, daily needs, and distinct processes. The communication between the two parties is worded in a friendly manner that is easy to understand without escalating unnecessarily.
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