Understand the Common Words Used In Operational Level Agreements

28 August 2023

405 4 mins read

Know about the Operational Level Agreements (OLA). Understand the significance of OLAs, their components, terminology, and what constitutes an effective OLA. Gain insights on structuring and responding to OLAs for enhanced operational efficiency and collaboration.

Before proceeding further, let us first understand the meaning of the Operational Level Agreements, or OLA. An operational level agreement (OLA) is a legal agreement that specifies how information technology (IT) companies and service providers intend to provide services and monitor performance indicators for an internal customer.The basic objective of an OLA is to mention the scope as well as the depth of the duties and responsibilities of various departments in the organization. However, it should be noted that OLA and SLA do not mean the same thing. But, why are such agreements required in any organisation? Let’s take a look at the following while understanding why OLA is required in the first place.

It is important to understand that SLAs, or Service Level Agreements, address the requirements of external customers, whereas SLA delivery is dependent on the performance of the Operational Level Agreement (OLA), for that matter of fact. In other words, an SLA highlights the commitments that have been made to the client, whereas an OLA lays down the commitments that have been made to the internal groups within the organization.

Table of Contents

Do You Need a Plan for Revision in Case You Have Already Formulated the Document?

Of course, yes. You can improve the scope of the content based on business requirements. However, experts warn that if a detailed scope of revision arises, it is always better to take professional help. In fact, the business proprietor can take the help of legal firms in order to draught OLAs.

Keywords Used in Operational Level Agreements

There are some keywords that are commonly used in OLAs. Some of these terms include General Review, Service Scope, Service Dependencies, Responsible Parties, Service Exceptions, Metrics and Goals, Roles and Responsibilities, Incident Management, and Problem Management. Please note that each and every term has a meaning and that such terminologies are used in order to protect business interests.

This part of an OLA deals with preparing the ground for the relationship, identifying the parties, and establishing the objectives of the relationship. Here, reference should be given to accountability, roles, and responsibilities. The general overview also mentions the start date and the end date of the contract.
Service Scope: This section provides a technical explanation of the service rendered. It should also take into consideration updates as well as upgrades, and tasks which may be beyond the Operational Level Agreements scope.
Here, supporting services that are dependent on the deliverables of the vendor should be listed.
Responsible Parties: In the event of an issue, it should be known to the internal customer how to get in touch with the responsible parties. In this section, vendors should provide the names, hours, phone numbers, as well as emails of those individuals whom they can contact.
Service Exceptions: This provision is very crucial because it restricts the scope as well as the depth of your relationship with respect to incident management and problem management. In other words, the exceptions should be mentioned in this section.
Metrics and Goals: Key performance indicators, or KPIs, are regarded as crucial components of an OLA relationship. The organisation should request the vendor to track specific metrics and make those available to the main team members.
Roles and Responsibilities: This section talks about how the parties involved play a role in the delivery of service. It lays down training measures, meeting timings, the activities where vendor participation is required, etc.
Incident Management: There should be transparency between the vendors and the service providers. This part of an Operational Level Agreements should mention the standard expected as well as the ad-hoc requests that pour in and the way they decide to process them.
Problem Management: In the event of the occurrence of an incident, the internal customer also requires a certain degree of reassurance that you will be able to deal with the incident. A section on problem management enables the IT vendor to jot down the what-if situations and communicate the possibilities and actions for resolving the issues that have been discovered.

Unlike in the previous years when the span of technology was not so huge, in today’s context, the entire world is driven by technology. Hence, to stay relevant in this highly competitive, technology-driven world, one should be in a position to manage its IT services in a very effective manner. Writing OLAs remains an important part and, hence, one must take enough care in drafting such documents.

Examples of Operational Level Agreement

To make the concept of OLA clear, let us consider some hypothetical examples of OLAs between an information technology (IT) vendor and an Internet Service Provider (ISP), before we delve into further details.

An IT vendor is supporting Company XYZ’s database, where Company XYZ is an ISP.
Company XYZ is giving Internet SLAs to its external customers as and when required.
Company XYZ is signing an OLA with the vendor of the IT database.
The IT database vendor, OLA, mentions that they should give a daily uptime of 23 hours.
Company XYX can make a claim for financial damages that it has incurred for too much downtime.
On the other hand, IT vendors who meet standards will be able to retain customers.

As is evident, there is a huge dependence of the Service Level Agreement on the assurances and limitations which have been laid down in the operational level agreements. Due to the nature or degree of complexity involved, OLAs should be drafted, negotiated, and finalised very carefully, keeping in mind the business requirements. At the same time,they should also contain a few critical terms which will help in protecting your organization’s fiduciary interests. Experts advise on the procedures, and sometimes you might require professional help in doing the same.

FAQs on Operational Level Agreements (OLA):

What is an example of an OLA?

An example of an OLA could be an agreement between IT support teams and the HR department to ensure timely resolution of employee tech issues.

What is OLA terminology?

OLA terminology refers to the specific language, terms, and definitions used within an Operational Level Agreement to ensure clear communication.

What is the full form of OLA?

OLA stands for ‘Operational Level Agreement,’ which is a document defining the roles, responsibilities, and expectations between different teams within an organization.

What should be included in an OLA?

An OLA should outline the services provided, metrics for performance, escalation procedures, response times, communication methods, and roles of involved parties.

How do you respond to an OLA?

Responding to an OLA involves reviewing the terms, clarifying any uncertainties, and ensuring agreement among involved parties. Once agreed upon, the OLA is implemented and monitored regularly.