This blog will explain why legal consultants believe that a Service Level Agreement is the best way to go when it comes to procuring deliverables of the required quality and on time.
Why Are SLA Recommended By Legal Consultants: When an organisation works with a service provider, whether internal or external, often the two parties do not document expectations. When an unspecified expectation goes unmet, there is blame and animosity, while both parties suffer losses in various ways. This can happen for simple, small tasks or tasks on a larger scale. Operations that are functionalised have multiple handoffs in a single process itself. This will require those different business units complete specific deliverables with a particular quality by a specific deadline. If operations are outsourced, the external provider of services must meet the same quality and deadline. This will need a strong governance structure to prevent sub-standard deliverables and missed deadlines. It becomes essential to define expectations and processes clearly. The processes and expectations should also be measurable, lend themselves to tracking and data collection, and enable satisfaction with the service delivered. According to SLA consultants, the best way to achieve this is via service level agreements (SLAs).
An SLA is an informal or formal agreement arrived at between two parties. It contains the work scope, and the key responsibilities are for both parties to get to a contract. The SLA may be between an external service provider and a client and be contractually binding, or it could be an internal one between two departments in an organisation. Read this blog fully to know Why are SLA recommended by Legal Consultants?
The Need for a Service-Level Agreement
An SLA is not just meant to pull up and punish the party that fails to keep up its end of the promise as laid down in the SLA. The key purpose is to provide clarity, processes, methodologies, redressal mechanisms, etc., to make the path smooth for both parties to the agreement and achieve quality deliverables on time. But punishment for SLA is very real and applies to both parties involved.
Vakilsearch Consultants Recommend SLAs as Well
There are several reasons why are SLA recommended by legal consultants for ensuring perfect service outcomes.
SLA recommend by consultant because SLAs:
- They define the standard of service to be provided.
- They identify service-level issues
- They reduce the impact of all the service-level problems on company operations.
- Identify corrective measures.
- They define the means of measuring the standard.
- They define the penalties for failure to meet standards.
- Define incentives to exceed the defined standards.
- They define the responsibilities of both parties.
- Specify mutual accountability.
The Importance of an SLA
Prior to implementing the SLA, key criteria for evaluation criteria (metrics) must be defined. Tools for tracking these metrics also need to be defined and implemented.
An SLA can be used for performance monitoring with the help of accountability and transparency. Built-in reporting cycles and formats will also enable the service provider to know its own performance compared with the required standards. This will let the service provider take immediate corrective action.
When dealing with outsourcing, it is essential to identify those aspects that, when missed, will be considered major or minor SLA violations. Consequences for these violations also need to be identified and defined. If there is a minor violation of the SLA, the consequence could be, for example, service or fee credits, and a major violation could be considered an SLA breach.
It is important for the two parties to review the possible scenarios, define the penalty each scenario warrants, and identify the possible ramifications of the penalties. Where the SLA is being drawn up between two departments within an organisation, the penalties might differ, yet there must be consequences for any violation. For example, management reporting can highlight issues when they arise and make the violating department take corrective action and be warned in the future.
What to Include in an SLA for Clarity?
An SLA is an excellent document for the service provider and the customer. It can provide full clarity to both parties regarding the service’s deliverables, goals, expectations, breaches, agreement violations, penalties, etc., regarding the service. Putting the following items into the agreement will provide a good SLA to help both parties sail through the task much more efficiently and with greater awareness.
Provide a summary of what the agreement is about. List down what the deliverable services will be. Specify who is delivering the service, to whom, and how the delivery will be measured for success.
Expected Goals of Both Parties
Generally, in SLAs between customers and businesses, the goals specified in the SLA apply to the customer. If this is the requirement, then the service provider and the customer must work together to set up measurable goals that are feasible to be met by the service provider and the customer.
Is this an internal SLA between your marketing and sales departments? In that case, both teams should have their goals outlined in this section of the contract while ensuring that when marketing hits its goal, sales can reach its own goal.
All the expectations of both parties must be put down in the SLA. For example, besides the final deliverable, the customer might want daily reporting, a weekly meeting, work-in-progress documents, and such from the service provider. This must be specified in the service level agreement.
A Point-of-contact, or POC, is a person assigned by the customer at the end and by the service provider at their end. This person is responsible for ensuring that goals are met, and this person will be contacted by the other party for updates, redressal, raising of issues, etc. Roles need to be assigned, and there has to be complete clarity regarding the involvement of different people in the SLA.
If there is a slippage in meeting goals specified in the SLA, there must be a penalty imposed on the erring party. The penalties and consequences must form part of the SLA.
Conditions to Cancel the SLA
Defining and specifying the conditions under which the SLA will stand defunct in the SLA itself is essential. Specifying the consequences for both parties under the different contract termination circumstances is also essential. While with external service providers, the conditions will be harsher as there is generally much more at stake. With internal customers in a company, the consequences for termination of the SLA will generally be much more lenient.
A well-formulated SLA provides various benefits to both the service provider and the client. For an SLA to be effective, it has to be implementable, enforceable, and measurable. An SLA adds great value to a working relationship. Hope the blog Why Are SLA Recommended By Legal Consultants is helpful!
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