Your team probably has service-level agreements (SLA) in place today with your internal or external customers, but are you sure they’re accurate representations of the service you can guarantee? This article will explain what a good SLA looks like and show you what you need to improve SLAs for any customer.
The Key Components of a Good SLA
It has long been standard IT industry practice for a service team to set service-level agreements (SLAs) with their customers. Those customers could be external, but they’re just as likely to be others team within the same company.
The goal of either an internal or external SLA is to put everyone on the same page about what they can expect from the business relationship.
Good SLAs will include five core components:
- The agreed-upon services a provider will deliver to a customer
- The expected volume and quality of that service
- The roles, duties, and responsibilities of the provider and the customer
- The metrics the provider will use to measure performance
- The remediation procedures and penalties in place should that provider not meet the agreed-upon service levels
Here is an example of the components of a basic SLA that a cloud service provider might set with an external customer:
- The specific cloud services they will provide, like file storage, backups, and apps
- An expected uptime for all services of perhaps 99.99 percent
- The emergency points of contact at the service provider and customer during incident response
- The software and human resources the provider will use to monitor cloud tenant availability and performance
- The remediation procedures the cloud provider will take should one or more services be unavailable, including financial compensation
Improve SLAs Further By Adding Service and Management Details
The items above cover the bare minimum of what you should include in your SLAs. The next step you should take in improving your SLAs is to expand the documentation of your service and management processes.
There will undoubtedly be a tipping point beyond which more detail adds confusion, but in most business relationships you’ll want to include information on the following:
Detailed Service Information
- A complete list of all primary services provided, highlighting the customer’s mission-critical components, to demonstrate awareness.
- Any variable availability schedule or other conditions of service, such as a reduction in price if specific KPIs are not met.
- Any time-dependent standards or service levels, such as faster support response times during customer business hours.
- Problem and incident escalation procedures.
Detailed Management Information
- Define not only your metrics but also the supporting standards and the resources you will use to measure them.
- Outline your reporting process, including the content included, frequency, and any relevant regulatory standards involved.
- Your dispute resolution process, including roles and responsibilities for all parties, escalation pathways, and the mediation process.
- A process for periodically reviewing and updating the SLA.
- Why You Should Set SLAs For Every Customer
As you can see, a good SLA isn’t really about technology. SLAs are just as integral as pricing and legal documents in your service contracts. A well-written SLA outlines everything relevant to the business relationship surrounding the delivery of an IT service.
Putting everything relevant in a single document is essential, so neither party can claim to be ignorant of their responsibilities should an issue arise. The last time you want to get into a disagreement with one of your customers is after a service interruption.
Improve SLAs With These 5 Best Practices
SLAs are a critical component in any IT service management process. Here are five often-overlooked best practices you should follow when drafting your own SLAs for internal or external customers.
- Add an indemnification clause
Indemnification clauses are provisions where the service provider agrees to cover any penalties incurred by the customer should the service fail. For example, the provider pays the customer for any third-party litigation costs resulting from an outage.
- Be transparent
Post your SLAs somewhere each customer can easily access them. Customers should be able to reference it whenever they need it. For confidential SLAs, that might mean in a protected customer portal. For broad public-facing SLAs, that might just mean on a webpage.
- Use the right metrics
Each SLA might require you to collected different metrics, depending on what matters to the covered customer. Two of the primary metrics you’ll likely need to track are:
- Service availability, which is the percentage of time the service was available during a given period, usually daily, weekly, or monthly. For example, a customer might stipulate that they require 99.9 percent availability between the local hours of 8 a.m. and 6 p.m.
- Error rates in major deliverables, such as production failures like incomplete backups, coding errors, or missed deadlines.
- Use joint SLAs when appropriate
Today’s cloud-centric customers often use applications or other services that straddle multiple cloud services. As a result, the metrics that matter to them often depend on services provided by those various providers simultaneously. Consider creating joint SLAs with those other service providers to keep everyone on the same page about how complex cloud architecture must run.
Additionally, the different service providers might want to draft Operating Level Agreements (OLAs) with each other. OLAs detail what each provider owes each other to honor their joint SLA.
- Include penalties only where appropriate
SLAs need to have strict and well-defined penalties that can be enforced when minimum performance standards are not met. Usually, service providers and customers agree to apply a percentage of monthly fees tied to the vendor’s profit margin when SLA targets are missed.
Most highly functioning IT organizations tend not to use harsher SLA provisions as a punishing tool for their partners. Instead, they use SLA metrics to allow for fluid and productive conversations regarding performance issues, prioritization, and business relationships.
Good SLAs Protect the Customer and the Provider Alike
Reliable ITSM tools are important, of course, but you need sound business practices, like putting a well-crafted SLA in place, to best serve your customers and your team. Both provide peace of mind.
Schedule a free demo of C2 ATOM today to see why it’s one of the best tools to support your ITSM practices.