Improve SLAs With these best practices

Your team likely has service-level agreements (SLAs) with your internal or external customers, but have you ever evaluated whether these agreements truly represent the level of service you can consistently provide? It's essential to ensure that your SLAs are not merely formalities but are realistic commitments that align with your capabilities and resources. This article will explore the critical components that make up a strong SLA, offering insights on how to create agreements that are not only thorough but also flexible enough to meet the varied needs of any customer. By grasping these principles, you can improve your SLAs to build stronger, more transparent relationships with your clients, ensuring mutual satisfaction and trust.

Key components of a good SLA 

In the IT industry, it has long been a standard practice for service teams to create service-level agreements (SLAs) with their customers. These customers can be external entities or other teams within the same organization. The primary goal of both internal and external SLAs is to ensure that all involved parties have a clear and mutual understanding of the expectations and obligations within the business relationship. Effective SLAs are built upon five crucial components:

1. The specific services that a provider commits to delivering to a customer, detailing the scope and nature of these services
2. The expected volume and quality of the services, including any benchmarks or standards that define satisfactory performance
3. The roles, duties, and responsibilities of both the provider and the customer, ensuring clarity in who is accountable for what
4. The metrics and criteria the provider will use to evaluate and measure performance, ensuring transparency and accountability
5. The remediation procedures and penalties that will be enacted if the provider fails to meet the agreed-upon service levels, including any compensatory measures or corrective actions

Tangibly, 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 elements mentioned earlier represent the essential components that should be part of your SLAs. To enhance your SLAs, the next step is to broaden the documentation of your service and management processes. While there is a point where too much detail can lead to confusion, in most business relationships, it's beneficial to include information on the following:

Comprehensive service details

A thorough list of all key services offered, emphasizing the customer's essential components to show understanding. Any flexible availability schedules or service conditions, like price reductions if certain KPIs are not achieved.

Time-sensitive standards or service levels, such as quicker support response times during the customer's business hours. Procedures for escalating problems and incidents.

Detailed management details

• Establish your metrics, the associated standards, and the tools you will employ to assess them.
• Detail your reporting procedure, specifying the content, frequency, and any applicable regulatory standards.
• Your conflict resolution process should define the roles and responsibilities of all parties, along with escalation routes and mediation.
• Implement a routine for regularly reviewing and updating the SLA.

The Importance of establishing SLAs for every customer segment

As you can see, a good SLA isn't primarily about technology. SLAs are as crucial as pricing and legal documents in your service contracts. A well-crafted SLA details everything pertinent to the business relationship involved in delivering an IT service.

Consolidating all relevant information into a single document is vital, ensuring that neither party can claim ignorance of their responsibilities if an issue arises. The last thing you want is to have a disagreement with a customer following a service disruption.

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 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 do not 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 

While good IT tools are very important, the real secret to great service is having strong business rules, like making a well-thought-out SLA. These agreements help protect both sides and build trust and understanding, so your team and customers feel really confident. To do your best, focus on making detailed SLAs that show you care about quality and honesty, which will make the service even better.