an introduction to sla

8/18/2019 An Introduction to SLA

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An Introduction to Service-Level Agreements (SLAs)

［ Source:www.cio.com Date:2007-8-9 Font Size:］

SLAs are a critical component of any vendor contract. Beyond listing expectations of servicetype and quality, an SLA provides remedies when requirements aren't met.

By Lauren Gibbons Paul

A service-level agreement (SLA) is nothing more than a type of contract between two parties. In thecontext of managed I services (in which SLAs most fre!"ently appear)# SLAs dictate the !"ality andtype of service that will be provided to the client in exchange for a fee. SLAs also provide the remedy#s"ch as a red"ced fee str"ct"re# that will apply in the case of a service o"tage.

So# for example# if the contract specifies $$.$$$$ percent "ptime and that is not met# the c"stomerwo"ld have the right to red"ce its bill by an agreed-on percentage. SLAs are important beca"se they

set the tone for the relationship between the parties and will govern if and when things brea% down. A&good& SLA is a balance between being thoro"gh and clear on one side# while not being overly onero"son the service provider on the other.

Tale of !ontents

• 'hat is an SLA

• 'hy is it important to have an SLA

• 'hich side sho"ld prepare the SLA

• 'hat are the basic components of an SLA

• 'hat abo"t indemnification

• Are SLAs transferable to a third-party provider

• ow can I be s"re the service provider is meeting the service levels set o"t in the SLA

• 'hat is SLA monitoring and verification

• 'hat are some SLA metrics

• 'hat sho"ld I consider when selecting metrics for my SLA

• 'hat are the typical "ptime provisions for an I networ% services provider

• Sho"ld we review o"r SLAs periodically

"hat is an SLA# A service-level agreement (SLA) is a doc"ment that spells o"t two or more parties* rights andobligations "nder a contract for wor% (s"ch as between a company and its service provider). he mainp"rpose of an SLA is to spell o"t the level of service that will be provided "nder the agreement. Aninternal I services organi+ation may also provide an SLA to its internal b"siness &c"stomers.&

he classic example of an SLA is with a networ% services provider or telecom provider# where thedoc"ment dictates what penalties the provider will inc"r if its performance falls short of specified levels.

,s"ally# in this case# the penalties will follow a stepped sched"le - for example# &If the networ% is downfor an ho"r# the c"stomer is entitled to a percent rebate of its monthly networ% service fees/ if the

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networ% is down for two ho"rs# the c"stomer is entitled to a 01 rebate of its monthly networ% servicefees& and so on.

"hy is it important to have an SLA#It is as important to have an SLA as it is to have a contract for b"siness arrangements of all types --

beca"se it constit"tes a single doc"ment that contains the terms of the agreement as "nderstood byboth parties. 'ith the SLA in place# it is m"ch more diffic"lt for either party to claim ignorance if theagreement brea%s down. 2I3s sho"ld expect to have an SLA (reviewed by their legal co"nsel) in placefor every significant service relationship they have.

"hich side should prepare the SLA#4ost service providers will offer a standard SLA as part of the wor% agreement. Ideally# yo" sho"ld "sethat as a starting point. 5ive their SLA to yo"r in-ho"se co"nsel department# if yo" have one# and letco"nsel ma%e ad6"stments that are favorable to yo"r side. 3r add some provisions that reflect yo"rpriorities. If time is of the essence# however# yo" may have to "se the service provider*s standard SLA.

"hat are the asic components of an SLA#

An SLA can comprise a few short pages "p to a few h"ndred pages. he basic components are astatement of the parties* intent# an o"tline of the responsibilities of each party (incl"ding acceptableperformance parameters with applicable metrics)# a statement on the expected d"ration of theagreement# a description of the applications and services covered by the agreement# proced"res formonitoring the service levels# a sched"le for remediation of o"tages and associated penalties# andproblem-resol"tion proced"res.

"hat aout indemnification#he SLA sho"ld incl"de a provision in which the service provider agrees to indemnify the c"stomercompany for any breaches of its warranties. Indemnification means that the provider will have to paythe c"stomer for any third-party litigation costs res"lting from its breach of the warranties. If yo" "se astandard SLA provided by the service provider# it is li%ely this provision will be absent/ as% yo"r in-ho"seco"nsel to draft a simple provision to incl"de it# altho"gh the service provider may want f"rther

negotiation of this point.

Are SLAs transferale to a third$party provider#he iss"e of transferability "s"ally arises when the service provider is ac!"ired by or merged withanother company. If the new entity intends to carry on the ac!"iree*s b"siness as "s"al# the c"stomerwill have a nat"ral expectation that the ac!"irer will ass"me the previo"s provider*s SLAs.,nfort"nately# this may not be the case. SLAs granted by one company do not a"tomatically transfer toa new owner of that company. If yo"r service provider has merged or been ac!"ired# it is li%ely yo" willneed to renegotiate the terms of the SLA. In many cases# however# the new entity will not want to ris%ca"sing ill will with the client base and will therefore ass"me any existing SLAs.

%ow can & e sure the service provider is meeting the service levels set out in the SLA#

4ost service providers (especially in cases where high availability is critical# s"ch as networ% services)ma%e reports available# often on a 'eb portal. here# yo" can see how yo"r application or system isfaring# whether service levels have been maintained and whether yo" are owed any rebates for serviceo"tages. If the service being provided is mission-critical (that is# yo"r b"siness is in 6eopardy if the SLAsare not met)# yo" will want to consider "sing an SLA management tool or monitoring service.

"hat is SLA monitoring and verification#Service providers typically have their own means of ens"ring that SLAs are being met. B"t if the serviceis tr"ly critical to yo"r b"siness# yo" sho"ld consider engaging a third-party monitoring company tomonitor yo"r SLAs# ideally in real-time# so yo" can be s"re yo" are getting what yo" paid for. It*s anextra layer of hassle and expense b"t %ey for that extra peace of mind.

"hat are some SLA metrics#

4ost SLA metrics concern the !"ality of wor% to be performed by the service provider. According to IanS. ayes of 2larity 2ons"lting in Beverly# 4ass.# a !"ality definition may contain several individ"al


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metrics that may form part of the deliverable*s acceptance criteria# or that may serve as standalonemeas"rements of a single aspect of service.

7xamples of !"ality metrics incl"de8

efect rates. hese are co"nts or percentages that meas"re the errors in ma6or deliverables# incl"dingn"mber of prod"ction fail"res per month# n"mber of missed deadlines# n"mber of deliverables re6ected(rewor%s)# and so on.

Technical quality. In the case of o"tso"rced application development# this incl"des meas"rements ofthe technical !"ality of application code# normally prod"ced by commercial tools that loo% at items s"chas program si+e# degree of str"ct"re# degree of complexity and coding defects.

Service availaility. his indicates the amo"nt of time9window of time that the services managed bythe o"tso"rcer are available# ranging from online application availability to delivery of reports by aspecified time of day. 4eas"res can be reported positively or negatively and "s"ally incorporate somelevel of tolerance (for example# online application availability $$ percent of the time between the ho"rs

of :8 a.m. 7S and ;8 p.m. 7S).

Service satisfaction. his relates to the client*s level of satisfaction with the perceived level of serviceprovided by the o"tso"rcer capt"red for each ma6or f"nction thro"gh internal and9or external s"rveys.Ideally# these s"rveys are cond"cted periodically by a ne"tral third party. Altho"gh s"b6ective# they are agood do"ble chec% on the validity of the other SLA metrics.

"hat should & consider when selecting metrics for my SLA# According to ayes# it is important %eep these g"idelines in mind8

!hoose measurements that motivate the right ehavior. he first goal of any metric is to motivatethe appropriate behavior on behalf of the client and the service provider. 7ach side of the relationship

will attempt to optimi+e its actions to meet the performance ob6ectives defined by the metrics.


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"hat are the typical uptime provisions for an &T networ) services provider#'hen it comes to hosted networ% services# most companies will need at least $$ percent "ptime/ manyproviders will offer $$.$ percent "ptime or higher. It is important to "nderstand exactly what this means#as $$.$ percent "ptime e!"ates to >?.0 min"tes of "nplanned downtime per month.

an introduction to sla

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