Service Level Agreement

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Service Level Agreement

Service Level Agreement (SLA) is that part of a service contract in which a certain level of service is agreed upon. An SLA is therefore not a type of service contract, but rather a part of a service contract. A service contract can contain zero, one, or more SLAs. A contract containing SLAs is usually referred to as a performance contract.

In practice, the term SLA is sometimes used incorrectly in the context of contracted delivery time (of the service) or performance.

What is a Service Level Agreement (SLA)?

A SLA is a formal negotiated agreement between two parties. It is a contract that exists between customers and their service provider, or between service providers. It transcripts the common understanding about services, priorities, responsibilities, guarantee, etc. with the main purpose to agree on the level of service. For example, it may specify the levels of availability, serviceability, performance, operation or other attributes of the service like billing and even penalties in the case of violation of the SLA.

Historically, SLAs have been used since late 80's by fixed line telecom operators as part of their contracts with their corporate customers. More recently, IT departments in larger enterprises have adopted the idea of using service level agreements with their customers, i.e. users in other departments within the same enterprise, to allow for comparing the delivered quality of service with the one promised, and potentially consider the alternative of outsourcing IT services to an external company.

A SLA is generally business oriented and doesn't go into much technical detail. Its technical specifications are commonly described through either SLS (Service Level Specification) or SLO (Service Level Objective).

SLS is a technical interpretation of SLA. It is therefore intended as an operational guideline for the implementation of the service.

SLO is a subset of SLS, which contains some service parameters the goals to be achieved by the SLS.

Common metrics found in Service Level Agreements - Service Desk (ITSM)

Service level agreements can contain numerous service performance metrics with corresponding service level objectives.

Some examples are:

  1. ABA (Abandon Rate): Percentage of calls abandoned while waiting to be answered.
  2. ASA (Average Speed to Answer): Average time (usually in seconds) it takes for a call to be answered by the service desk.
  3. TSF (Time Service Factor): Percentage of calls answered within a definite timeframe, e.g. 80% in 20 seconds.
  4. FCR (First Call Resolution): Percentage of incoming calls that can be resolved without the use of a callback, or without having the caller call back the helpdesk to finish resolving the case.
  5. Uptime Agreements: Perhaps the most common. Can vary tremendously between shared hosting, virtual private server and dedicated servers. Common agreements include percentage of network uptime, power uptime, etc.

Typical SLA Contents

SLAs commonly include segments to address: a definition of services; performance measurement; problem management; customer duties; warranties; disaster recovery; termination of agreement.

See also