What Is SLA? Service Level Agreements and Their Role in Business

What Is SLA? Service Level Agreements and Their Role in Business


What Is SLA? Service Level Agreements and Their Role in Business

What Is SLA? Service Level Agreements and Their Role in Business

What do service level agreements stand for? What is SLA in call center? Those are popular questions among many businesses and their clients today. On the whole, one should not ignore the importance of these documents.

SLA is an integral part of any IT vendor contract. It pulls together info and data on all the offered services and expectations of customers in one file.

Both parties should be held liable for breaking the rules mentioned in this agreement. It is critical that both parties have the same vision and interpretation of the points listed in this document.

What Is SLA? Service Level Agreements and Their Role in Business

To begin with, we would like to define SLA. Then, we will move to other critical points you should understand, no matter whether you represent a business entity or customer sector.

What Is an SLA in Business? Definition and Meaning

Perhaps, you have already heard that companies that offer services require so-called service level agreements. These documents assist in managing client expectations and determine when users are not responsible for outages or gaps in the work of the provider. “Why is SLA important?” To understand this, it is crucial to define this abbreviation first.

SLA stands for the “service-level agreement.” It is an agreement between a party that offers some service(s) and users of those service(s). The contract covers the list of services and highlights the quality standards that the provider should follow to guarantee customer satisfaction. Clients can benefit from such documents as these agreements contain the qualities of the ordered service that makes it possible to compare with other organizations working in the same field. Such contracts also recall the ways to redress gaps and problems (e.g., using service credits).

What is an SLA model? To understand that, one may need to know the performance metrics which are usually evaluated. The model functions based on them (only some examples are listed):

  • Availability & uptime percentage
  • Various performance benchmarks
  • Response time (often associated with the work of customer care service)
  • Problem resolution time
  • Usage statistics that will be provided

Another good question is, “What is specifically not included in the SLA?” By knowing what this contract should contain, you can answer it. Service level agreements only deal with the service itself, time of export, place of storage, support, data access, downtime, penalties, and legal issues such as intellectual property.

Three Major Types of Service Level Agreement: Brief Comparison

Now, you can respond to the question, “What is an SLA in business?” You should also know some other facts about these agreements. For instance, experts usually define the three basic categories of SLAs. Those are:

  • Customer-based

This one includes all services that a customer may demand. In this example of a service level agreement, one may view info about the type and quality of service mentioned in the agreement. Such a document is created for individual consumers. A good example could be telecommunication companies. Their services contain messaging, Internet connection, and voice calls. However, all of them fall under just one agreement.

What Is SLA? Service Level Agreements and Their Role in Business

  • Service-oriented

This document recalls a single identical service for all clients. It is based on a single set of standards. It makes this type of SLA the most comfortable one. For instance, we have many users who sign the service level agreement of this category concerning an information technologies helpdesk. It means that the same service would be valid for all of them.

  • Multiple-level

You may wonder if there is a mixture of the two previous types of service level agreements. Well, a multi-level SLA is a customizable contract. It makes it possible to play with various standards and conditions to make both sides benefit from the final version of the document. We can divide multi-level SLA into several other categories.

  1. Corporate: There is no need to update the agreement regularly. The points included are usually stable. The document of this type involves the relevant sides of the SLA.
  2. Client: Such an agreement covers all service aspects related to a certain category of customers. At the same time, the type of services is not considered.
  3. Service: This document involves all points attributed to a certain service regarding a client.

What makes a good SLA? No matter which type you deal with, the qualities will be the same. We can say that these six components are obligatory for a good agreement:

  • Document overview;
  • Strategic goals;
  • Shareholders;
  • Regular review and necessary changes;
  • Service agreement;
  • Service management.

What Is SLA? Service Level Agreements and Their Role in Business

What Does KPI Stand for? What Is the Difference between KPI and SLA?

While you have received an answer to the question, “What Is SLA,” we will focus more on defining KPI in this section so that you can compare these two. A key performance indicator is a method used to evaluate how well employees and organizations perform. The criteria used to estimate that efficiency level are the strategic objectives. It makes sense that goals have to be set first. KPI assists in defining how soon the project will be accomplished or specific targets will be hit. Through controlling progress toward this business tool, it’s possible to choose the correct direction in work to achieve maximum efficiency level.

We can say that a key performance indicator is somehow a navigation tool like a map. It is up to the team lead to use this instrument as a critical piece of info. This way, it is possible to solve critical issues and make decisions that help to achieve the objectives. Now, what is the difference between KPI and SLA?

We will start with the service level agreements. They identify and deal with the ways services are delivered to the clients. One can say that KPIs are such measures. The agreements determine the general service standards that providers should stick to when dealing with clients. KPIs evaluate and control performance quality; those are critical metrics highlighted in the company SLAs.

How Can You Improve Your Service Level Agreements: Tips & Tricks

So, how can you improve your service level agreements? First of all, you should set S.M.A.R.T. goals. Out of all these letters, “A,” which stands for “attainable” is the most important one. In this contract, business entity should only outline what it will and will not do for the clients. It is critical to use only clear and concise language that would be understandable by both sides. Often, it is better to under-promise things instead of promising something your company cannot do (e.g., troubleshooting tools that you do not possess or have never tested before or extra fast support having not enough operators.

Second, you should remain transparent and honest. Avoid elevator pitch language. Do not make your clients guess what you mean. Exclude any difficult terminology or replace it with more understandable words.

Then, you should hire the right staff. Each time you deal with any legal document, it is better to have professionals by your side that understand the issues and may warn you. You may need a special legal counselor or advanced translator. In this case, it is better to recruit a professional instead of using online translating tools. To cut costs and speed up the process, you should be ready to invest in the labor first. You might need to consult lawyers and IT experts before offering the agreement to your customers. Finally, you need to train your staff according to the created contract. This way, your agreements will always look realistic and fair.


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