Service Level Agreement (SLA)

SLA is an important element of any service contract.   SLA can be described as an element or part of a service contract, where a service is formally defined. Particular aspects of the service, like scope, quality, responsibilities, are agreed between the service provider, who is usually the seller and the service user, who is usually the buyer.   Simply  it is “a collection of promises”.

SLA is important for both the Service Provider as well as the Service User. Given below are some of the significant benefits for each of them.

SLA is important for Provider

• Unlike a product, which can be displayed, the service can not be showcased or displayed for potential buyers.    Sample SLAs and the ability to deliver the SLAs consistently over a period of time with different customers can stand as a testimony for future buyers.
• SLA becomes part of the deliverable in the specification and hence it is a clear differentiator for the service provider.
• By defining the SLAs well, the peak load conditions of the business can be managed better in terms of planning, execution and reporting.
• SLAs also help in bringing cost efficiency, by suitably defining minimum volumes and consolidating services across multiple projects of the same customer or multiple customers, as appropriate.
• SLAs also help the service provider to plan for the right infrastructure, resources and investment.
• Another major advantage of SLA definition is in managing the customer escalations and in prioritising the service issues, generally the ones that are not caused by the service provider.
• SLA is a direct demonstration of the quality of service for the service provider.

SLA is important for the User

• Defining the services is more difficult compared to giving the specification for a product.   Service purchases carry a higher level of risk and this can be mitigated by suitable SLAs.
• SLA definition is the first step in Continuous improvement in the service delivery.   Regular SLA measurement and historical data gathering can be the right platform to continuously raise the bar.
• SLA definition can help in identifying the areas of improvement for the scope or service coverage.  This could help in optimising the cost by having the right level of service.
• SLA definition along with the internal stakeholders will help in formalising the expectation of the service delivery.
• At times SLA may also help to get more from the Service provider.

Understanding the importance of SLA document and defining the individual SLAs with sufficient clarity will help both the buyer and the seller in managing the scope, cost, quality as well as the stakeholders.

For more information kindly contact rv@bizintek.com.my