The word “contract” often invokes images of distrust, red tape, and arguments. However, a service level agreement (SLA) is simply an organized contract that outlines the obligations and expectations of the parties involved. A SLA is beneficial to any business because it increases transparency and sets clear standards for performance. It also streamlines communication in the event of an outage or another problem with the service. An SLA can be as simple as a one-page document or as detailed as a 100-page manual. Regardless of its length, an SLA has three main components: scope, monitoring, and remedies. Let’s take a closer look at why you need to create an SLA for your business and how you can make one yourself.
What is an SLA?
SLAs describe the terms and conditions of a service provider’s performance, as well as the expected performance from the customer. They are also sometimes called service level agreements, performance contracts, or service agreements. SLAs are legally binding, so they should be written in a way that is clear and unambiguous. They should also be kept in a central location so that all parties have access to the most current version of the document. SLAs are particularly useful in cases where a business is providing a service using a third-party vendor. For example, a business might use a vendor to provide IT services, such as maintaining the network or running the servers. The vendor’s SLA can specify exactly how quickly they respond to outages and what percentage of uptime they guarantee. The business’s SLA can specify the requirements for the service provided by the vendor, such as the bandwidth required for a particular application.
Why is an SLA important for your business?
Service Level Agreements are crucial for businesses because they provide assurances of performance and expectations for what to do if those terms aren’t met. If the service provider fails to meet the terms of the SLA, the customer has a clear recourse for what to do next, such as getting the money back or switching providers. This kind of transparency is important when the product or service you offer is delivered via a third-party vendor. A vendor SLA has the potential to save you from having to spend a lot of time and money attempting to resolve issues that are out of your control. For example, you may use a cloud-based email marketing service for your business. Purchasing a software as a service (SaaS) solution like this can be very convenient, but it can also be risky. If the email marketing service suffers a significant outage, it could have a serious impact on your business. An SLA from the vendor can specify how quickly they will resolve the problem and how much of the outage they will cover. If the outage lasts longer than the SLA specifies, you can take action to get compensated.
How to create an SLA for your business?
When creating an SLA, you must first define the problem and then provide a solution. In the case of an SLA, that problem is insufficient service. All providers should have a SLA. If they don’t, that’s a red flag. If they do, that’s a good start. Now work backward from there. Are their terms acceptable to you? Are their terms fair? Do they have the capacity to meet those terms? If not, what can you do about that?
3 reasons to get your business an SLA ASAP
– Successful partnerships depend on strong foundations. SLAs are a roadmap for success. They help keep expectations clear, reduce misunderstandings, and make the partnership more likely to succeed. – They make it easier to switch providers when necessary. If a provider can’t meet their obligations under the SLA, you want to be able to terminate the contract immediately. If you don’t have an SLA, you may not be able to do that. – They can protect you from lawsuits. If you don’t have an SLA, a disgruntled customer could sue you for failing to deliver on your end of the bargain even if you did everything you could.
2 reasons you may want to wait before creating an SLA
– You don’t have a clear picture of what you want. Take the time to clearly define the problem before you jump into the solution. If you don’t know what you want, you’re less likely to get it. – You’re too emotional. You can’t be objective about your own SLA if you’re too invested in the process. Take a step back and use your emotions to spur you to action, but leave them behind when creating the terms.
Conclusion
An SLA is a legally binding agreement between service providers and their customers that details the key expectations, obligations, and responsibilities of both parties. They’re crucial for businesses because they provide assurances of performance and expectations for what to do if those terms aren’t met. When creating an SLA, you must first define the problem and then provide a solution. In the case of an SLA, that problem is insufficient service. All providers should have a SLA. If they don’t, that’s a red flag. If they do, that’s a good start. Now work backward from there. Are their terms acceptable to you? Are their terms fair? Do they have the capacity to meet those terms? If not, what can you do about that?
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