A service level agreement (SLA) is basically an agreement between a service provider and a customer. Its core function is to be a communication device between the service provider and their customers. An SLA is intended to clearly state to the customer what they should expect from the service provider, that is, what service they will receive rather than how they will receive it.

If you are operating a service-based business, it is important that you understand how to write a coherent SLA as there are a lot of considerations that go into writing a great one

Components of an SLA

Before you learn how to write a good SLA, you need to first familiarize with its general structure. A typical SLA document has six major components:

Agreement Overview- A general overview of the SLA including what it will cover and who will be involved.

Goals and objectives- A detailed description of the purpose of the agreement.

Stakeholders - The people that will be bound by the provisions of the agreement: service provider and customer.

Periodic review- An overview of the circumstances under which the SLA will be reviewed.

Service Agreement- Guidelines of the actual agreement. This section will cover such issues as:

  • Service scope – A clear description of the services the customer will receive.
  • Customer requirements – Details the responsibilities of the customer which includes making payments on an agreed arrangement.
  • Service provider requirements–Sheds light on what roles and responsibilities the service provider will play.
  • Service assumptions – Talks about the speculations surrounding the service.

Service management – The last part of a Service level agreement covers service management, which looks at both service availability and demand. A clear SLA should state to the customers how available the service will be and how their needs or requests will be met.

Types of Service Level Agreements

The first step towards writing a good SLA is determining what type would be most appropriate in your case. Generally, there are three common types of Service Level Agreements:

Customer-based SLA

This clearly defines the type of service the provider will be giving to a specific customer. For example, what kind of service the accounting department will provide to a given customer.

Service-based SLA

This talks about the services that every customer will receive in general, regardless of their uniqueness. For example, an online store can waive shipping charges for all orders above $30 without considering who placed the order.

Multilevel SLA

The multilevel SLA defines how one service will be provided to different groups of customers under different conditions. For example, in the air transport industry, an airline can offer the same service to first-class and economy class passengers.

Things to consider when writing an SLA:

Standard of Services

After clearly establishing and describing the kind of services you offer, the next step would be to determine their standards. These include such factors as availability, reliability and response time. This means that your services will be available at the appropriate time when the customers need them.

Duration of agreement

The expiration date of the agreement from the day it takes effect should clearly be described in the SLA. Understanding the start date of the contract will also give you an opportunity to start tracking the performance of your business.

Roles and responsibilities

The SLA should clearly define the roles and responsibilities that will be played by both parties- the customer and the service provider. Establish what will be your obligation towards the customer and what you should expect on their part.

Performance indicators

While writing your SLA, you should think about how you are going to measure the effectiveness of the services you provide. You should come up with a number of indicators to help track the performance of your services and whether they are satisfying the customer needs.

Liability and dispute resolution

One key function of the SLA is to act as a mediator between the customer and the service provider by preventing conflicts. There should be enough clarity on who is liable of what and the procedures to be used when settling disputes.

Termination

Clearly state the terms under which the service level agreement can be terminated before its expiry time. Regulations on SLA termination will help prevent conflicts in situations where one party feels that they have to terminate the agreement.