Why your business needs a service-level agreement (SLA)

Expect the best. Prepare for the worst. Capitalise on what comes

Although your business may take great care to ensure that every client transaction goes as smoothly as possible, unforeseen issues can come to the forefront. Should this happen, the simplest of tasks can quickly turn into a nightmare. Fortunately, there is a way to ensure that virtually any disaster with a client or project can be quickly addressed: have a service-level agreement (SLA).

What is a service level agreement (SLA)?

A SLA is an agreement between two or more parties that outlines their rights and obligations. It also outlines the quality and type of service that will be provided by a company to a customer in exchange for a fee.

In addition an SLA covers, in detail the steps that will be taken in the event that something goes awry with the task being performed for that client. Some of these common features may include:

  • A reasonable amount of time to wait for a response
  • The type of response that will be received (i.e. an offer to repair or replace an item, or an offer of technical or other product support)
  • The cost of acquiring support services

If the above details don't seem familiar, consider that you have likely encountered the SLA many times before. Signing up with any internet, utility or telephone company for instance will involve an SLA somewhere in the process which outlines what the company will provide should an outage occur.

Why do businesses need An SLA?

It is important to have an SLA in place because without one it is much easier for either party to deny responsibility should disagreements occur in their partnership.

Not only that, but an SLA can provide a company with a vast amount of insight as far as performance indicators go. An SLA allows a business to easily understand where they can improve their customer service, as well as keeping customer service an explicit objective. For employees, the SLA provides a standard of performance that’s both measurable and precise. Lastly, the SLA outlines penalties for non-compliance, which indicates a company’s willingness to achieve its goals as well as notifying the customer that there are penalties in place.

Common sections of an SLA

The SLA can range from a few to a few hundred pages. However, there are some sections that are common to most SLAs. They are:

  • A statement of intent for all parties
  • An outline of responsibilities for each party
  • A fixed duration of agreement statement
  • The services and applications the agreement covers
  • The procedure that will be followed for quality control
  • A schedule for the addressing and solving of any issues
  • Penalties for not adhering to the remediation schedule
  • Procedures for problem resolution.

Along with the above sections is usually a statement of indemnification. This statement will be an agreement by the company providing services to pay for any of the client's legal costs should any warranties be breached.

Reviewing and changing an SLA

Because a company's requirements can change, it is important that regular reviews of the SLA take place. This will ensure that the agreement is in line with a company's current service levels and reflect their desire for future levels of service.

The SLA should be changed whenever a company's environment changes in some way, when the workload of employees has changed, when the evolution of processes and tools has occurred, and when a client's needs or expectations have changed.

Although it can take time to finalise an SLA, it is worth it to have a document by which all parties involved in a business relationship can be governed.

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