What’s a service-level agreement (SLA)?

A service-level agreement (SLA) is a a kind of contract or part of a contract between a service provider and a client.

Aspects of the service being provided like quality, availability and the responsibilities of the service provider can all be defined in this agreement. The primary piece of an SLA is defining the services as they’re agreed upon between the provider and the customer so there’s a mutual understanding of what service is being provided, what’s prioritized by the service provider, the responsibilities of both parties and the warranties being offered by the provider.

For example, Internet service providers and cloud computing providers typically establish an SLA when onboarding a new customer. In the terms of these contracts, they tend to define what service they’re offering and for these companies in particular, they have things defined like how much time is allowed between service failures, time allowed for repairs/recovery, who’s responsible for what sort of payments in the agreement, steps for reporting issues with the service, how the service is monitored, how the agreement may be terminated, etc.

While the U.S. Telecommunications Act of 1996 doesn’t expressly mandate that companies have an SLA established, it offers a sort of framework for a standard telecom service SLA here. SLAs are a bit unique as a contract in that they typically have metrics in the contract – outsourcing companies and even departments within existing larger organizations will sometimes establish an SLA in order to have their performance defined and benchmarked.

For users, it is important to review these agreements for things like remedies. If a business can’t receive the service it is paying for or the quality is diminished, how will the service provider make that business whole (if at all?). For service providers, it’s important to be clear about the service obligations to avoid any claims in the future.

If you need assistance establishing an SLA for your company, contact us.


Megan is a video game industry veteran and guest blogs at Odinlaw.com

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