SLA Definitions and Solutions
SLAs are a critical component of any vendor contract. Beyond listing expectations of service type and quality, an SLA provides remedies when requirements aren't met.
- What is an SLA?
- Why Do I Need SLAs
- Who Provides the SLA?
- What's in an SLA?
- What Are Key Components of an SLA?
- What about indemnification?
- Is an SLA Transferable?
- How Can I Verify Service Levels?
- What Kind of Metrics Should be Monitored?
- What should I consider when selecting metrics for my SLA?
- What Uptime Provisions are Typical for Network Service Providers?
- When Should We Review our SLAs?
What's in an SLA?
The SLA should not only include a description of the services to be provided and their expected service levels, but also metrics by which the services are measured, the duties and responsibilities of each party, and the remedies and/or penalties for breach.
Metrics should be designed so bad behavior by either party is not rewarded. For example, if a service level is breached because the client did not provide information in a timely manner, the supplier should not be penalized.
What Are Key Components of an SLA?
The SLA should include components in two areas: services and management.
Service elements include specifics of services provided (and what's excluded, if there's room for doubt), conditions of service availability, standards such as time window for each level of service (prime time and non-prime time may have different service levels, for example), responsibilities of each party, escalation procedures, and cost/service tradeoffs.
Management elements should include definitions of measurement standards and methods, reporting process, contents and frequency, a dispute resolution process, an indemnification clause protecting the customer from third-party litigation resulting from service level breaches (this should already be covered in the contract, however), and a mechanism for updating the agreement as required.
This last item is critical; service requirements and vendor capabilities change, so there must be a way to make sure the SLA is kept up-to-date.
What about indemnification?
The SLA should include a provision in which the service provider agrees to indemnify the customer company for any breaches of its warranties. Indemnification means that the provider will have to pay the customer for any third-party litigation costs resulting from its breach of the warranties. If you use a standard SLA provided by the service provider, it is likely this provision will be absent; ask your in-house counsel to draft a simple provision to include it, although the service provider may want further negotiation of this point.
