What is a Service Level Agreement? | A Simple Guide to Service Level Agreements

A service level agreement (SLA) is a contract between two parties with clearly defined standards of service, penalty points for failing to meet these standards, and measures that must be taken in the event of such failure. Essentially, an SLA document details, in writing, what’s expected of both parties and how each will respond if their obligations are not met. In general terms, an SLA is a set of rules that dictate how much time your service provider will give you before responding to your tickets or phone calls after signing the contract. The SLA tells you what to expect from them as your partner and what to expect if they don’t meet their obligations. It also gives you a clear understanding of what happens if one party fails to meet their obligations. A Service Level Agreement ensures a smooth collaboration between your business and the other party in case something goes wrong. An effective SLA helps to align expectations on both sides by ensuring there are no hidden pitfalls or catch 22s. In this blog post we explore why you should have an SLA, what it covers and examples of different clauses commonly found in an SLA.

What is a Service Level Agreement?

A Service Level Agreement (SLA) is an agreement that defines the obligations and expectations for goods or services that are being provided by one party to another. SLAs are often used in the business-to-business (B2B) context, such as when a cloud computing provider offers a certain level of availability or uptime for their services. A Service Level Agreement is an important document that helps business partners to understand their obligations and rights. It brings certainty and predictability to the relationship, and provides a common language that can be used to discuss and resolve issues. It’s important for both parties to understand the level of commitment being made.

Why should you have a Service Level Agreement?

A Service Level Agreement is a document that makes it clear to your business partner what they need to do and what you expect them to do in order to avoid penalties and maintain the agreed-upon level of service. Such an agreement ensures that both parties understand what the other expects from them. It also helps you understand what your rights are if one party doesn’t meet their obligations. A well-defined SLA is your shield against faulty service. It’s the document that will hold your provider accountable for their obligations and put a stop to further damage if they fail to meet the terms of the contract. Without an SLA, you’re left with no leg to stand on when issues arise.

SLA Provisions

There are two main categories of SLA provisions: Service Level Targets and Service Level Responsibilities. A. Service Level Targets state things like how much time your partner needs to respond to your tickets, how many tickets they will respond to per day, how many tickets they will close per day, etc. It’s important to remember that targets are just that — they’re not minimums. Your partner may exceed those targets with no penalty. A good example is a ticketing system. Your provider manages the ticketing system for you. They decide which tickets get worked on first and what’s their order of priority. Having a SLA ensures that they have guidelines on how to prioritize and resolve tickets. B. Service Level Responsibilities state what happens if one party fails to meet their obligations. A common example is a penalty for failing to meet uptime requirements. Another example is a penalty for failing to meet availability requirements.

SLA Enforcement

The way penalties are applied is one of the most important aspects of an SLA. It’s important to clarify which party is responsible for identifying and recording when a violation occurs. Each party should have a clear understanding of how penalties are applied and what happens when those penalties are imposed. When calculating penalties, the most important consideration is consistency. If you, as a client, don’t apply penalties consistently, your SLA will be meaningless. This will result in a weak partnership and a bad reputation.

SLA Measurement and Verification

It’s also important to clarify how and when measurements are taken place and how they’re verified. This ensures that there are no discrepancies or misunderstandings that may prove to be costly in the long run. Measuring and verifying will help you determine whether your partner is meeting their obligations. It’s also important to remember that some measurements may require a certain degree of time. For example, you may verify the uptime of the system once a month. It’s also important to clarify when measurements are taken place.


Business relationships are built on trust, and trust is based on clear expectations, clear communication and a willingness to hold each other accountable to those expectations. Having a Service Level Agreement is a great way to ensure that both parties understand their obligations and expectations of each other. It’s also a great way to ensure that there are no misunderstandings and that the relationship will be built on a foundation of trust.

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