Companies need digital and technological solutions to achieve optimal levels of performance. While many implement them autonomously, there are also cases where services are acquired from a specialized provider in a particular field, such as software, digital infrastructures, or cloud solutions (cloud). This type of contract is known as a SLA, Service Level Agreement.
In this text, we will tell you more about this agreement, what it is for, its key elements, and the types of penalties for non-compliance.
The Service Level Agreement or SLA is a contract that links a service provider with a client, generally in the technological field. As an agreement, it establishes the guidelines and parameters that will allow the provider to offer a set of products or solutions according to the client’s needs, expectations, and objectives. Thus, the SLA is essential for companies as it ensures not only internal goals are met but also the quality of the services provided to their users. In other words, it helps maintain safe and efficient business relationships.
This agreement or contract is essential for establishing the following points in the relationship between provider and client:
Therefore, the SLA must contain clear, realistic clauses that are adapted to the client’s needs and implemented according to the provider’s capabilities.
These are the three types of SLAs:
The customer-oriented SLA is designed to meet the specific needs of an individual client. The contract document includes details about the service, basic procedures, real service conditions, coverage, and the circumstances under which the relationship may be terminated.
The service-based SLA focuses on a specific type of service regardless of the client; that is, it forms part of a single offer for multiple beneficiaries. It is commonly used when several clients enjoy the same service under identical conditions.
The multilevel SLA applies to contracts that offer different levels of performance, range, or pricing. When is it used? It is suitable when the provider serves clients who require the same service with different productivity levels: a small business will not require the same performance as a large corporation.
A well-structured SLA ensures that all parties involved understand the terms of the agreement and their responsibilities. Below are the main components of an SLA:
This section includes the general information of the agreement, such as contract duration (start and end dates), parties involved, and a summary of the agreed services. This is essential for clearly understanding the real scope of the agreement.
Every contract lists a detailed description of the agreed services. The SLA specifies the types of services, their scope, timelines, digital solutions involved, technologies, methodologies, and processes. It also includes schedules for reporting, maintenance, and evaluation.
The SLA defines the standards that both the provider and the client will follow to comply with data protection protocols, client infrastructure security, and risk prevention. In short, it specifies agreements related to access and data encryption policies, including the non-disclosure or confidentiality agreement.
A disaster or failure response protocol must be in place for service interruptions or server issues. The provider is responsible for outlining the procedures, containment measures, and other actions to restore services and minimize downtime.
Services must have clearly defined indicators, i.e., specific metrics to evaluate performance. These may include response times, operational efficiency, and other quality measures. This is known as a Service Level Objective (SLO).
Exclusions specify the circumstances or cases where the provider is not responsible for service failures. These include unforeseen situations, changes in company needs, or special conditions beyond the initial agreement.
The termination clause details the conditions under which the contract may end before its scheduled expiration. These include breach of terms, non-payment, required notice period, or significant changes in the client’s or provider’s circumstances.
Penalties apply in case of non-compliance with the terms of the agreement. Usually, these are financial compensations or other forms of reimbursement. Additionally, every SLA should include periodic performance reviews to ensure service objectives are being met. If performance exceeds the agreed levels, measures such as termination or limitation of service may be applied.
Signatures from both parties are required to validate the agreement. The SLA signature represents acceptance of the terms and conditions by both the client and the service provider.
When a service provider fails to meet the terms established in the SLA, they may face various penalties designed to compensate the client. These include:
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