Chapter 2 - Service Level Agreements (SLA)
Chapter 2 - Service Level Agreements (SLA)
Exception reports
These automated reports identify all applications that did not successfully
complete or otherwise malfunctioned.
An excessive number of exceptions may indicate:
• Poor understanding of business requirements
• Poor application design, development or testing
• Inadequate operation instructions
• Inadequate operations support
• Inadequate operator training or performance monitoring
• Inadequate sequencing of tasks
Incident management
• An Incident is an event that could lead to loss of, or disruption to, an
organization’s operations, services or functions.
• Incident management is a term describing the activities of an organization
to identify, analyze, and correct hazards to prevent a future re-occurrence.
• These incidents within a structured organization are normally dealt with by
either an (IRT) or an incident management team (IMT)
• Incident management is reactive and its objective is to respond to and
resolve issues restoring normal service (as defined by the SLA) as quickly as
possible.
Problem management
• Problem management is the process responsible for managing the lifecycle
of all problems that happen or could happen in an IT service.
The SLA is typically one of two foundational agreements that service providers have
with their customers. Many service providers establish a master service agreement
to establish the general terms and conditions in which they will work with
customers.
The SLA is often incorporated by reference in the service provider's master service
agreement. Between the two service contracts, the SLA adds greater specificity
regarding the services provided and the metrics that will be used to measure their
performance. Service commitments define the services that are included with the
service offering.
Agreement overview. This first section sets forth the basics of the agreement,
including the parties involved, the start date and a general introduction of the
services provided.
Exclusions. Specific services that are not offered should also be clearly defined to
avoid confusion and eliminate room for assumptions from other parties.
Security. All security measures that will be taken by the service provider are
defined. Typically, this includes the drafting and consensus on antipoaching, IT
security and nondisclosure agreements.
Periodic review and change processes. The SLA and all established key
performance indicators (KPIs) should be regularly reviewed. This process is defined
as well as the appropriate process for making changes.
Termination process. The SLA should define the circumstances under which the
agreement can be terminated or will expire. The notice period from either side
should also be established.
Signatures. Finally, all stakeholders and authorized participants from both parties
must sign the document to show their approval of every detail and process.
An internal SLA is between an organization and its internal customer -- this could
be another organization, department or site.
That means that although a company could have an SLA open with each of its
customers, it might also have a separate SLA between its marketing and sales
departments.
For instance, a company's sales department has nearly $10,000 worth of sales every
month, with each sale worth $500. If the sales team's average closing rate is 20%,
then sales knows that marketing must deliver at least 100 qualified leads every
month.
So, the head of the organization's marketing department can work with the head
of the sales department on an SLA that stipulates that the marketing department
will deliver 100 qualified leads to the sales director by a specific date every month.
This service-level agreement could stipulate that it will include four weekly status
reports every month sent from marketing to sales to ensure the leads the sales
team is getting are enabling them to hit their monthly sales goal.
A multilevel SLA will divide the agreement into various levels that are specific to a
series of customers using the service. For example, a software as a service (SaaS)
provider might offer basic services and support to all customers using a product,
SLA examples
One specific example of an SLA is a data center service-level agreement. This SLA
will include:
• An uptime guarantee that indicates the percentage of time the system
is available. Nothing less than a 99.99% uptime should be considered
acceptable for modern, enterprise-level data centers.
• A definition of proper environmental conditions. This should include
oversight and maintenance practices as well as heating and cooling
standards.
• The promise of technical support. Customers must be confident that data
center staff will respond quickly and effectively to any problem, and they
will be available at any time to address it.
• Detailed security precautions that will keep the customer's assets
secure. This could include cybersecurity measures that protect against
cyberattacks, as well as physical security measures that restrict data center
access to authorized personnel. Physical security features could include two-
factor authentication, gated entries, cameras and biometric authentication.
And it should be easy to accurately collect the data for the metrics -- capturing the
data automatically would be best. In addition, the SLA should specify a reasonable
baseline for the metrics, which can be refined when more data is available on each
metric.
Other metrics include the schedule for notification in advance of network changes
that may affect users and general service usage statistics.
An SLA may specify availability, performance and other parameters for different
types of customer infrastructure, including internal networks, servers and
infrastructure components, such as uninterruptable power supplies.
The SLA should detail how the service credits will be calculated. For example, the
customer and the vendor could develop a formula that provides service credits
based on the amount of downtime that exceeds the terms of the SLA. A service
provider may cap performance penalties at a maximum dollar amount to limit
exposure.
The SLA will also include a section detailing exclusions, that is, situations in which
an SLA's guarantees -- and penalties for failing to meet them -- don't apply. The
list might include events such as natural disasters or terrorist acts. This section is
sometimes referred to as a force majeure clause, which aims to excuse the service
provider from events beyond its reasonable control.
Penalties
The SLA penalties are disciplinary measures that exist to ensure the terms of the
contract are maintained. These penalties differ from contract to contract. They are
as follows:
• Service availability. Includes factors such as network uptime, data center
resources and database availability. Penalties should be added as deterrents
against service downtime, which could negatively affect the business.
• Service quality. Involves performance guarantee, the number of errors
allowed in a product or service, process gaps and other issues that pertain
to quality.
These penalties must be specified in the language of the SLA or they won't be
enforceable. In addition, some customers may not think the service credit or license
extension penalties are adequate compensation as they may question the value of
The measurements should motivate the right behavior. When defining the metrics,
both parties should remember that the metrics' goal is to motivate the appropriate
behavior on behalf of the service provider and the customer.
The metrics should only reflect factors that are within the service provider's
reasonable control. The measurements should also be easy to collect. Furthermore,
both parties should resist choosing excessive amounts of metrics or measurements
that produce large amounts of data. However, including too few metrics can also
be a problem, as missing one could make it look like the contract has been
breached.
For the established metrics to be useful, a proper baseline must be established with
the measurements set to reasonable and attainable performance levels. This
baseline will likely be redefined throughout the parties' involvement in the
agreement, using the processes specified in the periodic review and change section
of the SLA.
Earn backs
An earn back is a provision that may be included in the SLA that allows providers
to regain service-level credits if they perform at or above the standard service level
for a certain amount of time. Earn backs are a response to the standardization and
popularity of service-level credits.
Service-level credits, or, simply, service credits, should be the sole and exclusive
remedy available to customers to compensate for service-level failures. A service
credit deducts an amount of money from the total amount to be paid under the
contract if the service provider fails to meet service delivery and performance
standards.
Knowing when and when not to make changes in an SLA is a key part of managing
the client/service provider relationship. The two parties should meet on a set
schedule to revisit their SLA and ensure it's still meeting the requirements of both
parties.
Most service providers understand the need for service level agreements with their
partners and customers. But creating one might feel daunting, like you don’t know
where to start or what to include. In this article, we’re sharing some examples and
templates to help you create SLAs.
Before subscribing for an IT service, the SLA should be carefully evaluated and
designed to realize maximum service value from an end-user and business
perspective. Service providers should pay attention to the differences between
internal outputs and customer-facing outcomes, as these can help define the
service expectations.
There are several ways to write an SLA. Below is a mock table of contents (TOC),
which you can use as a starting template for writing your own service level
agreements.
• Version details
• Document change history, including last reviewed date and next
scheduled review
• Document approvals
… … … …
… … … …
This is a Service Level Agreement (SLA) between [Customer] and [Service Provider].
This document identifies the services required and the expected level of services
between MM/DD/YYYY to MM/DD/YYYY.
Signatories:
… …
2.3. Purpose
This section defines the goals of this agreement, such as:
The purpose of this SLA is to specify the requirements of the SaaS service as defined
herein with regards to:
• Requirements for SaaS service that will be provisioned to [Customer]
• Agreed service targets
• Criteria for target fulfilment evaluation
• Roles and responsibilities of [Service Provider]
• Duration, Scope and Renewal of this SLA contract
• Supporting processes, limitations, exclusions and deviations.
Availability MTTR
Reliability MTTF
Issue Recurrence
… … …
Severity Target
Level Description Response
Within 10
2. Critical High risk of server downtime minutes
Within 20
3. Urgent End-user impact initiated minutes
6.
Informational Inquiry for information Within 48 hours
… … …
[Customer] responsibilities:
Type –
Service Capacity Throughput Price
Cloud Storage A
Option
Additional
Storage
… … … …
Reference:
InfosecTrain. (2020). CISA Domain 4 – Information Systems Operations,
Maintenance And Service Management. Retrieved from:
https://www.infosectrain.com/blog/cisa-domain-4-information-systems-
operations-maintenance-and-service-management/#part2
Raza, M. (2019). Service Level Agreement (SLA) Examples and Template. Retrieved
from:
https://www.bmc.com/blogs/sla-template-examples/