What are the Components of a Service Level Agreement?
Each service commitment (SLA) has these attributes:
- Service - the service or action the the vendor provides. For instance, your Internet Provider gives you internet access.
- Measurement - this is a metric that quantifies the service commitment. Again, using our Internet Provider example, the measurement could be 99.999% availability (also known as “5 nines of uptime”).
- Interval - the measurement (metric) must captured at defined intervals. For example:
- “….Every time the helpdesk is called..”,
- “… every month”,
- “average of all tickets every month”,
- What are SLA based services?
- Obligations - Some SLAs have obligations that the Client AND the Vendor must fulfill in order for the SLA to be enforceable. Also, it’s a common obligation for the Client to declare an “SLA Violation” in order to exercise their right to receive penalty fees from the Vendor.
- Penalty - This is the penalty for failure to comply with the SLA component’s obligations (“SLA Violation”). In subscription-based agreements, the penalty a vendor incurs will usually be to give a credit back for a percentage of the monthly subscription. In software development outsourcing – an SLA penalty is often the loss of a “bonus payment” (or percentage) held in reserve by the Client for a successfully completed project with all SLA’s met.