Wonder how to write a service level agreement? A service level agreement, or SLA, is an important part of the service level management (SLM) strategy for any IT company. An SLA outlines the organization's responsibility to its clients as a managed services provider and offers you protection as an employee or contractor by limiting your liability.

SLAs protect companies in lawsuits and disputes and can actually prevent legal action from happening because they clearly describe the responsibilities of each party. A service level agreement tells each party what to expect and can help iron out conflicts before they grow out of control.

How Do Service Level Agreements Work?

A service level agreement is important for any company that works with service or product delivery because it formalizes the relationship between an IT company and its customers. An SLA is particularly important for companies that subcontract work. If this is the case, the document should explain how a client's data can be shared with third parties. Clients that are required to follow regulations that restrict the sharing of information, including Sarbanes-Oxley or HIPAA, will definitely need to know what will happen to their data.

Like the name implies, an SLA is an agreement rather than a contract. An SLA should always clearly state who is receiving IT services and who is providing them, no matter if you are an internal IT department working for other departments in the same company or if you are an independent IT consultant. Drafting an SLA with your client can help strengthen your relationship by giving you a better feel for the client's business and what your IT services can do to improve their operations. In some cases, an SLA may be required to get insurance for your company.

You can include a clause in your SLA that restricts your client from hiring outside consultants to service the same software or technology that you are hired to work on, which protects you from potentially having to fix a problem that another firm creates. You can also add a clause that limits your liabilities to no more than the amount you have been paid by the client.

SLA Types

There are a variety of types of SLAs, including:

  • An Enterprise SLA, which serves as an agreement between the provider and all of the customers of an organization
  • A Multi-Level SLA, which states how the same service will be given to different clients with different circumstances. An example of this is airlines that provide different levels of service to passengers who fly first class versus those that fly economy, even though they are all on the same plane.
  • An Internal SLA, which states the services that one department will provide to another department in the same company. This type of agreement can help determine if it is better for the department to use the internal service or outsource to a third-party provider.
  • A Service SLA, which is an agreement between a provider and customers of a certain service
  • A Customer SLA, which acts as an agreement between a provider and a certain group of customers of a company
  • A Service-Based SLA, which details the service given to all customers, no matter the type of end user. An example of this is when Amazon offers free shipping on all orders of $25 or more, no matter who places the order. Unless there is an additional agreement, service-based SLAs aren't permanent and can be changed by the service provider.

Why Use an SLA?

Drafting an SLA is vital when you're starting a service-based IT business. It used to be that most sellers were only middlemen between their customers and vendors, but now more IT companies are offering services directly or rebranding work by a managed service provider as their own.

There are a number of reasons for an IT consultant to write an SLA, including:

  • Implementing a new SLM strategy
  • Introducing a new product or technology from the development stage
  • Concerns from customers about how IT services are delivered
  • Customers who want to choose the amount of service IT provides

For example, companies that offer web hosting or SaaS services typically require customers to sign an SLA or check a box saying “I Agree” in order to create an account.

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