Network Enablers - Service Level Agreements

As companies become increasingly more dependent on information and communication services, greater demands are being placed on levels of service delivery, performance, continuity and support. But all too often reality falls short of expectations, from excessive lead-times to constant failures and downtime. One method of setting service commitments to deliver against expectations and get the performance that's being paid for is via service level agreements (SLAs).

An SLA is a negotiated contract between a service provider and a customer. SLAs specify in measurable terms certain service levels that the service provider must meet or exceed. They create a commitment to quality of service guarantees, covering such aspects as service availability, reliability and response times, and specify the consequences for failing to achieve acceptable service qualities under specified conditions. They demonstrate the service provider's confidence and ability to deliver, making SLAs a powerful and competitive differentiator.

Service level management is frequently sighted as a more important purchasing factor than functionality or price. But demonstrating a commitment to service quality ahead of time is challenging to overcome. Above all, the customer must establish confidence that the service provider can run the network in a way that meets their needs.

Often, customers and service providers do not have a common understanding about what constitutes an adequate level of service or what key indicators represent the level of service being offered. The service provider has little information about the value of the service to the customer, and the customer does not have a good understanding of the issues facing the service provider. What is meaningful and measurable to the service provider might have little relevance to the quality of service being received by end-users. The parties' different perspectives, terminology and expertise may compound these issues further.

SLAs translate network performance into service level metrics that are relevant to the customer's perception of the service being offered. However, both the service provider's and customer's opinions may differ on what constitutes acceptable performance levels. Consequently, the SLA negotiation process must overcome unrealistic expectations relating to performance and cost in order to establish a common understand about service and reporting limitations.

Major challenges to achieving effective SLAs include:

	Defining an SLA that is both meaningful and measurable
	Aligning the interests & incentives of both service provider & customer
	Establishing a common understanding of service requirements & capabilities
	Setting realistic expectation & quantifiable metrics of service performance
	Mapping service quality attributes into technology-specific parameters
	Measuring SLA performance accurately
	Providing performance reports that avoid ambiguity & disputes
	Setting appropriate rebates and financial penalties
	Administering and managing different SLAs operationally
	Distinguishing the quality & reliability of services over those of the competition

Network Enablers assists both service providers and customers develop balanced and effective SLAs. Negotiating an effective SLA is critical when impacts on service performance affect the well-being of the customer. This is particularly important when the customer is heavily dependent on the service provider, as is the case for outsourcing, virtual ISPs and managed ASPs.

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Developing effective SLAs that represent the service levels needed may be difficult to define, but the benefits gained enhance both service provider image and customer satisfaction.

Depending on your situation, SLA development activities include:

	Co-ordinating SLA negotiations
	Developing baselines and templates
	Understanding common terms and conditions
	Customising and documenting SLA contracts
	Mapping customer service quality into meaningful network parameters
	Identifying quantifiable performance and reliability metrics
	Setting realistic targets and thresholds
	Formalising processes for monitoring, measuring, notifying and reporting
	Interpreting performance reports and validating ongoing performance
	Ensuring compliance with end-to-end service level objectives
	Detecting degraded service levels and SLA violations
	Implementing penalty provisions or cancellation clauses
	Establishing dispute resolution and escalation procedures
	Reviewing service performance and refining SLAs periodically

SLAs create a commitment to quality of service guarantees relating to service delivery, performance, continuity and support. Negotiating effective SLAs create a number of key benefits for both service providers and customers alike:

Service Provider Benefits:

	Create market differentiation and competitiveness
	Build brand image and maintain/grow market share
	Attract new customers and maintain loyalty
	Enrich customer-care and build longer-term relationships
	Establish credibility by committing to provide guaranteed service levels
	Improve responsiveness and prioritise service improvement opportunities

Customer Benefits:

	Define meaningful end-to-end service level objectives
	Compare service levels offered by different service providers
	Clarify specifications to reduce possible misunderstandings & unrealistic expectations
	Ensure service delivery & performance satisfy business requirements
	Align service provider commitment to customer service
	Monitor usage patterns, degraded service and SLA violations
	Validate ongoing performance compliance
	Implement penalty provisions for failure to maintain service levels