SLA Develoment  
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.



Clock Tower



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.

Service Level Management

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







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Last updated: 9/01/09