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Why Is a Service Level Agreement (SLA) Important?

why is sla important

Let’s say a new coffee shop opens in your town. On the first day, you go in and buy a coffee for $2.00. The next day, you go in, and the same coffee is $6.00. The day after that, the same coffee is $0.50. If you never know what to expect, you’ll probably stop going to that coffee shop. Instead, you’ll go to a place with a fixed menu and set prices.

That menu with set prices is a lot like a Service Level Agreement (SLA)—a contract between a service provider (the coffee shop) and the consumer (you).

So, why is a Service Level Agreement important? Because it makes sure that both parties are clear as to what is being delivered and how that process will take place. Let’s look a little closer at SLAs to see how they benefit both businesses and consumers.

What is the Most Important Aspect of a Service Level Agreement?

Our above example makes it easy to see the value of an SLA by putting it into an everyday setting. However, most SLAs will not be as simple as writing down a price. That’s because SLAs are designed to cover services that are more complicated than buying coffee.

What is an SLA’s most important aspect? The most important aspect of an SLA is that it is created collaboratively by both the service provider and the consumer. While some SLAs may be initially drafted by the provider, bringing in the consumer can provide benefits for both parties:1

  • Setting expectations – In our above example, it’s obvious that the customer didn’t know what would await. With an SLA, a service provider can outline what a consumer can and cannot expect. Setting clear expectations can protect the provider against any false claims that they failed to deliver since everything is clearly spelled out in the SLA.
  • Agreeing on measurables – SLAs can also clarify how the provider’s work will be measured. If they fail to hit their benchmarks, it will be obvious and easy to demonstrate. Conversely, if they’re delivering, the performance metrics should make it evident.
  • Specifying remedies – It’s important that an SLA covers recompense if performance expectations are not met. This way, a provider can’t simply disappear with the customer’s money. Likewise, the consumer can’t demand excessive repayment. 

 

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What Are Critical Components of SLAs?

To make sure your SLA is as clear as possible, it’s important to include certain service level agreement best practices:2

  • Objectives – The consumer should clearly outline their objectives and what they expect of a service provider. When everything is agreed to ahead of time, the parties are better poised to avoid confusion and conflict.
  • Detail of services – This one is important—a consumer may not know how a service provider normally works. The provider should, therefore, lay out the services that will be provided as well as the processes they’ll use (including timeframes). This will keep the consumer from claiming work took too long or filing other logistical complaints.
  • Measuring performance – Parties should agree upon key performance indicators (KPIs) and other SLA metrics that can be analyzed to assess performance. Key performance indicators make performance analysis objective. With a common understanding of the performance standard, both parties can avoid “he said/she said” situations in the future.
  • Cost – This is the main term covered in our coffee shop example. Without being upfront about cost, it’s easy for a business to take advantage of a consumer or for a consumer to simply refuse payment. Outlining a clear budget and payment schedule ensures there’s no future conflict about hidden fees or unexpected overages.

    In addition to the base cost, you can also address service credits or refunds that a provider will issue if they fail to meet all their measurables. This sets you up to address any hiccups in service.
  • Termination – What does failure to deliver a service level objective look like? What will trigger a contract termination? What level of refund is expected? Will service credit be issued? A good SLA document should clarify the guidelines and processes in the case that there are unmet service obligations.

These aren’t the only elements that will go into your SLA. Depending on the complexity of the work to be completed, you may also want to factor in price changes or other potential issues that may arise. Think of all outcomes ahead of time, and be sure to include them in your SLA. That way, both parties can enter the agreement with confidence.

You may be able to adjust your SLA later if circumstances change.

SLAs and More with Syncro

Why is a Service Level Agreement (SLA) important? Depending on the size of your business and the services you provide, you may find that you have many active SLAs. That’s where something like the contract manager from Syncro can come in handy. This tool allows you to keep track of all your SLAs so that nothing slips through the cracks.

Of course, Syncro is more than simply a place to keep track of your SLAs. Our MSP platform is designed to help you make more money. We offer tools to help with invoicing, credit card payments, email marketing, and a whole lot more.  Set up a demo with our sales team and see how Syncro can help your business today.

Caitlin Good

Denver-based content marketing manager for Syncro. Curator of new experiences: creating compelling and helpful content on the weekday, exploring nature and cities on the weekend.

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