Simply put, a service-level agreement (SLA) is a contract that covers a vendor’s performance, products and services. As enterprises increasingly turn to outside vendors to deliver critical IT services, it’s important that they negotiate SLAs to identify their expectations and the suppliers’ responsibilities. In today’s economic climate, vendors will often agree to meet customers’ service level needs in order to acquire new business or to keep their current clients happy.

More often than not, companies and their suppliers are just not on the same page when it comes to the type of performance that was expected and whether the vendor agreed to adhere to specific benchmarks within the contract.

So in order to provide clear guidance to the vendor about what you expect, you must negotiate an agreement—it should be in writing and be part of the original contract—that details the performance expectations of both parties.

By doing so, you can make sure the supplier will respond to your needs in a timely manner. You can also include financial incentives for the vendor to meet your critical service level needs. And you could agree to financially reward your vendor if he helps you increase your revenue.

An SLA should be crafted to make sure the vendor meets all your requirements. That means you must use language that requires the supplier to perform his responsibilities. For example use words like “the vendor will,” do something. Additionally you should also use language that obligates the vendor to make his “best efforts” to meet your needs.

While SLAs vary, you should make sure your supplier responds to your problem as quickly as possible. Ensure that you receive a firm commitment from your vendor as to the maximum time it will take respond to a problem, and ultimately resolve it. For example, a vendor might have at most 30 minutes to respond to a critical error and should use his “best efforts” to fix it within several hours. For a less serious error, the supplier might have several hours to respond and up to a business day to fix the problem.

If your vendor hosts part of your IT infrastructure or if he provides support on-site, you should ensure that you get a firm commitment from him as to the percentage of time the hosted service or application will be available. This does not include scheduled maintenance. You should negotiate a reduction in fees if the vendor does not meet the availability requirements.

Also try and negotiate the right to continually compare the costs and levels of service offered by industry leaders. If you find that another vendor is charging less or offering better service, then you should require your vendor to match what that vendor is offering

Sometimes a vendor introduces a new product, which is just an update version of the product you purchased, and decides to discontinue support for your product, forcing you to purchase the new product. To prepare for such an eventuality you should require your vendor to commit to continue supporting your product for a certain period of time, usually 18 months.

• Use What-If scenarios to determine who does what during a critical outage.
• Develop a Critical Outage Bridge Toll-Free Number and Procedures on how to inform critical people when an outage occurs.
• Assign a role of Severity Analyst to someone in your organization and make sure the person in that role knows all of the proper procedures and people on the vendors side to both open an incident as well as escalate.
• Define reporting guidelines and spend time with the vendor informing them on how the SLA will be measured as well as general expectations of availability.

Remember, it is your company’s best interest for the supplier to be able to make their SLA. If the supplier is regularly able to achieve their SLA your employees and IT users will be able to remain productive. So an SLA should be a cooperative effort between vendor and the company.

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While this is a good definition for someone who understands the vernacular of ITIL, it isn’t easily understood by the layman. Let’s dissect the definition and put it into terms the general population can understand. The IT Service provider is the organization that has been hired by the Customer to perform a service, for example, answer calls. The service level agreement is the document, which can be a few brief lines or it can be a hundreds of pages, which describes each service level target(s). These service targets are based on the customers business needs. For example, if Large Corp. sells their products worldwide, they may have a need to have a call center that is available 24×7. This one business objective, call center available 24×7, could produce multiple service level targets such as:

Call Center is available to take calls 99.99% of the time each month.

No more than 5% of calls will abandon each month.

99% of all incoming calls must be answered within 30 seconds.

All of the service level targets must be agreed upon by both parties. Once both parties agree to all of the service level targets, they are assembled into the Service Level Agreement document. The service level targets will each have a description that identifies the expectation, how it will be measured and penalties, if missed. For example:

Call center must answer all incoming calls within 30 seconds

Measurement period: 1 month

Report(s): ASA Report 101 – monthly

Penalty: $10,000

The SLA is a joint goal between the IT Service Provider and the Customer. Although penalties do reduce costs and they do send a strong signal to service providers to improve their service, neither you nor the service provider “win” if an SLA is missed. Think of an SLA as a shared goal.

It should be noted that the term Service Level Agreement is used in many companies when discussing agreements between two internal groups, such as the Procurement Department will process all purchase requests by the Engineering Department within 5 business days. Technically, per ITIL, this is not a Service Level Agreement, but instead an Operational Level Agreement.

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Webster’s dictionary defines the word, “expectation” as the act or state of looking forward or anticipating the degree of probability that something will occur. How does this relate to the ITIL standards? Not setting proper expectations with the customer can result in dialogs such as:

CUSTOMER: I submitted a ticket to have someone map a new printer to my laptop, but nobody has come by or called me back.

HELP DESK: I am sorry to hear that but we are busy with a network outage, it may be awhile before somebody comes by to assist you in your request.

CUSTOMER: Can you give me some timeframe on when to expect a visit from a technician?

HELP DESK: It all depends on when we get the network outage repaired; it could be then next 5 minutes or the next 5 days.

CUSTOMER: It is no wonder your area is referred to as the helpless desk. CLICK!

Unfortunately, the above conversation is all too familiar in many help desks across the world because expectations are never set with customer. One way of setting expectations with the customer, even before they call or write, is to establish Service Level Objectives, such as:

Ultimately, service level objectives will benefit the help desk in a number of ways such as: Less repeat callers/tickets – with service level objectives established, customers are less likely to repeatedly call in order to get a status of their issue.Less upset customers – if the objectives are “advertised” on websites and IVR/VRU’s, the customers are less likely to be irate when calling a help desk if they already know that their issue may not be resolved on first contact and may be considered a low priority.Potentially reduces staffing – less repeat calls and tickets to the help desk, lowers call and ticket volume, and potentially reduces the staff needed to perform the volume of work.Assists in priority setting for employees – with objectives in place, the help desk staff have a clear understanding of what issues should take precedent (i.e., individual outage should be worked prior to a individual new request).If your help desk has not established service level objectives, your next step should be to have a project approved to begin establishing the objectives to help you manage your customers.

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