What is a Service Level Agreement

What is a Service Level Agreement

A Service Level Agreement sets the tone and defines the level of service that is required between your business and the Service Providers or Vendors with whom you do business. The rights and responsibilities of both Parties are clearly defined in a plain-language agreement; timelines, expectation and remedies are agreed to before the service commences.

A Service Level Agreement is a living document and should be reviewed on a regular basis, at least once a year. Business needs change and so should your Service Level Agreement’s (SLA). Make sure that your SLA meets your own and your Vendor’s expectations.

Service Level Agreements (SLA) are used by Internet Service Providers, Technology Vendors and Outsourced Services. SLA’s can be used by any business that provides a service (not goods) to another business.

A service level agreement (SLA) is a key component of most IT organisations overall -Service Level Management (SLM) strategy.

A retail business may need to upgrade their CCTV cameras in their stores that are scattered around South Africa. A typical SLA will set out the exact terms, timelines and conditions that deal with the supply, delivery, installation, support and maintenance of the CCTV cameras.

An IT Service Desk may provide technical support for certain services and offer guarantees re deliverables such as uptime and response times. 

The reason why businesses use SLA’s is to mitigate risk – from performance to dispute resolution.

How to approach a Service Level Agreement:

When drafting an SLA it is vital to fully understand the exact requirements of the project. The language used must be clear and free from ambiguity. Write the SLA so that every-one clearly understands what is expected from them.

Consult with Experts when you prepare the SLA. In the example of the CCTV’s, make sure that you understand the inner workings of the entire process, from sourcing the CCTV’s, the quality required, the installation duration and process, etcetera. 

Create a framework and automate workflows where possible to help save time and deliver a faster service.

A Service Level Agreement will contain very specific clauses that relate to each specific agreement, but it will also contain ‘boilerplate’ clauses. Do not use a one size fits all SLA as you will likely ‘get your fingers burnt’.

The criteria that will be used to measure the service levels must be well-defined, time periods must be spelled out and penalties must be clear.

The Parties must work together during the SLA negotiations to reduce any misunderstandings.

Fairness in the SLA creates better results. Say the Vendor is ready to install the CCTV cameras, but you do not want the installation to start because of the Christmas rush that is expected, then the Vendor should not be penalised for the late delivery.

Select measurements that are easily collected – it can be time consuming and cumbersome to keep a check on the performance, yet it is vital that someone monitors and measures performance as agreed. A failure to monitor can quickly escalate and cause unhappiness between the Parties.

Create a baseline and then look at what needs to be monitored. See what is on offer and how it aligns with your business goals and the goals of your customers.

Discuss the performance with the people that must do the measurements and further discuss this with the people on the frontline – the people that must perform under the SLA. Remove unnecessary services and measurements tools.

A well drafted SLA has many benefits and will assist you with the growth of your business.

A SLA may contain the following:

  • Description of the service to be provided;
  • Payment terms;
  • Service requirements;
  • Technical requirements;
  • Security;
  • Confidentiality;
  • Limitation of Liability;
  • Evaluation criteria;
  • Availability of services;
  • Roles and Responsibilities;
  • Duration;
  • Change process.

Customised Service Level Agreements should be an essential part of your Company’s growth strategy.


Martin Vermaak

Practising Attorney