Service Level Agreements: A Determinant of the Success of the Vendor-Client Partnership

Service Level Agreements (SLAs) are an important aspect in business engagements. A Service Level Agreement sets the parameters for deliverables, priorities, responsibilities and guarantees/warranties. IT Buyers seek vendors who make SLAs with clearly defined terms and conditions and a roadmap to achieve the desired goals of their project. An experienced IT company seeking to outsource any part of its final project deliverables would prefer to enter into a SLA (also known as contracted delivery performance) with the outsourcing company. It includes setting, tracking and managing SLAs which is an important part of Outsourcing Relationship Management (ORM) discipline.

SLAs are especially useful in the IT service industry, in which the clients are worried about softwares providing mission-critical services to their business. A single malfunction in IT operations can severely damage the working structure of the business. It is hence vital that the IT service provider has a defined set of rules and strict regulation to ensure that the promised IT services will be delivered. A Service Level Agreement can provide the network administrator with complete details on application availability and is a great tool to application monitoring and performance testing. This also smoothens the business service management process.

An Ideal Service Level Agreement

SLAs are usually scripted keeping in mind the client’s requirement, and essentially differ for each project. However, an ideal SLA has to cover some important aspects like:

• Definition of the services being promised
• How the services will be delivered
• Measurement criteria of services delivered
• Quality standards of the services promised
• Action to be taken if the provider fails to deliver as promised

Advantages of Having a SLA

A Service Level Agreement is applicable to both the vendor and the client. Some of the important advantages of having a SLA are as follows:

• Documented evidence of the agreement
• Sets a framework for quality expectation and implementation
• Makes the rules clear in case of a disagreement between vendor and client
• Makes goals and methodology crystal clear
• Creates a standard in the level of service
• Becomes a basis for improvisation of services