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A contract guaranteeing a performance of service between a business and its clients is called a Service Level Agreement. It is useful in outlining the specifics of a deal in which two parties have reached a mutual agreement. The type of Service Level Agreement to be used, and the specifics to be covered by the agreement depends on numerous factors. While some Service Level Agreements focus on certain client segments, others focus on issues related to the whole business.

Service Level Agreement
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Who needs a Service-level agreement?

The Service Level Agreement or the contract between the service provider and the customer that documents the service is commonly known as SLA. Service Level Agreement is distinct from Service Level Commitment. An SLA includes two teams and is bi-directional. 

Intrinsically, you need a service level agreement if you are a service provider and intend to outline circumstances for your accountability. Therefore, SLA is for service providers to manage customer expectations. 

Even though a Service-level agreement or SLA is most useful to service providers, customers too benefit greatly from it. Since an SLA clarifies the characteristics of the service provided, customers can weigh the benefits of the product and compare it to their alternatives. A Service-Level Agreement is therefore reliant on the type of customers. 

Key components of a Service-Level Agreement

A well-organized Service-Level Agreement bears six distinct components

  1. Agreement Overview
    The agreement overview includes details such as the individuals involved, efficiency and expiration date, and a general statement of other details that will be included inside the SLA.
  2. Service Agreement
    Perhaps the largest section of a service level agreement comes next and is called the service agreement, which features many key components for which the service provider takes responsibility. The topics covered in this section include Service scope, Customer requirements, and Service assumptions.
  1. Stakeholders
    The parties to the contract are described in this section. Think about IT clients and IT service providers.
  2. Periodic Review
    Periodic review is an important component of a Service-Level Agreement. The conditions and dates of the particular SLA review period should be stated explicitly.
  3. Goals and Objectives
    The goals and Objectives of the Service Level Agreement should be stated in the following section. Within this, the possibility of mutual agreement is also included. 
  1. Service Management
    The service level agreement’s final section addresses service management. Here, the service requests and service availability are addressed.  Information on the availability of digital assistance, the limitation for service requests, and choices for remote help are all part of Service Management. 

What are the three types of Service-Level Agreements?

As mentioned earlier, the purpose of SLAs and their type can vary due to various reasons. To understand these better, let’s look into some key types of Service-Level Agreements and what they cover below:

  1. Customer-based SLA
    These are often used to address individual clients. This type of contract incorporates details of all related services that will be provided to a customer into a single agreement. The conditions of the mutual agreement are provided in-depth. For instance, Internet Service Providers commonly make use of a customer-based SLA when signing new users or getting customers on board.
  2. Service-based SLA
    Service-based SLA is a contract that states that all clients will get the same level of service. Suppliers believe that service-based SLAs are more efficient as they cater to individual exchanges and circumstances in the same manner. For instance, all end users who sign their service-based SLA will receive the same amount of assistance if the helpdesk employs a service-based contract. 

Multi-level SLA
A multi-level SLA is used when the offered services vary and have different levels to it. This type of SLA can be customized to meet the needs of a company’s end users. A multi-level SLA defines the various services offered to customers in relation to the subordinate services that are also provided by the same company. To understand this easier, let us take the example of Netflix. Depending on the amount you pay, the service you receive changes. If you are on a basic plan, you have access to their service but it has a set limitation. When you upgrade to a premium package, you still get the same service but now you are allowed to have more users and screens using it simultaneously. So here, even if the services will be the same; the agreement you have with the end users varies depending on what they will receive. Every time they upgrade or downgrade you have to update and revise your agreements again.

Considerations for Service-Level Agreements metrics


To provide you with some breathing room in the case of a data breach, some cloud service providers advertise uptime that is lower than what they can deliver. While some firms that can tolerate brief drops in output may find this to be enough, healthcare providers and governmental organizations who require rapid access to data still view it as insufficient. 

2. Data Protection

SLAs must take data security procedures like backup and disaster recovery into account. The agreement specifies the obligations of each party, acceptable performance standards, covered applications and services, monitoring processes, and time frames for addressing outages brought on by power failures, natural catastrophes, human error, or malware. is required. Look for the section on penalties, which describes the punishments the provider can suffer if the SLA’s requirements for privacy are not upheld.

3. Exporting Data 

Just as in every relationship, there are moments when you want to break the connection. However, it is simpler to say than to execute. While some cloud service providers make it simple to migrate your data there, after you’ve done so, they either charge you a large cost or return your data to you in an unusable state. You must make sure that your contract can be ended at any time and without paying any penalties as a result. Data export in defined formats such as CSV, XLS, XML, and others is also negotiated. Additionally, using a csv importer can streamline the process, making it easier to transfer large datasets efficiently. Demanding vendor help for the export may be necessary if you lack a capable IT staff to manage it.

4. Scalability

Many SLAs are created to satisfy client expectations at the time they are signed, but as we all know, an organization’s size can vary significantly over time. Make sure contract review intervals are included in your SLA so that you may expand your cloud capacity as your company expands. If your organization shrinks, you also need the option to lower cloud capacity. Paying for capacity that isn’t being used is useless.

5. Data Location

Data must eventually reside somewhere, but cloud computing attempts to make it available at all times and from any location. Your data may be stored in a separate place or dispersed among numerous services. It’s crucial to know where your data is physically situated when it comes to compliance problems. We need to be aware of the location of the data, particularly for the CJIS agencies and HIPAA health standards. Compliance with the General Data Protection Regulation is further endangered by ambiguity over the placement of data.

When to revise a Service-Level Agreement

As organizations change, so do their service requirements. The SLA should not be viewed as a static document. The SLA should include a clearly defined framework for changes during the life of the contract. SLAs should be reviewed periodically, especially when:

SLAs are an important part of any supplier agreement, and if they are well thought out and structured at the beginning of the relationship, they pay off in the long run. Protect both parties, determine remedial action in the event of a dispute, and avoid misunderstandings. This saves considerable time and money for both customers and suppliers.

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