What is a Service Level Agreement & Can It Benefit Your Business

An IT support SLA (service level agreement) is the contract section that defines exactly what service a provider owes you. A good one spells out guaranteed response and resolution times by priority, support hours, what is included and what is billed extra, uptime commitments, security and backup responsibilities, escalation steps, and service credits if targets are missed. IS&T, a Houston managed IT provider since 1997, recommends checking all of these before signing.

Reviewing an IT support contract? Have an IS&T engineer walk through the SLA with you.

When looking for a managed services provider (MSP), organizations will find that most IT service management companies offer their clients services based on what’s known as a service level agreement (SLA). This is a very common component of outsourcing tech services, so it’s imperative that all business owners understand what it is, what it includes, and how to leverage the SLA to best benefit the business.

Below, we’ll discuss the details of service level agreements, including common questions and ways your organization can help create an ideal agreement.

Table of Contents

Definition of Service Level Agreements

Service level agreements (SLA) are contractual agreements that help define a level of service, performance standards, and a baseline of what to expect from your relationship with your provider. In regards to IT assistance, such as with a managed services provider, an SLA will define things such as expected response times, guarantees regarding IT performance, and additional metrics to measure service. Within an SLA, providers will also outline what will happen in the event they don’t meet the agreed upon level of service. For example, some providers will offer businesses service credits in the event performance goals haven’t been met.

It’s important to have documentation of projected levels of service and performance so both parties know what to expect and what action to take in the event outcomes are different than expected.

Response time and resolution time are not the same thing. Response time is how fast someone starts working on your issue; resolution time is how fast it is fixed. A strong SLA states both.

Components of Service Level Agreements

Understanding an SLA as a part of an IT provider contract starts with understanding its components. So, how are service-level agreements typically structured?

There are many aspects within an SLA, including which services are to be provided, detailed metrics regarding the services, costs of the services, and more. The main components of an SLA include service and management elements.

Services

Service areas of an SLA will outline exactly what services will be provided and what services, if any, will not. Service sections of the SLA include hours of operation, costs of services, escalation procedures, and any other parameters that are important for involved parties to know.

Management

Management areas of SLAs include how the MSP will measure progress and performance. This can include an outline of objectives that the MSP will aim to achieve, details on how they will report any changes in business processes, and what protection is offered to the client by the MSP in the event business objectives aren’t met.

Key Elements of an SLA

The following are examples of more specific elements that are often included in the SLA:

Overview – The basic information regarding the responsibilities of the provider, including what partners are involved in the agreement (the business, the MSP, etc.), as well as the start date of the agreement and an outline of what support and services will be offered.
Services Description – What exact services the SLA will be providing and details surrounding those services? For example, an SLA with a full-service MSP would include details on every aspect of IT management the MSP will provide, what hours they will provide service, and what resources (hardware, software, man-power, etc.) will be used to provide services.
Exclusions – The services or performance levels that are NOT included within the contract.
Performance Expectations – Metrics that define how well the technology services are expected to perform (uptime, downtime, number of issues, etc.) and what reporting methods will be used to provide results to the customer.
IT Security – How the MSP will protect your business data and systems from cybersecurity and/or physical security issues.
Backup and Disaster Recovery – In the event of a breach, a BDR plan outlines the processes that the MSP will enact to help reestablish service and get business systems up and running.
Compensation – In the event the MSP doesn’t meet customer expectations or services are out of compliance with the agreed upon service/performance metrics, compensation or service credit penalties will be outlined in the SLA.
Service Performance Analytics – How the MSP will document, measure, track, and report on the business’s IT performance.

Remember that every SLA will be slightly different, depending on the parties and circumstances involved, but having the basics in mind will help avoid confusion when looking through an SLA from potential IT service providers.

If a service is not written into the SLA, assume it is not included.

Benefits of a Service-Level Agreement

Providing an SLA is one of the best practices in managed services, in part because of the many benefits it provides for each side of the partnership. For the provider, it manages client expectations. For businesses, it offers specific measurements by which to gauge the value of their investment in having an IT partner.

What Are the Different Types of Service Level Agreements?

There are a few key types of SLAs, including:

Customer – Customer service level agreements are between a service provider and their customers to help negotiate things such as expectations, payment rates, standards for service, and more.
Internal – Internal service level agreements are contracts between internal departments, teams, or organizations within a company to help establish and enforce deliverables.
Multilevel – Multilevel service agreements are SLAs that are divided into tiers specific to a selection of customers. Similar to customer service level agreements, these SLAs help manage pricing and expectations. However, it is done with different levels of service depending on the type of customer.

For companies looking for a managed services provider, expect to deal with customer or multilevel SLAs.

IS&T provides managed IT services and IT help desk services to Houston businesses under written service levels. For more questions to ask a provider, see our managed services FAQs.

Bring your current IT contract or proposal. A short review with IS&T will show you what the SLA covers, what it leaves out and what to ask for.

Frequently Asked Questions

What is the difference between response time and resolution time in an SLA?

Response time is how quickly the provider acknowledges and starts working on a ticket. Resolution time is how quickly the issue is actually fixed. Many SLAs only guarantee response time, so check whether resolution targets are included, especially for critical issues like a server outage.

What are typical SLA priority levels for IT support?

Most IT support SLAs use three or four priority levels. Critical issues, such as a business-wide outage, get the fastest response. High, medium and low priorities cover problems affecting one team, one user, or routine requests. The SLA should define each level and the response target for it.

What happens if an IT provider misses its SLA?

The SLA should say. Common remedies are service credits against the next invoice, escalation to senior staff, and the right to end the contract after repeated misses. If the agreement has no remedy, the targets are goals rather than commitments.

What should not be in an IT SLA?

Watch for vague language such as “best effort” without numbers, response times that only apply during business hours when you need 24/7 coverage, and long lists of exclusions. Anything critical to your operations should be stated as a measurable commitment.

What Is An SLA & Why Is It Important To Understand What’s In It?