Introduction to Service Level Agreements
Business success strongly relies on an organisation’s capacity to comprehend and fulfil client expectations. However, managing those expectations may be pretty challenging when those expectations are unclear or when customers are not entirely informed about what to anticipate from a service provider. To overcome this issue, all kinds of organisations rely on Service Level Agreements or SLAs.
What is a Service Level Agreement?
An SLA is a written agreement between the party receiving the service’s advantages and the party providing it. Traditional SLAs specify service expectations between vendors and consumers, but they are also used within departments in many organisations. And even if the SLA may be as little as a few phrases or as long as full pages’ worth of clauses and requirements, they are always an essential part of everyday service contracts.
It’s also worth remembering that SLAs should evolve and adapt to accommodate changing business requirements rather than viewing them as unchangeable. In light of this, SLAs should provide a precise framework for implementing changes or alterations during the contract term.
For example, a telecom company’s SLA might guarantee network availability of 99.999 percent (that equates to about five and a half minutes of downtime per year, which, believe it or not, can still be too long for some businesses). It might also allow the customer to reduce their payment by a specific percentage if that goal is not met, typically on a sliding scale based on the severity of the breach.
What are the 3 types of SLA?
Ultimately, a Service Level Agreement aims to align two parties by defining clear expectations and preventing problems before they arise. In light of this, various SLA kinds depend on your use case.
a) Customer Service Level Agreement
A customer SLA is all about an agreement with a vendor to provide a specific customer with a given quality of service. Here’s an entertaining example:
In the television programme The Office, Dunder Mifflin provides paper to numerous businesses. They may have a client service level agreement that states Dunder Mifflin will provide [Company X] with 50 reams of paper each month, shipped by Darryl Philbin to [Address 1] and [Address 2] every Monday, with a delivery confirmation provided to Jim Halpert. This is what Customer SLA is all about.
b) Internal Service Level Agreement
An Internal Service Level Agreement only applies to groups within the organisation. While a company may have open SLAs with all of its clients, it is also possible for it to maintain different SLAs between its sales and marketing divisions.
For example, consider that each sale in the sales department of Company A must reach a total of $10,000 per month. Tom, the marketing director at Company A, and the sales team can come up with an SLA that states that marketing will send 100 qualified leads to Millie, the sales director, by a specific date each month if the sales team’s average win rate for the leads they interact with is 50%.
This will involve Millie sending Tom four weekly reports every month to ensure the leads her team is bringing are assisting them in meeting their monthly sales target.
c) Multilevel Service Level Agreement
Multilevel Service Level Agreements can help a company’s clients or internal divisions. If there is more than one service provider and end-user, a Multilevel SLA lists out the expectations from each party.
Based on an Internal SLA, the sales and marketing teams of Company A collaborate to send leads from marketing to sales each month. But what if they wanted to make this contract an SLA between Sales, Marketing, and Customer Service to include a customer retention strategy?
In a Multilevel SLA, Company A can have Millie, the sales director, give Ashley, the VP of Service, monthly “customer friction” reports based on conversations the sales team regularly has with its clients. This aids in the customer support team’s knowledge base building so that they are more equipped to handle the problems for which the customers call.
Who furnishes the Service Level Agreement?
The service provider develops and offers the SLA. This enables the business to customise its SLAs to satisfy particular service and customer needs. There may be instances where a company offers multiple SLAs for a single service, with each SLA reflecting various service levels at different price points. SLAs, however, may benefit the service provider over the client because the vendor typically creates them. As a result, it can be beneficial to encourage clients to evaluate SLAs before making official commitments and, if necessary, to consider getting legal assistance. This will aid in avoiding situations where clients may feel cheated or misled.
Why are Service Level Agreements so important?
Service Level Agreements have several uses, despite their seeming simplicity.
a) Makes sure everyone is on the same page
Service Level Agreements keep both parties honest at their most fundamental level. The SLA serves as essential documentation outlining all the metrics, duties, and expectations initially agreed upon if there is a problem with the service. Given that both parties had access to the SLA, neither could later assert that they were unaware of the expectations or standards you had set.
A legally evaluated and approved service level agreement efficiently reduces the potential for contract misunderstanding and protects both the consumer and the service provider. Clients benefit from the assurance that they will receive the service they have paid for, and service providers are bound by a contract to refer clients back to them if they start to request services that don’t feature in the agreement.
b) Offers precise metrics
An SLA defines the metrics that enable monitoring service levels in addition to outlining the specifics of the services themselves. These rules make it easier for both parties to comprehend and evaluate the service’s efficacy and compliance with the contract’s requirements. There should be no space for doubt when it comes to critical KPI measurements because they must be explicitly defined and adequately quantified.
c) Provides redress for obligations not fulfilled
Service Level Agreements serve as a roadmap for what should happen next and if commitments are not met. The SLA will specify the repercussions should one party fails to adhere to the requirements outlined in the contract, which may include fines or other forms of monetary compensation. Repercussions that are precisely stated aid in holding all parties responsible.
d) Enhances business partnerships
To strengthen the relationship between service providers and businesses, a properly implemented SLA helps manage commitments between service providers and customers. Relationships between customers and companies are more fruitful and successful, and neither party has to worry about the other failing to fulfil its promises. While doing so, the correct SLA can assist in decreasing the worries of prospective clients, generating new business prospects and improving the brand’s reputation.
What are the different components of a Service Level Agreement?
Some of the critical components of an SLA are as follows:
Overview of the agreement: The basic terms of the agreement feature in this section, including the parties involved, the start date, and an overview of the services offered.
Service descriptions: Every service provided must be explicitly described in the SLA under every conceivable condition, along with the turnaround time frames. The delivery of services, the operating hours, the locations of dependencies, an explanation of the procedures, and a list of all the technology and applications used should feature in the service definitions.
Exemptions: To prevent misunderstandings and the possibility of assumptions from third parties, certain services that the party does not offer should be explicitly mentioned in the agreement.
Performance: Establish the metrics for measuring performance and performance. The customer and service provider should agree on the list of all indicators used to gauge the provider’s service performance levels.
Redressals: The service provider must list the compensation or payment terms if they cannot effectively satisfy their SLA.
Participants: Specifies the parties’ responsibilities to the agreement and clearly describes the individuals involved.
Guarantees: The service provider identifies and lists every security measure to ensure the agreement’s fulfilment. This usually involves creating and consensus-building of nondisclosure agreements, IT security, and anti-poaching arrangements.
Risk Management: The service provided prepares the risk management plan and lists the mechanisms to manage those risks.
Reporting and tracking services: The reporting format, tracking intervals, and stakeholders in the agreement are all described in this section.
Review: Review all established key performance indicators (KPIs) and SLAs regularly. The proper procedure for making changes is also defined.
Process termination: The provider should outline the termination or expiry conditions of the SLA. Establishing the notification period from each party is equally important.
Signatures: Finally, all parties must sign the agreement to legalise their consent and participation in the deal.
An indemnification clause in a Service Level Agreement
Some SLAs may have an indemnification clause. One of the parties (the Indemnitor) undertakes an indemnity provision to assume total liability for damages and losses incurred by the other party in the event of a breach.
These provisions are frequently one-sided, favouring one party without benefiting the other. Some service providers would choose to do so to ensure the quality of their services.
Service Level Agreement Free Template
If you are running a company that extends its services to other clients, then you can take the help of our free service level agreement template. It consists of a ready-made standard document that contains all terms and conditions required for any service agreement. Just fill in your essential information into the document wherever necessary and get yourself an SLA document in no time.
Benefits of using Sharepoint for Service Level Agreement
Customer satisfaction is key to the success of any organisation, and businesses tend to thrive when they follow the terms of their Service Level Agreements.
However, SLA intricacies vary with each customer as businesses have different objectives and customer requirements. Consequently, keeping track of your Service Level Agreements might be challenging.
We can customise your SharePoint to suit your unique business requirements as we understand that there’s no ‘one size fits all solution when it comes to SLAs.
With SharePoint, you can create different escalation levels to ensure the contract is never breached and automate specific processes at each step, for example, automatically assigning a bug to a senior or junior developer based on the severity of the issue.
SharePoint customisation can also help you track complaints, monitor response times, or even send notifications when KPIs are not met. You can automate all these processes once you set up an SLA and outline the conditions under which your company should execute it.
Here are some benefits of using SharePoint for Service Level Agreements:
- No separate licensing fees as SharePoint comes bundled for free with your Office 365 Enterprise subscription
- Turn granular data into visually compelling information with Power BI and analyse them from a single dashboard
- Integrating SharePoint with other Microsoft apps eliminates the need to subscribe to separate 3rd party apps
- Reduce overheads and operational costs
- Easy to track and manage escalations
- Improve employee productivity and efficiency
So, if you have an Office 365 Enterprise subscription, then you must consider using SharePoint for Service Level Agreement automation.
Free service level agreement template.
Conclusion
A Service Level Agreement is an essential component of any supplier agreement and is beneficial in the long run. It safeguards both parties and, in case of a dispute, will outline remedies and prevent misunderstandings. Both the customer and supplier can cut costs and time. The right SLA can help you manage user expectations and establish successful business connections.
SLAs, however, are just one part of the overall process. More and more companies are using SharePoint to guarantee the best experience while managing agreements between consumers and service providers. SharePoint can unite SLAs, operational level agreements, essential definitions, and precise real-time analytics in a single, centralised location.
With SharePoint, you can utilise user-friendly dashboards to view and manage SLAs across departments and customers. Integrating SharePoint and its powerful automation features enables you to optimise critical service-level management processes effortlessly. And that’s only the start.
To know more about how SharePoint can help you create and manage your company’s SLAs, make sure you reach out to us. Our team of experts will guide you through every step and help you correctly manage expectations between customers and service providers while forging strong and productive business relationships.
