What this post is about
- Know types of SLAs
- Define components of the agreement
- Establish meaningful metrics and key performance indicators
- Discuss goal deviations
- Utilize internal SLAs for efficient collaboration
Collaborating in a simplified manner! With a Service Level Agreement (SLA), two parties agree on defined goals and metrics that are relevant for their joint work on projects and ongoing services.
In simplified terms, an SLA can be understood as a contract to which both parties agree. Unlike typical contracts, an SLA includes more information about delivery times, response times, or processed tickets to ensure long-term and successful collaboration at a consistent level.
External agreements with service providers are common, but internal departments can also agree on SLAs. In some cases, these agreements reduce the potential for conflict and enhance mutual goal achievement.
Fundamentally, three types of Service Level Agreements can be distinguished. A brief definition aims to provide an understanding of their different uses.
- SLA at the customer level: If your company uses all services of a service provider individually, all details are documented in an SLA at the customer level. Everything encompassing the service portfolio is part of this document and may include accessibility, service hours, reporting, or termination conditions.
- SLA at the service level: When your company utilizes products or service offerings that are also made accessible to other companies and customers, an SLA at the service level comes into play. This includes software or virtual offerings.
- Multilevel SLA: In this case, multiple levels of an SLA are combined and segmented according to the customer's needs. Thus, different SLAs for a product could be designed differently based on various packages (Basic, Premium, Exclusive).
To outline and define the objectives of a Service Level Agreement clearly, you can orient yourself around these typical components:
- Agreement Summary: Both parties agree on the fundamentals with a detailed description of the offered services and expectations.
- Service Levels: Both parties agree on metrics to establish the level of service.
- Exclusions: Specific services excluded from the SLA are understood here. Direct naming is recommended to avoid misunderstandings.
- SLA Objective: Your objective is the clear outcome of the SLA. Whether it's increasing revenue, expanding reach, or maximizing productivity, you articulate your goal in clear terms.
- Metrics: These data points help you achieve your objectives and provide insights into the set goals.
- Points of Contact: Define responsibilities and determine which individuals to contact in case of issues.
- Consequences of SLA Breach: If goals and conditions are ignored or not met, consequences such as compensation payments can be defined.
To achieve goals, you need metrics. In the SLA, the parties involved record their measurements in the form of transactions, processing time, stability, capacity, the number of customer inquiries, or sales. To regularly collect these numbers, you need metrics in turn.
Metrics are used to examine the metrics. Ensure that the collection of numbers and values always occurs under the same conditions. Only in this way can a clean analysis be conducted. Consider the following questions in advance, and their answers should be documented in the SLA:
- Which tools are used for data collection?
- Who collects the data?
- Which metrics are relevant?
- Which data can be dispensed with?
Just like with any contract, there are consequences for non-compliance with the metrics or agreements of the Service Level Agreement. Typically, in external SLAs, there are claims for damages or compensation payments.
However, it's also worthwhile to include positive consequences as incentives for compliance in the SLA. Therefore, in the best case scenario, if metrics are exceeded ahead of schedule, bonuses or credits are paid out.
Yes, because the internal use of SLAs promotes collaboration between departments whose actions impact each other. Often, an SLA serves as an interface between Marketing and Sales. To jointly achieve the company's goals, the following parameters could be defined in this combination:
- General lead generation
- Verified and qualified leads
- Number of sales
- Specific milestones within predefined time periods
- Reporting for regular updates
This way, communication between teams is maintained. No one operates in isolation, and it's not possible to blame the other department for declining sales. Through the Service Level Agreement, both sides rely on a cooperative approach.
A foundation without a doubt: When you establish a Service Level Agreement, you create more transparency in collaboration. Avoid interpretations or different interpretations of requirements with an SLA and build future goals on an unambiguous document.