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Service Level Agreements: the foundation for a proper relationship with an IT service provider

A service level agreement (SLA) is a best practice that is agreed upon between a vendor of IT services and a customer of these services. An SLA is an agreement about the delivery of IT services and sets a benchmark that should be considered the standard for delivery.

What is a service level agreement (SLA)?

An SLA covers the obligations an IT service provider has with regards to the services provided. This means that for both parties involved, it is crystal clear what is expected in terms of delivery and what the quality should be. The goal of an SLA is to cover the objectives in such a way, that monitoring and tracking are possible, both for operational aspects as well as financial. A commonly seen practice is to include a realistic penalty clause. This acts as a stimulus for the IT service provider to comply with the agreements made in the contract. A service level agreement is often combined with a product/service catalog. In a product/service catalog, a description is given on what services will be provided, whereas the SLA describes how these services will be provided.

Legal status of a service level agreement

SLAs represent an agreement made between two parties. The law considers this to be a binding, legal document. This means that if one party does not respect this agreement, a claim could be made in court. If a relationship with a vendor reaches a low-point, a company should carefully consider if bringing the matter to court is a wise decision. Clear, unambiguous evidence proving the neglect of the service provider is required. Furthermore, legal escalation could possibly result in a fracture of the relationship and the termination of future services.

Tracking and monitoring SLAs

If agreements are made in the SLA, these should be converted to clear and realistic objectives. These clear objectives form the starting point for monitoring and tracking the performance of the service provider. Ultimately, setting up an SLA without proper objectives defeats the purpose. Agreements can cover various topics, depending on the services provided. A few examples are:

  • Percentages regarding up-time/down-time of the IT environment;
  • The maximum time it may take to follow up on an incident;
  • Information on the operationalization of activities that will be performed;
  • How responsibilities are determined and to whom these apply and are assigned;
  • The pricing of the services that are provided.

Exit strategy can be a lifesaver

To ensure the continuity and availability of an IT environment, it is recommended to think about – and include – an exit strategy. An exit strategy is a relatively new component of SLAs, but can potentially act as a lifesaver if the relationship with a vendor goes south and a company wants out of the contract. Such a strategy covers various topics in case one of the parties wants to end the contract. Examples of exit strategy topics are: what the costs will be, who takes care of what, ownership of information and intellectual property and in what timeframe the activities will be performed. An exit strategy therefore can prevent a ‘lock-in’, which especially is the case if the services provided are cloud-based.

Need help?

Are you confronted with service level agreements and would you prefer some help? Feel free to contact Crowe Peak and we can examine both the contents and legal aspect of the SLA.

Crowe Peak
Olympisch Stadion 24-28 1076 DE Amsterdam, The Netherlands
+3188 2055 000 contact@crowe-peak.nl