9 Service Level Agreement (SLA) Best Practices for IT and Procurement Teams

Service level agreements are required to ensure that vendors provide the desired level of service which they promised. Further, it should be updated as and when there is any change in the service. 

Having an understanding of service level agreements (SLAs) and incorporating its best practices bring a lot of value to your organization. It helps you in aligning your internal requirements with service providers.

It could be boring and tedious to read service level agreements (SLA), but service level agreements play an important role whenever any conflict arises between a service provider and the customer. It not only helps resolve conflict but prevents them too by making both parties accountable.

Service level agreement (SLA) simply refers to the agreement between a service provider and its customers in which the service provider ensures to deliver a certain quality of service to its customers. Here is an example of the service level agreement (SLA) of Slack. In the SLA, Slack commits at least 99.99% uptime for customers on Business+ subscription and above. 

In case they fail to ensure their commitment, the affected customers can raise the issue. In return, Slack will provide a credit of 10 times for the downtime period.

A service level agreement (SLAs) acts as a foundational agreement between your IT teams and customers that is an essential element for building trust. Further, service level agreements (SLAs) set a certain standard for service expectations in customers' minds, and it becomes a critical factor for priority work in case of multiple concurrent issues.

SLAs reduce the concerns, uncertainty, and risks associated with service. Additionally, service level agreements (SLAs) assure the outcome of expected service with IT spending by giving clarity about the resolution to the customers.

Further, IT teams also often create internal service level agreements (SLAs) within the organization to provide a certain standard of service, so it becomes imperative to align providers and internal service level agreements (SLAs) prior. 

In this post, we are going to discuss some of the best practices of service level agreements that IT teams should follow in negotiating with any vendor and keeping track of service level agreements (SLAs).

Service Level Agreements Best Practices

While having an easy to understanding and clear service level agreement (SLAs) is a basic requirement. Further, it should be specific so that you should have clarity about it. For example, when you see in any service level agreements (SLAs) that issues will be resolved earliest, you must ask the service provider to specify it as all raised issues will be resolved within 24 or 48 hours or any finite time period. Let's see some of the best practices of service level agreements (SLAs).

1. Always Read All the Terms

Service level agreements (SLAs) are boring, and it may be frustrating to read all the terms and conditions mentioned in them. But, signing it without understanding every detail may cause a huge loss as well as damage to your organization. 

Or, in some cases, you may miss out on any sort of compensation for any damage caused by the application if you don't follow the terms. So, the most important thing is to carefully read and understand everything mentioned in the service level agreements (SLAs). Also, you can take the help of your finance, legal, and other relevant departments in case any terms are associated with them.

2. Keep Different SLAs for Different Services

Every service is different, and they are associated with a unique set of problems. In some services, resolving a certain problem can be done quickly, while in others, it may take even a day or a few weeks as each IT service has its own lead time and approval schedule. So, if you are taking more than one service from a particular vendor, always maintain different service level agreements for every service. In this way, you will have an understanding of relevant details more clearly related to the different services.

3. Keep Service Level Agreements (SLAs) Specific

The different points mentioned in service level agreements should be clear and specific; otherwise, you will get confused. A simple example can be rather than mentioning that all the issues will be resolved as soon as possible, you should look for a finite timeline for it and ask the vendor to change accordingly. A better way to write this can be that all the issues will be resolved within 24 hours or 48 hours (or any finite timeline based on the type of the issue). In this way, you will have a clear understanding and idea of the maximum waiting period for any sort of issue.

4. Set a Realistic Target

Thoroughly understand your current and future business needs and, based on that, define key metrics. You need to set targets for minimum and maximum requirements for each metric. For example, if your business does huge transactions online and the minimum uptime requirement is 99.999% in 24 hours. 

So, go for 99.999% and more uptime. Further, depending on the requirements, the cost of service may vary. Hence, it's imperative that you should accurately evaluate requirements and check whether the pricing is reasonable and fits your budget or not. Set simple targets without merging multiple factors together to make a complex one. 

5. Track Performance

You should not rely on the vendor to provide reports on the service level agreements (SLAs) performance but also measure the performance from your end too. In this way, both parties will have a sound understanding as well as a source of truth for relevant metrics.

Measuring performance not only helps you to know whether the providers are providing you the quality of service which they promised. But, it also helps you to understand the scope of improvement as well as make the provider accountable with relevant data in case of any service lag. Further, you can claim compensation which is listed for different service failures in the service level agreements (SLAs). 

6. Align Every Stakeholder

Align service level agreements (SLAs) targets and expectations among business, IT, and the company's strategic partners to ensure that everyone is on the same page. Don't over-promise to deliver if your internal service level agreements (SLAs) are not aligned with the service providers. 

If you do so, you will fail to deliver the service which you promise, and in this way, it will affect your business relationship with the affected stakeholders. So, always ensure that you are aligning internal service level agreements (SLAs) as per your providers for smooth functioning.

7. Review & Ask for Change 

Change is unavoidable, and with time as your requirements vary, you should reach out to service providers for the amendment in service level agreements (SLAs). In this way, you ensure that the service level agreement is as per your requirement and fulfilling your designed business objectives at every point in time. 

You cannot expect a provider to change the service quality with time when your requirements vary without communicating them. Also, in case the provider is making any changes in service, always ask them to make relevant changes in the service level agreement.

8. Don't be in a Hurry

Achieving designed outcomes for business from SLAs and service integrations takes time, and it requires continuous improvement. IT teams should develop an understanding of the amount spent relative to the benefit or outcome they get out of the service. 

The understanding of value realization from SLAs is critical to establishing ongoing competence. IT teams can track the utility of the application by using Zluri to find out whether it is used fully or not. Applications that are duplicated or not used can be discarded to save cost.

9. Incentivize Vendor to Strive for Consistent Improvement

Set targets that require continuous improvement over the period; this is a good way to ensure that your designed business objectives from the providers are meeting with time. 

Further, it requires vendors to improve efficiency progressively and pushes them to strive for continuous improvement. You can also use it as a parameter to understand whether the vendor will be able to fulfill your future requirements based on the progress.