Importance of an SLA for any organization
- By Amit Mehendale
Effective Service Level Agreement (SLA) is absolutely vital and extremely important to any organization to ensure effective engagements for any service or product delivery. Though outsourcing may be an easy way to curb implementation costs, obtain effective expertise, faster solution deployment and application maintenance and support. But the question is how can an organization guarantee that the application service vendor, provides an appropriate level of support by just hiring? SLA is the answer. The success of the formal relationship between an Application Service Provider (ASP) and its customers, fundamentally depends on a strong SLA.
The ability to govern and deliver according to pre-defined agreements increasingly becomes a competitive requirement. Aside from being able to deliver highly available, reliably performing systems, just being able to deliver your promise is key to success. This is why an effective and efficient SLA is important. Key to the success of ASP engagement is a sound SLA.
SLA is important because it sets boundaries and expectations for both the vendor and its customers. SLA helps to show the value of IT to the business and provides meaningful information so companies can meet their key targets. It clearly defines the level of services expected between two parties. It ensures these targets are met within expected standards and budgeted costs.
Service Level Agreements are vital because they help businesses to easily analyze underlying factors and make corrections. They allow businesses to optimize resources cost effectively. They give you the competitive edge in highly competitive business environment, by allowing you to deliver business services consistently, at minimum cost.
How important it is to have a contract for business arrangements of all types, similarly it is important to have an SLA. It constitutes a single document that contains the terms of the agreement as understood by both parties. With the SLA in place, it is much more difficult for either party to claim ignorance if the agreement breaks down. CIOs should expect to have an SLA in place for every significant service relationship they have.
Key points one should keep in mind for a perfect SLA: The SLA can make the difference between a solid relationship that lasts for years and keeps both parties happy — or something just the opposite.
While defining an SLA, realistic and measurable commitments are important. Performing as promised is important, but swift and well communicated resolution of issues is even more important. The challenge for a new service and its associated SLA is that there is a direct relationship between the architecture and what the maximum levels of availability are. Thus, an SLA cannot be created in a vacuum. An SLA must be defined with the infrastructure in mind. An exponential relationship exists between the levels of availability and the related cost. Some customers need higher levels of availability and are willing to pay more. Therefore, having different SLAs with different associated costs is a common approach.
A good SLA addresses five key aspects:
- What the provider is promising.
- How the provider will deliver on those promises.
- Who will measure delivery, and how.
- What happens if the provider fails to deliver as promised.
- How the SLA will change over time.
Few tips for an good SLA: A good SLA helps the ASPs promise what is possible to deliver and deliver what is promised.
An SLA sets the expectations between the consumer and provider. It helps define the relationship between the two parties. It is the cornerstone of how the service provider sets and maintains commitments to the service consumer.
An SLA should highlight that the ASP will help its customer for use of the application to achieve their business goals and to maximize their investments in software.
Although an SLA is an excellent expectations-managing mechanism, it’s important to manage your own expectations of what it can realistically accomplish. Unfortunately, some people view an SLA as a complaint-stifling mechanism or a quick fix to a troubled relationship; however, using it for such purposes creates more problems than it solves. Instead, think of an SLA as:
- A communications tool. The value of an agreement is not just in the final product; the very process of establishing an SLA helps to open up communications.
- A conflict-prevention tool. An agreement helps to avoid or alleviate disputes by providing a shared understanding of needs and priorities. And if conflicts do occur, they tend to be resolved more readily and with less gnashing of teeth.
- A living document. This is one of its most important benefits. The agreement isn’t a dead-end document consigned to the Forget Forever file. On a predetermined frequency, the parties to the SLA review the agreement to assess service adequacy and negotiate adjustments.
- An objective basis for gauging service effectiveness. An SLA ensures that both parties use the same criteria to evaluate service quality.
An effective SLA must incorporate two sets of elements: service elements and management elements. The service elements clarify services by communicating such things as:
- the services provided (and perhaps certain services not provided, if customers might reasonably assume the availability of such services)
- conditions of service availability
- service standards, such as the timeframes within which services will be provided
- the responsibilities of both parties
- cost vs. service tradeoffs
- escalation procedures
An example which can form a part of SLA:
| Priority | Definition | Business Impact | Maximum Initial Reponses Time | Maximum Resolution Period |
| 1 | Emergency Production Issue | Major Impact – System Operations affected, customer business cannot continue. No alternate solution available | 1 hour | 24hours |
| 2 | High Level Issue – Database or Infrastructure | Significant Impact – Restricted Processing – Customer work is delayed due the issue | 4 hours | 48 hours |
| 3 | Operational Issue | Minor impact on customer business; does not prevent system operations software error for which there is an acceptable alternative solution. Performance degradation | 8 hours | 72 hours |
| 4 | How – To’s | Minimal impact on customer business tips techniques | 24 hours | 96 hours |
| 5 | Informational | No business impact Documentation issue training and help usage | 48 hours | 120 hours |
The management elements focus on such things as:
- how service effectiveness will be tracked
- how information about service effectiveness will be reported and addressed
- how service-related disagreements will be resolved
- how the parties will review and revise the agreement
A well-defined SLA records the expectations for both sides of the relationship and provides targets for accurately measuring performance against those objectives. The SLA lays down the boundaries of the project in a number of areas:
- Standard(s) by which service is measured
- Functions that the ASP commits to providing to the customer
- Volume of work that will be accepted and delivered
- Accepted criteria for responsiveness
- Quality of deliverables
- What should happen if something goes wrong
Posted on June 5th, 2008 by Amit Mehendale
Filed under: View Points & Perspective
Leave a Reply