https://www.techtarget.com/searchcio/tip/Why-SLA-compliance-should-be-top-of-mind-for-IT-leaders
One of the most important contractual agreements that an organization can execute with a partner is a service-level agreement, or SLA. IT leaders should make sure that their organization is following some best practices to ensure that their partner is compliant with the SLA.
An SLA documents the products or services that the service provider will furnish and defines the service standards that the provider is obligated to meet. Creating an SLA helps organizations avoid potential issues in the future, including subpar service from the provider.
Learn more about some best practices for ensuring SLA compliance.
Service providers of all kinds, including managed service providers, use SLAs to ensure that their customers are satisfied. SLAs also define the circumstances in which a provider could be penalized for unsatisfactory performance.
Companies that work with service providers benefit from SLAs because the contract outlines the criteria for acceptable provider performance and specifies how to address service delivery issues.
SLAs are external if they are established with a third-party organization and internal if they are established with another department within an organization. The former is very common, and the contents of an SLA can be an important deciding factor for companies when evaluating prospective service providers. SLAs have become increasingly important as cloud vendors and MSPs, which might support some or all of an organization's IT operations, have grown in popularity.
Meanwhile, a company might use an internal SLA if, for example, an IT department develops a product for the customer service department. The SLA would lay out the customer service department's expectations for the IT department.
Service providers might establish two service agreements with companies. One is a master service agreement that defines the general terms and conditions for the working relationship. The second is the SLA, which goes into greater detail on specific provider activities, defines required performance levels and discusses the penalties for failing to achieve the desired results.
SLA compliance is achieved when service providers satisfy SLA requirements. SLAs must be clearly written and provide sufficient detail to avoid any uncertainty about expectations.
SLAs are often linked with an organization's KPIs. Here are some examples of SLA performance metrics that are based on a company's KPIs:
Achieving compliance is a two-way street. The provider and the company receiving the services both have a vested interest in achieving compliance with SLA metrics.
The company's employees must carefully monitor the systems and resources that the provider is working on. While doing so is relatively easy if a company uses on-site systems and data centers, monitoring the provider is more challenging if the provider manages systems and resources. Providers might not want customers looking over their shoulders.
Providers should make every effort to achieve SLA compliance, as doing so ensures that they will get paid for their work and avoid costly litigation. SLA compliance is also key for maintaining good customer relations and renewing contracts.
There are three types of service-level agreements: customer, internal and multilevel.
A customer SLA is also referred to as an external SLA and is established between a service provider and its customers. A customer SLA involves both parties negotiating an agreement about the services that the service provider will supply as well as penalties for nonperformance or poor performance.
Components of a customer SLA typically include the following:
As discussed above, this agreement is typically used within an organization. An internal SLA would be created if an IT department and its internal customer establish an agreement for delivery of a specific product or service.
Companies might have multiple SLAs in progress. For example, an IT department could be working on projects for the customer service department and the finance department.
A multilevel SLA is used when a provider is supplying different service performance levels to a series of customers using the same service.
For example, a software-as-a-service provider might deliver a package of basic services and support to all of its customers, but offer different price ranges for different service levels.
SLAs are legal contracts and should include some specific elements, such as the following.
This section discusses the basics of the agreement, including the parties involved and the date it will become effective, and gives a general introduction of the services that the provider will deliver.
This section describes every service that the provider would potentially offer, along with performance completion dates and times, and delivery dates and times.
The section also discusses the method of service delivery, availability of maintenance service, provider hours of operation and service locations, and a detailed list of all hardware, software and network services.
This section is a list of services that the provider does not offer. Discussing the services that are not available helps avoid confusion.
This section discusses the specific performance metrics that both parties have agreed to, as well as the methods that will be used for monitoring and measuring them, and a description of unacceptable performance.
This section spells out the compensation or payment that the customer will receive if a provider does not achieve SLA compliance.
This section defines the parties that are involved with the SLA as well as their responsibilities.
Defining the security measures that the provider must carry out is important for ensuring the continued operation of the contracted resources.
This section might include details on specific agreements about IT security and nondisclosure agreements.
Outlining disaster recovery and risk management requirements is also important for ensuring that the contracted services are not disrupted by an unplanned event.
This section can discuss any risk management activities that the provider will carry out as well as a technology disaster recovery plan.
This section defines the methods for monitoring service performance, as well as the mechanisms for tracking and reporting issues.
It also identifies who will receive this information.
The SLA should be regularly reviewed and improved in terms of quality, accuracy and legal language.
This section should also include discussion of how changes to the SLA should be carried out, including approved change management processes.
The next-to-last part of an SLA should define the criteria for terminating the agreement or indicate an expiration date.
Establishing a notice period for such activities can help avoid any confusion.
The final part of the SLA should consist of the signatures of all authorized parties and stakeholders.
Here are some best practices that CIOs and IT leaders should follow when creating an SLA with a service provider:
Paul Kirvan, FBCI, CISA, is an independent consultant and technical writer with more than 35 years of experience in business continuity, disaster recovery, resilience, cybersecurity, GRC, telecom and technical writing.
16 Jul 2025