What Is Service Level Agreement?

Service Level Agreement

What is a Service Level Agreement (SLA)?

An SLA (Service Level Agreement) is a formal document that defines a working relationship between parties for a service contract. It details the services provided, the standards expected, and the metrics for measuring performance. Commonly used in IT, SLAs are integral to ensuring a consistent level of service and outlining remedies or compensation if these standards are not met.

Types of SLAs

  1. Customer SLA: An agreement between an organization and an external vendor.
  2. Internal SLA: An agreement between different teams within an organization.
  3. Multi-level SLA: Involves multiple parties, such as multiple teams within an organization or a combination of vendors and internal teams.

Importance of SLAs

SLAs are crucial across various industries as they establish trust, align expectations, and create a foundation for transparent and effective collaboration. They also offer opportunities for vendors to demonstrate their commitment to service quality and reliability.

Key Components of an SLA

  • Overview of the agreement
  • List of stakeholders and their objectives
  • Description of services and service levels
  • Exclusions from the agreement
  • Conditions for cancellation
  • Contingency plans for unmet goals
  • Service performance metrics

How to Write an SLA: A Step-by-Step Approach

  1. Define the Service: Clearly outline the service scope, stakeholder roles, customer and vendor obligations, and conditions for agreement cancellation.
  2. Verify Service Levels: Establish and agree upon specific service level metrics with all stakeholders.
  3. Determine Performance Metrics: Define clear metrics to measure the service quality, including output quality, defect rates, cost of meeting goals, and security measures.

Best Practices for SLAs

  • Ensure stakeholder agreement before service delivery.
  • Design SLAs with end-users in mind, focusing on their benefits and needs.
  • Set realistic and achievable service levels.
  • Regularly review and adjust the SLA as necessary.
  • Use precise terms for clarity and understanding among all parties.


A well-crafted SLA is a vital tool in business relationships, ensuring clarity, consistency, and satisfaction for all parties involved. It serves as a roadmap for service delivery and plays a critical role in maintaining quality and accountability.

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