Definition of Service Level Agreement: Understanding its Importance to the IT Industry

Service level agreement or SLA is defined as a contract between two parties: the service provider and the customer, or between two service providers to draw formally the level of service to be rendered. It is a very essential document that, if used properly, should identify and define the needs of the customer / client, provide a structure for understanding to simplify or make complex issues easier to deal with, make way for discussions in the event of disputes and will eventually eliminate conflicts, and diminish expectations that are unrealistic and unworkable. SLA commonly includes a wide range of segments to address such as definition of services, performance tracking and reporting, problem management, customer duties and responsibilities, warranties, legal compliance and termination of agreement.

In the late 80’s, service level agreements have been used by fixed line telephone operators to record the scope or area of support that they can provide to their corporate clients. Until recently that many companies have sought the importance of creating service level agreements, that even IT companies have adopted it to define the parameters of service for the benefit of both them and the recipient such as comparing the quality of service given from the one being promised. Say for example a wireless Internet provider assures a connection speed of up to 200 kbps but the customer only gets like 60 kbps. The customer can then complain to get it fixed or a refund should be given in return.  The complaint can also make room for adjustments in constantly providing improved services by the provider. This is indeed an indication of good business as more and more customers will subscribe since satisfaction is definitely met.

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