How Important is SLA Management in IT Departments?

Service Level Agreements (SLAs) are an essential part of any IT service delivery.

Find out what SLAs are, what SLA management entails, and why they are essential in IT departments.

What is SLA?

An SLA gathers information about all the services offered by a provider and their agreed upon expected performance and quality together in a single document. It provides the metrics by which these services will be measured and the remedies or penalties applicable if agreed service performance is not met. SLAs are typically entered into between clients and external suppliers, but they can also be used between two internal departments of a company.

SLAs can cover several types of records in IT management, including incidents and work orders. They can also set target dates for important activities related to IT work and projects to be carried out (start dates, response dates, delivery dates, etc.).

SLA example

Here is a concrete SLA example:

A telecommunications company’s SLA can promise a network availability of 99.999%, and allow the customer to reduce its payment by a given percentage if this level of availability is not achieved, usually on a sliding scale based on the extent of service failure.

Three types of SLA

There are three categories of SLAs.

Customer-based SLA

These SLAs are between service providers and individual customer groups and apply to all services used by the customer group. For example, a company’s finance department could negotiate a separate SLA from other departments to account for the specifics of the management and availability of financial software, invoicing, payroll and procurement systems.

Service-based SLA

These agreements are entered into between service providers and their customers, whoever they may be, and are based on the specific services the provider offers. These may include the delivery of e-mail systems to customers or periodic updates as part of a service package.

Multi-level SLA

These agreements are classified into several sub-levels, each applying the same service levels for the same services offered to different customers within the same SLA.

• Corporate-level SLAs provide SLA management applying to each user across the entire customer organization.
• Customer-level SLAs provide SLA management for specific customer groups, but apply to all services provided or in use.
• Service-level SLAs provide SLA management for specific services related to specific customer groups.

SLA vs. SLO

It is important to differentiate SLAs from SLOs (Service Level Objectives). The latter is a specific target to be reached in metrics used to measure the quality of an IT service included in an SLA.

What is SLA management?

Simply put, SLA management is the ongoing process of making sure that all services and processes provided are consistent with the service level objectives agreed upon in the contract.

Since well-defined SLAs also identify the criteria for measuring agreed services and responsibilities, good SLA management also involves monitoring these metrics.

The importance of good SLA management for IT departments and users

SLA management helps protect the IT service provider and users in many ways.

Good SLA management sets clear and measurable guidelines

Any IT outsourcing contract without an SLA may be misinterpreted, either deliberately or unintentionally. On the other hand, when both parties (customer and IT service provider) sign a service level agreement, neither party can claim lack of understanding if there is a problem with the services provided. SLAs therefore protect both parties within the framework of the agreement.

Good SLA management keeps goals updated

Due to the speed of technological advancement, response times and other user expectations change almost every month. SLAs between an IT service provider and a customer should therefore be reviewed at least once a year. Otherwise, SLAs will quickly become unnecessary and outdated, often unrelated to existing technology capabilities.

In the IT Service Management industry, a flexible ITSM solution is important to effectively manage changes in objectives and commitments related to some metrics.

User recourse when service obligations are not met

If an IT service provider does not meet its obligations, there can be significant consequences for its client’s reputation and results. An SLA must anticipate repercussions if the performance standards for its IT service catalogue are not met. These financial penalties can help a company that suffers financial losses due to an IT problem.

An up-to-date ITSM solution is required for good SLA management

In short, mutual understanding of performance standards is important to establish a positive relationship between an IT service provider and its customers.

The best way to align user expectations with what an IT service provider offers is to produce an accurate SLA and keep it up to date.

The iTop Professional ITSM solution offers the ability to easily create effective SLAs and modify them as needed to make life easier for IT managers.

Contact SEI Team for more information on iTop Professional or its implementation in a company!