Writing an Effective Service Level Agreement

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Writing an effective Service Level Agreement (SLA) is a crucial part of ensuring that both parties - the service provider and the customer - understand the quality expected from their relationship. From a legal perspective, it is also essential for creating accountability and protecting both parties from financial losses due to misunderstandings or disputes. Of course, an SLA must be tailored to meet the needs of the customer while still providing enough safeguards for the provider.

The Genie AI team understands how complex legal language can be and so offer free templates on their community template library that make drafting and customizing high-quality documents easy without needing to pay a lawyer. But remember, any SLA must take into account applicable laws or regulations as well as include provisions addressing how any potential disputes will be resolved. This could including arbitration or mediation, for example, rather than expensive litigation which neither party would want to go through if at all avoidable. Furthermore, changes in services provided and any potential termination should also be addressed in the document so that expectations are clear from both sides.

In conclusion, having a Service Level Agreement is essential for legal reasons but just as important for practical ones too; it protects customers from being taken advantage of and providers from engaging in illegal activities. To help ensure your SLA meets these standards read on below for our step-by-step guidance or access our template library today.

Definitions (feel free to skip)

SLA: Service Level Agreement - A contract between two or more parties that outlines the services, performance and other expectations of a customer and a service provider.

Scope: The range of services and activities outlined in an agreement.

Metrics: Measurements that are used to evaluate performance.

Remedies: Actions that can be taken to address a breach of an agreement.

Compensation: Payment or other forms of benefit that is given as a result of a breach of contract.

Review: An evaluation of the current performance of an agreement.

Dispute resolution: A process for addressing disagreements between parties to an agreement.

Termination: To bring an agreement to an end.

Changes: Alterations to an agreement.

Roles: Assigned duties and responsibilities of each party in an agreement.

Communication protocols: Established procedures for how parties communicate with each other.

Contents

• Defining the scope of the SLA
• Outlining the services to be provided
• Establishing the timeframe for delivery
• Specifying any other pertinent details
• Establishing appropriate metrics for measuring the performance of the IT services
• Identifying response times
• Identifying uptime
• Identifying any other measurable results
• Establishing remedies for when service level targets are not met
• Determining the form of compensation (refunds, credits, etc.)
• Establishing a timeline for review
• Specifying the dates for when the SLA should be reviewed
• Establishing any associated review processes
• Establishing a dispute resolution process
• Specifying how any disputes over the SLA should be handled
• Establishing a termination process
• Specifying how the SLA can be terminated in the event of a breach or other issues
• Establishing a process for making changes to the SLA
• Specifying how changes to the SLA should be made
• Defining roles and responsibilities
• Assigning specific roles and responsibilities to each party
• Establishing communication protocols
• Specifying how the parties will communicate with each other
• Creating a document outlining the SLA
• Writing a document that can be signed by both parties, outlining all of the terms of the SLA.

Get started

Defining the scope of the SLA

• Identify the parties involved in the SLA and their roles
• Determine the objectives of the SLA
• Describe the geographic coverage of the SLA
• Define the applicable service levels
• Outline the responsibilities of the parties involved
• Specify the duration of the SLA

You will know that this step is completed when you have identified the parties involved in the SLA and their roles, determined the objectives of the SLA, described the geographic coverage of the SLA, defined the applicable service levels, outlined the responsibilities of the parties involved, and specified the duration of the SLA.

Outlining the services to be provided

• List the services that will be provided in the SLA
• Make sure to include all services that the customer is expecting to receive
• Specify any services that are not included in the SLA
• Include any limitations on the services such as availability, limitations on usage, etc.
• Describe the service performance measurements, such as availability and response time
• Make sure that the services are stated in clear and measurable terms

You can check this off your list when you have listed all the services that will be provided in the SLA, specified any services that are not included, and described the service performance measurements.

Establishing the timeframe for delivery

• Set a timeframe for delivery of the services specified in the agreement.
• Determine the start and end dates for delivery of the services and include them in the agreement.
• Clearly define what happens if the services are not delivered within the established timeframe.
• Specify the consequences for both parties if the timeframe is not met.
• Include any applicable penalty clauses in the agreement.
• Sign the agreement to make it legally binding.

How you’ll know when you can check this off your list and move on to the next step:

• Once the timeframe for delivery has been established and included in the agreement, and both parties have signed the document to make it legally binding, you can move on to the next step.

Specifying any other pertinent details

• Identify and list out any other relevant details that should be included in the SLA, such as cost and payment terms, service contact information, service availability, and any other requirements or restrictions.
• Ensure that the language used in the SLA is clear and unambiguous, and that the details are consistent with the scope of services and timeframe established in the previous steps.
• Make sure that any additional details can be easily monitored and measured.
• Once all pertinent details have been specified, the SLA should be reviewed and signed by both parties.

Establishing appropriate metrics for measuring the performance of the IT services

• Determine which metrics are most appropriate to measure the performance of the IT service
• Consider metrics such as availability, reliability, response time, and throughput
• Collaborate with stakeholders to ensure the metrics chosen are meaningful and relevant
• Ensure the metrics are measurable and can be tracked
• Record the metrics in the Service Level Agreement

Once you have recorded the metrics in the Service Level Agreement, you can check this step off your list and move on to identifying response times.

Identifying response times

• Establish the average response time for each type of service, such as response times for incidents, requests for changes, etc.
• Identify any exceptions to the average response times, such as responses to critical incidents or requests for urgent changes.
• Set a lower limit for response times, below which the SLA is not met.
• Make sure that the response times are realistic and achievable.
• Document the response times in the SLA.

Once you have established the response times and any exceptions, you can move on to the next step of identifying uptime.

Identifying uptime

• Determine the percentage of time that your services should be available during the agreement period
• Set a minimum uptime requirement based on the expectations of your customers
• Take into account any maintenance windows or planned outages when setting the uptime requirement
• State the uptime requirement in the agreement document
• Check off this step when the uptime requirement has been established and clearly stated in the agreement document.

Identifying any other measurable results

• Identify other measurable results that are important to both parties and should be included in the SLA
• Examples include:
• Response time to customer inquiries
• Maximum network latency
• Maximum storage capacity
• Record the metrics and values that need to be met for any other measurable results in the SLA document
• Determine if there should be any penalties for not meeting these metrics
• Once all metrics and values are established, this step is complete
• Move on to the next step, which is Establishing remedies for when service level targets are not met

Establishing remedies for when service level targets are not met

• Outline the remedies that will be taken when service level targets are not met.
• Consider how the customer will be compensated for breach of service level targets (e.g., refunds, credits, etc.).
• Describe the process for tracking, monitoring, and reporting performance against the service level agreement.
• Document the process for dispute resolution if a customer believes the service level targets have not been met.
• Include any other remedies that may be necessary.

Once you have outlined the remedies for when service level targets are not met, you can move on to the next step: determining the form of compensation (refunds, credits, etc.).

Determining the form of compensation (refunds, credits, etc.)

• Identify which services will be included in the SLA and the associated costs
• Consider the types of compensation that could be offered for non-performance (e.g., refunds, credits, discounts, etc.)
• Develop a structured process for how compensation will be determined and issued
• Obtain sign-off from both parties on the form of compensation
• Document the agreed-upon compensation in the SLA

When you can check this off your list and move on to the next step: Once you have obtained sign-off from both parties on the form of compensation and documented it in the SLA, you can move on to the next step of establishing a timeline for review.

Establishing a timeline for review

• Establish when the SLA should be reviewed (e.g. annually, quarterly, etc.)
• Agree on a timeline for when the review should take place (e.g. every 3 months)
• Decide when the review should start and end (e.g. 1st of January to 31st of December)
• Document the timeline and specify which party is responsible for initiating the review
• Once the timeline is established, you can move on to the next step: specifying the dates for when the SLA should be reviewed.

Specifying the dates for when the SLA should be reviewed

• Decide how often the SLA should be reviewed and set a timeline for this review
• Determine the start and end dates for each review period
• Create a record of the review period for both parties to reference
• Establish a notification process for both parties to remind each other when the review period is coming to an end
• Once the dates are established and recorded, you can move on to the next step in the SLA writing process.

Establishing any associated review processes

• Establish a schedule for reviewing the SLA to ensure that it is still meeting the needs of both parties.
• Decide how often the agreement should be reviewed and when the review should take place.
• Decide who should be involved in the review process and ensure they are notified of the review prior to it taking place.
• Make sure all the review criteria is documented and agreed upon prior to the review.
• During the review, review any changes since the last review, update or modify the SLA as necessary and document any changes.
• After the review, document any changes that were agreed upon and sign off on the SLA.
• When all steps are completed and the SLA is signed off, you can move on to the next step.

Establishing a dispute resolution process

• Identify how the parties will handle any disputes over the SLA
• Determine the process for escalating issues and the timeline for resolution
• Specify the communication protocols for resolving any disputes
• Decide on the method for settling the dispute (mediation, arbitration, etc.)
• Agree on any other processes with the other party that will govern the dispute resolution

Once all of the above points have been discussed, agreed upon, and documented in the SLA, you can check this off your list and move on to the next step.

Specifying how any disputes over the SLA should be handled

• Include a clause in the SLA that outlines the dispute resolution process
• Outline the different ways to settle disputes, such as arbitration, mediation, or negotiation
• Set forth a timeline for each party to respond to disputes
• Provide contact information of the people responsible for handling disputes
• Outline the process of how disputes will be resolved
• When all the above is done, you can check off this step and move on to the next step of Establishing a Termination Process.

Establishing a termination process

• Determine how much notice is required prior to termination
• Decide the terms of termination (for example, termination for cause or convenience)
• Specify the conditions and procedures for terminating the SLA
• Establish whether refunds or credits are to be provided for any unused services
• Include a provision for the return of any software or other assets owned by either party
• Consider including a provision for a grace period if either party is in breach of the agreement
• Once all of the above bullet points have been addressed, the termination process may be considered established.

Specifying how the SLA can be terminated in the event of a breach or other issues

• Clearly outline the conditions for breach of the agreement and the resulting consequences
• Make sure both parties understand the process for terminating the agreement
• Specify the termination timeline, including any notice that needs to be given
• Address any potential legal issues that might arise from terminating the agreement
• When applicable, include details on how to resolve any disputes that may arise

You can check this off your list when you have specified the process for terminating the agreement and addressed any potential legal issues that might arise from terminating the agreement.

Establishing a process for making changes to the SLA

• Decide if the SLA needs a formal review process, as well as who should be involved in the review
• Decide if the SLA needs to be signed by both parties in order to make any changes
• Define a timeline for when changes can be made, as well as when they need to be approved
• Establish an approval process for any changes to the SLA
• Determine how any changes need to be communicated to both parties
• Identify any potential risks associated with changes to the SLA

When you can check this off your list and move on to the next step:

• When you have established the process for making changes to the SLA and have defined a timeline and approval process for any changes.

Specifying how changes to the SLA should be made

• Decide who will have the authority to make changes to the SLA.
• Establish a formal process for making changes to the SLA.
• Ensure that changes to the SLA are approved by all necessary parties before implementation.
• Define the conditions under which changes can be made (e.g. notification periods, who needs to be informed, etc).
• Document the process for making changes in the SLA and ensure it is understood by all parties.

You can check this off your list and move on to the next step when all necessary parties have agreed to the process for making changes to the SLA and it is documented in the SLA.

Defining roles and responsibilities

• Identify which party will be responsible for each service level
• Outline the roles and responsibilities of each party in the SLA
• Clearly define the expectations of each party
• Specify who is responsible for carrying out specific tasks
• Make sure all roles and responsibilities are covered
• Ensure that everyone is aware of their roles and responsibilities

When you have identified which party is responsible for each service level, outlined the roles and responsibilities of each party in the SLA, clearly defined the expectations of each party, specified who is responsible for carrying out specific tasks, made sure all roles and responsibilities are covered, and ensured that everyone is aware of their roles and responsibilities, you can check this off your list and move on to the next step.

Assigning specific roles and responsibilities to each party

• Review the roles and responsibilities defined in the previous step and assign tasks to each party.
• Make sure each party understands their role and the tasks they are responsible for.
• Document each party’s roles and responsibilities in the Service Level Agreement.
• Create a timeline with deadlines for each task.
• When all roles and responsibilities have been assigned and documented, you can move on to the next step.

Establishing communication protocols

• Identify the primary form of communication between the parties (email, phone, etc.)
• Set deadlines for response times (ex. 24 hours)
• Define expectations for responding to inquiries or requests
• Outline the methods for escalating issues (who to contact, time frames, etc.)
• Establish protocols for regular updates on the SLA

You can check this off your list when you have defined how you will communicate with each other and when you have set deadlines and expectations for responding to inquiries or requests.

Specifying how the parties will communicate with each other

• Clarify how the parties will communicate with each other on an ongoing basis, such as via email, telephone, or video conference
• Specify the frequency of communication, such as daily, weekly, or monthly
• Make sure to detail which party is responsible for initiating communication
• Include the protocols for notifications and escalation
• Document how any changes to the SLA will be communicated
• When complete, move on to the next step of creating a document outlining the SLA.

Creating a document outlining the SLA

• Brainstorm what should be included in the SLA
• Outline the main points, making sure to address the agreed-upon areas of the SLA
• Create a document that is comprehensive and easy to read
• Recheck all points to confirm they are accurate and up-to-date
• You can check this off your list when the document is finished and ready to be signed by both parties.

Writing a document that can be signed by both parties, outlining all of the terms of the SLA.

• Outline the scope of the service, the responsibilities of each party, the delivery timeframe and any performance metrics that will be used to measure success
• Include any legal information that may be necessary and ensure that the language used is clear and concise
• Make sure that there are provisions that address any potential issues that may arise
• Provide an acceptable dispute resolution process
• Ensure that the document is signed by both parties
• Once the document is signed, store it in a secure location and provide a copy to each party
• Check this off your list and move on to the next step.

FAQ:

Q: How do I address local laws in my Service Level Agreement?

Asked by Madison on March 5th 2022.
A: When drafting a Service Level Agreement (SLA), it is important to take into account the relevant laws and regulations of the jurisdiction in which your business operates. This is because failure to comply with these laws can lead to serious penalties or fines. Depending on the local jurisdiction, you may need to include specific clauses or provisions in the SLA that address local laws and regulations. For example, in the US, you may need to include clauses that address anti-trust regulations or consumer protection measures. In the UK, you may need to include clauses that address data protection and privacy laws. Additionally, if you are operating across multiple jurisdictions, you will need to take into account any relevant international laws or regulations that may apply to your business. It is important to seek legal advice from a qualified lawyer when drafting an SLA so that you can ensure compliance with all relevant local and international laws.

Q: What happens if I breach a Service Level Agreement?

Asked by Noah on April 24th 2022.
A: Breaching a Service Level Agreement (SLA) can have serious legal and financial consequences for both parties involved. Generally, if one party breaches an SLA, the other party will be entitled to compensation for any losses they have suffered as a result of that breach. In some cases, this could include financial damages or an award of punitive damages. Additionally, depending on the jurisdiction in which the SLA is governed, there may be other remedies available to the non-breaching party, such as terminating the contract or seeking an injunction against the breaching party. Therefore, it is important to ensure that all parties involved are aware of their obligations under the SLA and that they act in accordance with those obligations. If a breach does occur, it is also important to seek legal advice from a qualified lawyer as soon as possible so that appropriate action can be taken.

Q: Is a Service Level Agreement legally binding?

Asked by Emma on May 13th 2022.
A: Generally speaking, a Service Level Agreement (SLA) is a legally binding agreement between two parties and can be enforced in court should either party fail to meet its obligations. However, there are certain factors that must be present for a contract to be considered legally binding. These include an offer and acceptance between two parties, consideration (i.e., something of value exchanged between the parties), and mutual agreement and intention to create legal relations (i.e., both parties understand and agree that they are entering into a legally binding agreement). Additionally, depending on the jurisdiction in which it is formed, there may be additional requirements such as formalities or signatures in order for an SLA to be legally binding. Therefore, it is important to seek legal advice from a qualified lawyer when drafting an SLA so that you can ensure all necessary requirements are met.

Q: What should I consider when writing a Service Level Agreement?

Asked by Liam on June 21st 2022.
A: When writing a Service Level Agreement (SLA), there are several key points that should be considered in order to ensure that it meets all legal requirements and adequately protects both parties involved. Firstly, you should consider what services are being provided under the agreement and what obligations each party has towards each other in relation to those services (such as timeframes for completion or levels of performance). Secondly, you should consider what penalties or remedies are available should either party fail to meet their obligations under the agreement. Finally, you should consider any other specific requirements of local law or industry standards that must be met in order for the agreement to be enforceable (such as formalities or signatures). It is important to seek legal advice from a qualified lawyer when drafting an SLA so that you can ensure all necessary requirements are met.

Example dispute

Possible Lawsuits Involving Service Level Agreements

• A plaintiff may raise a lawsuit referencing a service level agreement if they feel that the agreement was not followed, resulting in a breach of the contract.
• The plaintiff may allege that the other party did not meet the requirements of the agreement, failed to provide the services as promised, or provided services of a lower quality than specified in the agreement.
• The plaintiff may be seeking damages for any losses or expenses incurred as a result of the breach, as well as a court order requiring the other party to comply with the agreement.
• The plaintiff may also seek an injunction to prevent the other party from further breaching the agreement.
• The court may consider the terms of the agreement, any evidence of breach, and any losses or expenses incurred by the plaintiff in determining the amount of damages or other remedies that may be awarded.

Templates available (free to use)

Helpful? Want to know more? Message me on Linkedin