SLA Report: How to Create an SLA Report, SLA Monitoring, & Sample Reports

What is an SLA?

A service level agreement, or SLA, is a contract between a service provider and the customer that stipulates and commits the service provider to a required level of service.

 

Why are SLAs Needed? 

SLAs are a key component of a contract with a service provider. SLAs assist in defining how the service is measured, the agreed upon service levels, or uptime, as well as how penalties are levied if service levels are not met. SLAs help to level-set expectations for both the client and the service provider.

 

Types of SLAs 

There are a few common types of SLAs that are used today. In fact, larger organizations may have many SLAs in place between various internal departments. 

Customer-based SLAs 

A customer-based SLA is an agreement with a specific customer group and covers all the products and services they use. A good example of a customer-based SLA is when an organization signs with a telecommunications company. The organization agrees to utilize multiple services, such as VoIP, data, SMS, and other services. For all those services, there will be one contract. Similarly, if the organization uses a specific hardware vendor for their group, any service incidents for anything related to their hardware devices will be managed by a different service provider.

Service-based SLAs 

A service-based SLA is an agreement between all customers and a service provider. For example, an organization could use the same IT service provider for multiple departments. Since it is the same service provider, the SLA is the same between the customer groups that share this IT service provider.

Multi–level SLAs 

A multi–level SLA is an SLA that is divided into different SLA levels, consisting of corporate-level, customer-level, and service-level SLAs, with each level focusing on different customers that use the same services. Multi-level SLAs allow for the customers to include more customization and conditions of the service depending on the needs of their business.

 

What Components Make up an SLA? 

SLAs are usually comprised of a similar set of components that can include any of the following: 

• Services Overview. A general overview of the agreement, parties involved, service dates, stakeholders, and services provided. 
• Definition of Services.  An overview of the service(s) and definitions, how they are to be delivered, exclusions, hours of operation, maintenance schedule, etc. 
• Performance of Services. How performance levels are to be addressed and monitored, including what statistics are used to ensure service levels are continually being met.
• Service Issues and Resolution. This component describes and outlines the steps involved for how to report issues with the service, resolution steps, and length of the issue resolution, etc. 
• Services Redressing. This includes address what will happen if the service provider cannot meet or fulfill the agreed-upon service levels as defined in the SLA and what penalties will be enforced. This typically includes some form of compensation, such as refunds or credits to the customer, or even language around the right to terminate the SLA by the customer.

 

What Metrics are Measured in an SLA? 

Obviously, depending on the type of SLA and services being used, the metrics used to measure SLAs can vary. Some of the more common metrics involved with call center or IT services management that you may have heard or come across include call abandonment rate, turn around time (TAT), total resolution time (TRT), and mean time to recovery (MTTR). 

In the case of IT services specifically, many SLAs follow the guidelines defined by the ITIL (Information Technology Infrastructure Library) specifications. ITIL is a set of best practices specific for IT services management that can be applied to any organization to help provide alignment between business objectives and IT services. One of the more talked about metrics, especially in the case for IT services and website hosting providers, for example, is uptime. 

For example, in the SLA agreement with a web hosting provider, they may agree to maintain 99.999 percent uptime, which is also commonly referred to as the “five nines,” of uptime. This level of uptime indicates that there will be no more than five and a half minutes of downtime per year! If this service level is not met, and the client experiences long periods of downtime, or frequent, small outages throughout the year, there can be costly consequences, like lost revenue, frustrated customers, and negative brand perception.

 

What is the Cost of Downtime? 

A downtime of only a few minutes a year seems pretty good, right? Well, you may be shocked to learn that in some cases, like mission-critical systems or systems that are critical for human safety or medical equipment, etc., that even this length of downtime is considered too much. In terms of web hosting providers, for example, typical SLAs would fall between 99.99 percent and 99.9 percent. To give you some perspective, 99.99 percent per year SLA would equate to roughly 8 hours and 45 minutes of downtime.  An SLA of 99.9 percent per year comes out to be just over 50 minutes, or under an hour of downtime per year. And obviously, the amount of downtime a company is comfortable with is dependent on their cost of downtime to that company. It really depends on the unique situation of each company and how long they can afford to be down within a given year.

It is clear any downtime experienced by an organization is bad, and most importantly, bad for users and their online experience. However, downtime does not affect all organizations the same. There have been some surveys and studies that have put the cost of downtime per minute to over $5,000, but it really depends on many factors, including industry, size of company, cost of employees, length of downtime, and more, so it could be much lower, or higher, considering all the factors.