Well Defined SLAs -- A Must for Enterprises
By Sharmee Roy
Mumbai, Jun 2, 2008

A Service Level Agreement (SLA) is pivotal for any organization for bringing in more clarity in the communication between the user and the service provider, as well as to ensure effective engagements for any service or product delivery.

It provides meaningful information so companies can meet their key targets. Also, it clearly defines the level of services expected between 2 parties and ensures these targets are met within expected standards and budgeted costs.

Dissecting SLAs -- What a typical SLA should cover

Says Daya Prakash, CIO of LG Electronics India (LGEIL), "An SLA should essentially have what is expected of each other (the 2 parties involved), the criteria to evaluate the success, the periodicity of the evaluation, etc."

An effective SLA must incorporate 2 sets of elements -- service elements and management elements. The service elements must clearly mention details such as the services provided (and perhaps certain services not provided, if customers might reasonably assume the availability of such services), conditions of service availability, service standards, such as the timeframes within which services will be provided, the responsibilities of both parties, cost in relation to service tradeoffs, and escalation procedures.

On the management side, it should mention how service effectiveness will be tracked, how information about service effectiveness will be reported and addressed, how service-related disagreements will be resolved, and how the parties will review and revise the agreement.

Sanjay Mehta, CEO of MAIA Intelligence echoes this opinion. Mehta points out that the success of the formal relationship between an Application Service Provider (ASP) and its customers fundamentally depends on a strong SLA. "It's important because it sets boundaries and expectations for both the vendor and its customers," says Mehta.

The business benefits of SLAs

SLAs help businesses to easily analyze underlying factors and make corrections. They allow companies to optimize resources cost effectively and provide an edge in a highly competitive business environment, by allowing one to deliver business services consistently, at minimum cost.

However, to formulate a perfect SLA is no easy task as both the parties should be clear on the expectations and what can be delivered. Increasingly, the ability to govern and deliver according to pre-defined agreements is becoming a competitive requirement.

Mehta adds, "In spite of the fact that it's an excellent mechanism for managing expectations, it's important to understand what can be realistically accomplished beforehand. Unfortunately, some people view an SLA as a complaint-stifling mechanism or a quick fix to a troubled relationship; however, using it for such purpose creates more problems than it solves."

While defining an SLA, realistic and measurable commitments are important. Performing as promised is important, but swift and well communicated resolution of issues is even more important. A good SLA addresses key aspects like what the provider is promising, how the provider will deliver on those promises, who will measure delivery and how, what happens if the provider fails to deliver as promised, how the SLA will change over time.

To sum it, a well defined SLA should ensure ASPs promise only what is possible to deliver, while delivering what is promised. As Prakash puts it, an SLA should be 'SMART' -- where S stands for specific, M for measurable, A for achievable, R for realistic, and T for time.


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