Service Level Agreement
Encyclopedia
A service-level agreement is a part of a service contract
where the level of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery time (of the service) or performance. As an example, internet service provider
s will commonly include service level agreements within the terms of their contracts with customers to define the level(s) of service being sold in plain language terms. In this case the SLA will typically have a technical definition in terms of mean time between failures (MTBF), mean time to repair
or mean time to recovery
(MTTR); various data rates; throughput; jitter
; or similar measurable details.
The SLA records a common understanding about services, priorities, responsibilities, guarantees, and warranties. Each area of service scope should have the "level of service" defined. The SLA may specify the levels of availability, serviceability, performance, operation, or other attributes of the service, such as billing. The "level of service" can also be specified as "target" and "minimum," which allows customers to be informed what to expect (the minimum), while providing a measurable (average) target value that shows the level of organization performance. In some contracts, penalties may be agreed upon in the case of non-compliance of the SLA (but see "internal" customers below). It is important to note that the "agreement" relates to the services the customer receives, and not how the service provider delivers that service.
SLAs commonly include segments to address: a definition of services, performance measurement, problem management, customer duties, warranties, disaster recovery, termination of agreement.
SLAs have been used since late 1980s by fixed line telecom operators
as part of their contracts with their corporate customers. This practice has spread such that now it is common for a customer to engage a service provider by including a service level agreement in a wide range of service contracts in practically all industries and markets. Internal departments (such as IT, HR, and real estate) in larger organizations have adopted the idea of using service-level agreements with their "internal" customers — users in other departments within the same organization. One benefit of this can be to enable the quality of service to be benchmarked with that agreed to across multiple locations or between different business units. This internal benchmarking can also be used to market test and provide a value comparison between an in-house department and an external service provider.
Service level agreements are, by their nature, "output" based – the result of the service as received by the customer is the subject of the "agreement." The (expert) service provider can demonstrate their value by organizing themselves with ingenuity, capability, and knowledge to deliver the service required, perhaps in an innovative way. Organizations can also specify the way the service is to be delivered, through a specification (a service level specification) and using subordinate "objectives" other than those related to the level of service. This type of agreement is known as an "input" SLA. This latter type of requirement is becoming obsolete as organizations become more demanding and shift the delivery methodology risk on to the service provider.
is a call center or service desk
. Metrics commonly agreed to in these cases include:
Uptime
is also a common metric, often used for data services such as shared hosting, virtual private server
s and dedicated servers. Common agreements include percentage of network uptime, power uptime, number of scheduled maintenance window
s, etc.
Many SLAs track to the Information Technology Infrastructure Library
specifications when applied to IT services.
) to explicitly state its own service level agreement on its Web site. The US Telecommunications Act of 1996
does not expressly mandate that companies have SLAs, but it does provide a framework for firms to do so in Sections 251 and 252. Section 252(c)(1) for example (“Duty to Negotiate”) requires that ILECs negotiate in good faith regarding things like resale, access to rights-of-way, and so forth.
s. It allows authors to specify the performance metrics associated with a web service application, desired performance targets, and actions that should be performed when performance is not met.
WSLA Language Specification, version 1.0 was published by IBM on January 28, 2001.
(alternatively, grid computing
or service-oriented architecture
) uses the concept of service level agreements to control the use and receipt of computing resources from, and by, third parties.
Any SLA management strategy considers two well-differentiated phases: the negotiation of the contract and the monitoring of its fulfilment in real-time. Thus, SLA Management encompasses the SLA contract definition: basic schema with the QoS (quality of service) parameters; SLA negotiation; SLA monitoring; and SLA enforcement—according to defined policies.
The main point is to build a new layer upon the grid, cloud, or SOA
middleware able to create a negotiation mechanism between providers and consumers of services. An example is the European Union–funded Framework 7 research project, SLA@SOI, which is researching aspects of multi-level, multi-provider SLAs within service-oriented infrastructure and cloud computing.
The underlying benefit of cloud computing is shared resources, which is supported by the underlying nature of a shared infrastructure environment. Thus, service level agreements span across the cloud and are offered by service providers as a service based agreement rather than a customer based agreement. Measuring, monitoring and reporting on cloud performance is based upon an end user experience or the end users ability to consume resources. The downside of cloud computing, relative to SLAs, is the difficultly in determining root cause for service interruptions due to the complex nature of the environment.
involves transfer of responsibility from an organization to a supplier. The management of this new arrangement is through a contract that may include a service level agreement. The contract may involve financial penalties and the right to terminate if SLAs metrics are consistently missed. Setting, tracking, and managing SLAs is an important part of the outsourcing relationship management
(ORM) discipline. It is typical that specific SLAs are negotiated up front as part of the outsourcing contract, and they are utilized as one of the primary tools of outsourcing governance.
Service contract
A service contract can refer to the following, among others:*extended warranty*Service-oriented_architecture#Service_contract*Water service contract*Metropolitan Bus Service Contract*Contract for services...
where the level of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery time (of the service) or performance. As an example, internet service provider
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
s will commonly include service level agreements within the terms of their contracts with customers to define the level(s) of service being sold in plain language terms. In this case the SLA will typically have a technical definition in terms of mean time between failures (MTBF), mean time to repair
Mean time to repair
Mean time to repair is a basic measure of the maintainability of repairable items. It represents the average time required to repair a failed component or device. Expressed mathematically, it is the total corrective maintenance time divided by the total number of corrective maintenance actions...
or mean time to recovery
Mean time to recovery
Mean time to recovery is the average time that a device will take to recover from any failure. Examples of such devices range from self-resetting fuses , up to whole systems which have to be repaired or replaced.The MTTR would usually be part of a maintenance contract, where the user would pay...
(MTTR); various data rates; throughput; jitter
Jitter
Jitter is the undesired deviation from true periodicity of an assumed periodic signal in electronics and telecommunications, often in relation to a reference clock source. Jitter may be observed in characteristics such as the frequency of successive pulses, the signal amplitude, or phase of...
; or similar measurable details.
Overview
A service-level agreement is a negotiated agreement between two parties, where one is the customer and the other is the service provider. This can be a legally binding formal or an informal "contract" (for example, internal department relationships). Contracts between the service provider and other third parties are often (incorrectly) called SLAs – because the level of service has been set by the (principal) customer, there can be no "agreement" between third parties; these agreements are simply a "contract." Operational-level agreements or OLAs, however, may be used by internal groups to support SLAs.The SLA records a common understanding about services, priorities, responsibilities, guarantees, and warranties. Each area of service scope should have the "level of service" defined. The SLA may specify the levels of availability, serviceability, performance, operation, or other attributes of the service, such as billing. The "level of service" can also be specified as "target" and "minimum," which allows customers to be informed what to expect (the minimum), while providing a measurable (average) target value that shows the level of organization performance. In some contracts, penalties may be agreed upon in the case of non-compliance of the SLA (but see "internal" customers below). It is important to note that the "agreement" relates to the services the customer receives, and not how the service provider delivers that service.
SLAs commonly include segments to address: a definition of services, performance measurement, problem management, customer duties, warranties, disaster recovery, termination of agreement.
SLAs have been used since late 1980s by fixed line telecom operators
Telephone company
A telephone company is a service provider of telecommunications services such as telephony and data communications access. Many were at one time nationalized or state-regulated monopolies...
as part of their contracts with their corporate customers. This practice has spread such that now it is common for a customer to engage a service provider by including a service level agreement in a wide range of service contracts in practically all industries and markets. Internal departments (such as IT, HR, and real estate) in larger organizations have adopted the idea of using service-level agreements with their "internal" customers — users in other departments within the same organization. One benefit of this can be to enable the quality of service to be benchmarked with that agreed to across multiple locations or between different business units. This internal benchmarking can also be used to market test and provide a value comparison between an in-house department and an external service provider.
Service level agreements are, by their nature, "output" based – the result of the service as received by the customer is the subject of the "agreement." The (expert) service provider can demonstrate their value by organizing themselves with ingenuity, capability, and knowledge to deliver the service required, perhaps in an innovative way. Organizations can also specify the way the service is to be delivered, through a specification (a service level specification) and using subordinate "objectives" other than those related to the level of service. This type of agreement is known as an "input" SLA. This latter type of requirement is becoming obsolete as organizations become more demanding and shift the delivery methodology risk on to the service provider.
Service level agreements at different levels
SLAs are also defined at different levels:- Customer-based SLA: An agreement with an individual customer group, covering all the services they use. For example, an SLA between a supplier (IT service provider) and the finance department of a large organization for the services such as finance system, payroll system, billing system, procurement/purchase system, etc.
- Service-based SLA: An agreement for all customers using the services being delivered by the service provider. For example:
- A car service station offers a routine service to all the customers and offers certain maintenance as a part of offer with the universal charging.
- A mobile service provider offers a routine service to all the customers and offers certain maintenance as a part of offer with the universal charging
- An email system for the entire organization. There are chances of difficulties arising in this type of SLA as level of the services being offered may vary for different customers (for example, head office staff may use high-speed LAN connections while local offices may have to use a lower speed leased line).
- Multilevel SLA: The SLA is split into the different levels, each addressing different set of customers for the same services, in the same SLA.
- Corporate-level SLA: Covering all the generic service level management (often abbreviated as SLM) issues appropriate to every customer throughout the organization. These issues are likely to be less volatile and so updates (SLA reviews) are less frequently required.
- Customer-level SLA: covering all SLM issues relevant to the particular customer group, regardless of the services being used.
- Service-level SLA: covering all SLM issue relevant to the specific services, in relation to this specific customer group.
Common metrics
Service level agreements can contain numerous service performance metrics with corresponding service-level objectives. A common case in IT service managementIT Service Management
IT service management is a discipline for managing information technology systems, philosophically centered on the customer's perspective of IT's contribution to the business. ITSM stands in deliberate contrast to technology-centered approaches to IT management and business interaction...
is a call center or service desk
Service Desk (ITSM)
A Service Desk is a primary IT service called for in IT service management as defined by the Information Technology Infrastructure Library . It is intended to provide a Single Point of Contact to meet the communication needs of both Users and IT employees. But also to satisfy both Customer and IT...
. Metrics commonly agreed to in these cases include:
- ABA (Abandonment Rate): Percentage of calls abandoned while waiting to be answered.
- ASA (Average Speed to Answer): Average time (usually in seconds) it takes for a call to be answered by the service desk.
- TSF (Time Service Factor): Percentage of calls answered within a definite timeframe, e.g., 80% in 20 seconds.
- FCR (First-Call Resolution): Percentage of incoming calls that can be resolved without the use of a callback or without having the caller call back the helpdesk to finish resolving the case.
- TAT (Turn-Around Time): Time taken to complete a certain task.
Uptime
Uptime
Uptime is a measure of the time a machine has been up without any downtime.It is often used as a measure of computer operating system reliability or stability, in that this time represents the time a computer can be left unattended without crashing, or needing to be rebooted for administrative or...
is also a common metric, often used for data services such as shared hosting, virtual private server
Virtual private server
Virtual private server is a term used by internet hosting services to refer to a virtual machine. The term is used for emphasizing that the virtual machine, although running in software on the same physical computer as other customers' virtual machines, is functionally equivalent to a separate...
s and dedicated servers. Common agreements include percentage of network uptime, power uptime, number of scheduled maintenance window
Maintenance window
In information technology and systems management, a maintenance window is a period of time designated in advance by the technical staff, during which preventive maintenance that could cause disruption of service may be performed.- High availability services :...
s, etc.
Many SLAs track to the Information Technology Infrastructure Library
Information Technology Infrastructure Library
The Information Technology Infrastructure Library , is a set of good practices for IT service management that focuses on aligning IT services with the needs of business. In its current form , ITIL is published in a series of five core publications, each of which covers an ITSM lifecycle stage...
specifications when applied to IT services.
Backbone Internet providers
It is not uncommon for an Internet backbone service provider (or network service providerNetwork service provider
A network service provider is a business or organization that sells bandwidth or network access by providing direct backbone access to the Internet and usually access to its network access points...
) to explicitly state its own service level agreement on its Web site. The US Telecommunications Act of 1996
Telecommunications Act of 1996
The Telecommunications Act of 1996 was the first major overhaul of United States telecommunications law in nearly 62 years, amending the Communications Act of 1934. This Act, signed by President Bill Clinton, was a major stepping stone towards the future of telecommunications, since this was the...
does not expressly mandate that companies have SLAs, but it does provide a framework for firms to do so in Sections 251 and 252. Section 252(c)(1) for example (“Duty to Negotiate”) requires that ILECs negotiate in good faith regarding things like resale, access to rights-of-way, and so forth.
WSLA
A web service level agreement (WSLA) is a standard for service level agreement compliance monitoring of web serviceWeb service
A Web service is a method of communication between two electronic devices over the web.The W3C defines a "Web service" as "a software system designed to support interoperable machine-to-machine interaction over a network". It has an interface described in a machine-processable format...
s. It allows authors to specify the performance metrics associated with a web service application, desired performance targets, and actions that should be performed when performance is not met.
WSLA Language Specification, version 1.0 was published by IBM on January 28, 2001.
Cloud computing
Cloud computingCloud computing
Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility over a network ....
(alternatively, grid computing
Grid computing
Grid computing is a term referring to the combination of computer resources from multiple administrative domains to reach a common goal. The grid can be thought of as a distributed system with non-interactive workloads that involve a large number of files...
or service-oriented architecture
Service-oriented architecture
In software engineering, a Service-Oriented Architecture is a set of principles and methodologies for designing and developing software in the form of interoperable services. These services are well-defined business functionalities that are built as software components that can be reused for...
) uses the concept of service level agreements to control the use and receipt of computing resources from, and by, third parties.
Any SLA management strategy considers two well-differentiated phases: the negotiation of the contract and the monitoring of its fulfilment in real-time. Thus, SLA Management encompasses the SLA contract definition: basic schema with the QoS (quality of service) parameters; SLA negotiation; SLA monitoring; and SLA enforcement—according to defined policies.
The main point is to build a new layer upon the grid, cloud, or SOA
Service-oriented architecture
In software engineering, a Service-Oriented Architecture is a set of principles and methodologies for designing and developing software in the form of interoperable services. These services are well-defined business functionalities that are built as software components that can be reused for...
middleware able to create a negotiation mechanism between providers and consumers of services. An example is the European Union–funded Framework 7 research project, SLA@SOI, which is researching aspects of multi-level, multi-provider SLAs within service-oriented infrastructure and cloud computing.
The underlying benefit of cloud computing is shared resources, which is supported by the underlying nature of a shared infrastructure environment. Thus, service level agreements span across the cloud and are offered by service providers as a service based agreement rather than a customer based agreement. Measuring, monitoring and reporting on cloud performance is based upon an end user experience or the end users ability to consume resources. The downside of cloud computing, relative to SLAs, is the difficultly in determining root cause for service interruptions due to the complex nature of the environment.
Outsourcing
OutsourcingOutsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
involves transfer of responsibility from an organization to a supplier. The management of this new arrangement is through a contract that may include a service level agreement. The contract may involve financial penalties and the right to terminate if SLAs metrics are consistently missed. Setting, tracking, and managing SLAs is an important part of the outsourcing relationship management
Outsourcing relationship management
Outsourcing relationship management is the business discipline widely adopted by companies and public institutions to manage one or more external service providers as part of an outsourcing strategy...
(ORM) discipline. It is typical that specific SLAs are negotiated up front as part of the outsourcing contract, and they are utilized as one of the primary tools of outsourcing governance.
See also
- SLA@SOI FP7 Project
- Operational Level Agreement (OLA)
- IT Cost TransparencyIT Cost TransparencyIT cost transparency is a new category of information technology management software and systems and that enables enterprise IT organizations to model and track the total cost to deliver and maintain the IT Services they provide to the business. It is increasingly a task of management accounting...
- Network monitoringNetwork monitoringThe term network monitoring describes the use of a system that constantly monitors a computer network for slow or failing components and that notifies the network administrator in case of outages...
External Links
- Service Level Agreement (SLA) S-Cube Knowledge Model