Home » What is an SLA? 7 Best Practices for a Service Level Agreement

What is an SLA? 7 Best Practices for a Service Level Agreement

Creating service level agreements can be tedious and boring for a managed service provider, but it is one of the most crucial parts of a business-customer relationship. Whenever an SLA agreement is written, it can help your MSP business make sure that the relationship with the customers runs smoothly. A perfectly drawn-out SLA agreement can improve what your customers think about your brand and minimize the number of issues.

If you don’t know what SLAs are, how to make them, and what are the best practices, then you’re at the right place. In this guide, we’ll cover all the important aspects of a service level agreement. Let’s start.

What are SLAs?

An MSP SLA is a written agreement between the business and the customer. An SLA dictates the expectations from the business-customer relationship that have been contractually agreed upon. This covers several things, for example, expected response times for service requests submitted by the customers. Different relationships require different SLAs. Almost all the service level agreements are broken down into several categories based on the level of priority of the submitted support request. They also cover a minimum response time and maximum resolution time.

Let’s say a server outage that affects key operations of your clients is considered a “priority one” issue. In such situations, an MSP is contractually obligated to meet the minimum response time. In most cases, the minimum response time is 1 hour and the maximum resolution time is 8 hours.

Importance of SLAs

Service level agreements are so much more than a list of rules that must be followed. They’re a vital part of protecting your business and keeping customers satisfied with your service.

Here are some of the reasons why SLAs are so important for a Managed Service Provider.

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1. SLAs Establish Boundaries

As a service provider, an MSP is more than likely responsible for the customer’s vital hardware and software. However, there will be some systems that won’t be your responsibility. This includes line-on-business applications with their own particular service contracts. SLAs help in figuring out the boundaries.

2. SLAs Help In Understanding Accountability

Writing an SLA helps you manage customer expectations and point out accountability by giving your customers an outline of where the responsibilities begin and end. This prevents your customers from unfairly holding you accountable for things that aren’t your fault.

3. SLAs Save Time

A customer always seeks over-the-top service and effort. They’ll always have unrealistic expectations of you, and SLAs help in clarifying the time you have to allot to a particular client. It can help the client understand which days and hours you’ve agreed to provide support.

4. SLAs Can Prevent Disputes

Every business and customer will eventually have disputes, it’s a natural part of the business-customer relationship. But a well-written SLA can help in resolving disputes. The advantage also depends on your response time and your efforts to fix the problem. Let’s say a customer is complaining without a fair reason, you can show that your business has been putting in the effort and resolving issues within the agreed time frame.

Best Practices of Writing SLAs

In the end, it all comes down to how well you fulfill the terms of an SLA agreement. So, your efforts will primarily dictate how the customer and business relationship will go. To ensure that you’re writing the best possible SLAs, there are some best practices you should follow:

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1. Set Clear Expectations Around Reporting

It’s vital that your customers have a clear understanding of how to reach them in case of a problem. Every business has its preferred method of contact. Defining this method of contact for customers in the SLA will make sure that no issues go unreported. To avoid any confusion in emergencies, you should do your best to educate your customers about the terminology used in the SLAs.

2. Write Up a Clear Service Definition

Every customer is different, so every contract will be different as well. You may have some control over some IT assets, and not others. Your SLA should do its best to clarify which assets are covered by the support and which ones are not. Be as specific and clear as you can while defining the terms of the service and the assets that are your responsibilities so your customers can’t hold you accountable when you’re not at fault.

3. Include Realistic Performance Metric Standards

Every SLA you write must include performance metrics, such as device uptime and response times. These numbers are easy to explain to your customers and they give them a clear idea of what to expect. The metrics that you provide should be realistic and should be easy to match.

4. Educate About MTBF/MTTF

MTBF/MTTF is a metric that should be included in your SLA agreement. Most customers aren’t aware of what MTBF/MTTF is, so you’ll also need to educate them about it. MTBF/MTTF is the amount of time that has passed before an error happens. if the system can be repaired, the metric means “Mean time between failures” (MTBF). if the system can’t be repaired, then the metric means “mean time to failure” (MTTF).

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When you include these metrics in your SLA agreement, it helps your customer understand how frequently they may expect issues to naturally occur, and how often they need to be replaced. 

5. Educate About MTTR

MTTR is another crucial metric that you should include in your SLA. MTTR refers to “mean time to repair.” Whenever a system failure happens, the goal is to fix all the issues as soon as possible. MTTR is the time that’s passed between the issue and getting everything fixed. Usually, this number should be incredibly low. The lower the number, the faster you’re able to repair the issues. You should always set realistic expectations for your customers.

6. Outline Customer Responsibilities and MSP Responsibilities

A good SLA should outline the responsibilities of a customer and the MSP. It should also dictate all the responsibilities a customer should assume for their IT environments. This often involves requiring them to follow common practices and procedures sanctioned by you. Let’s say a customer installs bad apps or engages in risky computer behavior, they’ll be held accountable if these acts cause service disruptions.

7. Dictate Customer Compensation

Whenever an SLA is violated in one way or another, the MSP has to pay penalties. The best way to handle this is by adding a clause regarding any violation. This gives your customers assurance that you’ll be doing your best to uphold the agreement. A good SLA agreement usually includes a money-back guarantee for specific violations. Some violations qualify for a 5% discount on the next month’s service fees. But the specific terms depend on your business’s internal rules.