A service level agreement (SLA) is a contract between a managed IT services provider (MSP) and its client that outlines both parties' responsibilities. The goal of an SLA is to define and document which IT services the MSP will provide, minimum response time, liability protection for the MSP, payment structure and performance standards the provider is obliged to meet.
An SLA outlines the managed services offered in general terms, establishes metrics for measuring the success of these services and defines how they specifically apply to the client, including which computers and devices are covered.
Service level agreements can vary on a case by case basis. Typically, the most successful and well-crafted SLAs include the following components:
Scope of Services
MSPs should start by defining what products and services they offer. For example, this can include evaluating their strengths and weaknesses surrounding average response times, or the number of technicians they can allocate for product support.
Every MSP SLA should outline which metrics will be used to quantify and report on service levels, and who will be responsible for reporting—the MSP, their client or a third party.
Should any problems arise, an SLA needs to explain how clients should report them to their MSP. This section should also distinguish the varying levels of severity for different types of problems and indicate their response times for each type.
Warranties and Remedies
SLAs should iron out the legal fine points, such as indemnification policies, exclusions and details for handling third-party claims. MSPs should also leverage SLAs to spell out next steps if they fail to meet their obligations.
It takes teamwork from both parties to fulfill client commitments. Thus, an SLA should detail not only the MSP’s responsibilities, but the client’s as well.
An MSP SLA should specify the circumstances under which the MSP or their client can end the relationship. This section should also document the proper procedure, which usually includes advance written notification.
SLAs benefit MSPs in significant ways, such as laying the foundation for their client relationships and, at times, protecting them legally. The following points detail key reasons why MSPs need SLAs.
SLAs outline which services the MSP will provide and deliver. This sets expectations of the client-MSP relationship from the get-go. SLAs are designed to protect the MSP from legal action and ensure that they share a common understanding with their client of what’s expected from both parties, aiming to prevent disputes from arising. Essentially, SLAs are the foundation of any business relationship.
Provide Support for Success
Delivering a strong SLA will help an MSP establish themselves as an integral part of their client’s success, taking more direct responsibility for the client’s systems through proactive network monitoring and managing. This can be accomplished by:
• Identifying what hardware, users, vendors and services are covered, as well as those that are not.
• Clearly documenting the customer's as well as the MSP's roles and responsibilities.
• Accurately representing the customer's existing environment.
• Defining environmental prerequisites for service.
• Establishing a baseline environment.
• Creating a framework to insure the MSP's profitability.
This initial agreement will benefit customers in significant ways, such as:
The purpose of creating SLAs is to prevent inefficiencies and enhance the business relationship, with growth in mind. MSPs should consider the following tips to ensure their SLA is built for scale.
Many MSPs will look to speed through the SLA writing process in as little time as possible so they can focus on what they know and love: technology. However, this will end up costing the MSP more money in the long run—so it’s crucial to take the time to write a well thought out SLA. Otherwise, they’ll be vulnerable to complaints and potential lawsuits down the road.
It’s not worth it to cut corners when producing an MSP SLA. Using a template may help to save some time, but it should not be treated as a substitute for drafting a unique SLA that fits the specific MSP-client business relationship.
Having a lawyer write this type of contract is likely the most cost-efficient route because their expertise ensures MSPs are spending money on the right things. An MSP should have their legal team or attorney review each and every form and document they utilize in their business so that their rights, as well as their customers' rights, are protected.
As businesses change, so do its service requirements. An SLA should not be just a static document. It should be reviewed periodically, specifically if the client's business needs have changed, the technical environment has changed, workloads have changed or metrics, measurement tools and processes have improved.
Fully Managed IT Services—Managed IT services that are coupled with a Network Operations Center (NOC) to proactively monitor systems, resolve issues and perform work with a level of expertise and efficiency unparalleled to other solutions.
Information Technology (IT)—An enterprise solution for storing, transmitting, creating, and using data through computing devices, networks and telecommunications.
IT Service Management (ITSM)—The entirety of activities—directed by policies, organized and structured in processes and supporting procedures—that are performed by an organization to plan, design, deliver, operate and control IT services offered to customers.
Managed IT Services—IT tasks and processes that are fulfilled by a third-party organization.
Managed Services Provider (MSP)—An IT professional (or IT organization) that offers managed IT services.
Master Services Agreement (MSA)—A contract reached between parties in which the parties agree to most of the terms that will govern future transactions or future agreements.
Service Level Agreement (SLA)—A contract between a vendor and a client that specifies what the vendor will furnish, the timeframe in which it will be furnished, and the criteria for measuring vendor success.
Small- and Medium-Sized Business (SMB)—On average, a business or organization that has 100 or fewer employees is considered small; 100-999 employees is medium sized. IT channel partners often seeks SMB organizations as clients.
Software as a Service (SaaS)—Sometimes referred to as “software on demand,” SaaS is a licensing and distribution model that utilizes a subscription basis for access to software that is centrally hosted by its provider and accessed by end users via a client.