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What are Service Level Agreements?

By Garry Crystal
Updated May 16, 2024
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Service level agreements are documented agreements between a business and someone using the business's services. Service level agreements create a common understanding between the two of what each can expect from the other. This can include expectations regarding priorities, services and responsibilities.

Service level agreements are an effective communications tool. They help both parties involved communicate more efficiently with each other. Service level agreements can also help prevent conflicts or disputes, as both parties are aware of what is expected from each other. If there are any conflicts, service level agreements can help to resolve them.

One of the most important benefits of the service level agreement is that it can be updated. It is not a dead-end document. Both parties can review the document from time to time and make changes that are mutually agreeable. These can include changing service priorities and taking growth of business into account.

To be an effective business tool, service level agreements must incorporate both management and service elements into the document. Service elements include service standards, such as a timeframe for when services will be delivered and the cost of services. It should also include the responsibilities of both parties, as well as escalation procedures should they occur. The management elements focus on how service disagreements will be resolved and how service effectiveness will be checked. Other factors for the management side to consider include how both parties will review and revise the agreement, and how information regarding service effectiveness will be addressed and reported.

The process of establishing, planning and implementing service level agreements can take many months. It has to be undertaken realistically. There is no point to promising services in the agreement without first knowing that they are feasible. The agreement has to be carefully built upon and does not just include the business and the service provider. It also has to take into account any customers who may be the third party in the agreement.

Service level agreements should never be seen as just a way to stop complaints. This can backfire, and the complainer may start complaining about the agreement itself. Service level agreements should be a collaborative tool to which both parties can refer to if they feel something has not been working to their liking. If this happens, the agreement can act as a base to be built upon and extended to keep both parties happy.

Before the agreement is even written, there are a few steps that should be taken by both parties involved. Gather background information in order to have a better awareness of both parties. Ensure both parties are happy with the points set out in the agreement and establish ground rules towards the working partnership. Once these rules have been set and a successful agreement has been reached, the agreement can be written and built upon in the future.

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