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What is an SLA?

What is an SLA?

A Service Level Agreement (SLA) is a written document that defines a set of services and the parameters for their delivery.

SLAs can exist between departments within a single organization. For instance, an IT provider might have an SLA that establishes the ‘services’ marketing owes sales each month (e.g., a certain number of qualified leads). However, an SLA most commonly refers to a written contract between a service provider and a client. Our focus here will be on SLAs that Managed Service Providers (MSPs) use with their clients.

If you’re an MSP, the purpose of your SLA is to define the type and scope of services you are committed to offering a client. In addition, your SLA should clearly establish the following items:

  • Desired/Expected Performance Levels (and attendant metrics)
  • Service Availability
  • Customer Responsibilities
  • Consequences of Breach

This list is not exhaustive, and we recommend that you look into working with legal counsel when crafting SLAs for your own organization. There are also a variety of templates available online. These can be helpful, but it’s important not to neglect the unique features of your business when drafting an SLA. After all, your SLA is the cornerstone of your documentation, in that it sets down a clear picture of what customers can expect from you. If your SLA is generic, misinterpretations — whether willful or not — can arise between you and your customers. If it’s unrealistic, you’re just setting your MSP up for failure.

So, when drafting an SLA, aim for two things: clarity and accuracy. You want to tell your customers exactly which services you’re providing, how you’ll be providing them, when you’ll be providing them, etc. Define your services clearly. But it’s just as important that the services you define are in fact your services — i.e., the services you know your MSP can deliver, not the ones you hope it can. It’s better to set modest goals in your SLA and then exceed them than it is to set ambitious ones and fall short.

Let’s take a closer look at SLAs. This article will help you understand what the standard components of an SLA are, what the purpose of each component is, and why your MSP needs a good SLA to operate at its best.

Standard Components of an SLA

Type and Scope of Services

What services can your client expect from your MSP? Your SLA needs to answer this question with total clarity. In fact, it can be a good idea to not only list and describe the services you’re offering, but also, certain exclusions. For instance, if you have reasonable grounds to believe that a particular client is expecting a service that your MSP is not willing to provide, establishing that the service in question is not your responsibility can help head off disputes further down the line. Of course, documentation should always be a supplement — and never a substitute — for verbal communication.

Defining your services in a precise fashion is a key part of managing client expectations; if you do not give your clients a clear idea of what they should expect, their expectations of your MSP can quickly outpace your capacities and become unmanageable.

Desired/Expected Performance Levels

Your SLA should define metrics for measuring service quality. Performance metrics in your SLA give your team performance levels to shoot for, and your clients clear standards by which to hold your MSP accountable. You can set up individual metrics for particular services, as well as more general metrics that reflect your MSP’s performance across multiple services and contexts. Your key performance indicators (KPIs) are core metrics that monitor the overall health of your business.

The metrics in your SLA should establish baseline performance levels that you’re confident your MSP can reliably achieve. In other words, set the bar at a realistic height. It’s important that you share your metrics with your clients, either through an online portal or through some other means, to underscore the value of your services. You can hardly utilize your metrics to that end if they reveal consistent failures to meet your own standards of service delivery.

Although showcasing your metrics can be a powerful business tactic, be careful not to give your numbers too much weight. Remember, achieving KPIs is not synonymous with “providing excellent service” or “making your clients happy.” There are aspects of your service that your metrics don’t capture, and it’s entirely possible to provide service that honors your SLA and still comes up short in some other respect. Metrics are useful for assessing service quality, but they’re not the whole story. And, at the end of the day, there’s no substitute for talking to your clients directly and taking their feedback seriously.

Service Availability

Your clients need to know when they can expect to receive support from your MSP. Include your support hours in your SLA, along with any scheduled maintenance, holidays, and other interruptions to service. Most MSPs give uptime guarantees as a percentage. When defining your MSP’s availability, explain in unambiguous language how your support hours relate to your response times, which are themselves an important component of your MSP’s service availability.

Many MSPs use a tiered system for response time guarantees. Tiers represent levels of urgency, with more urgent tickets receiving faster response times. You can look at how other MSPs do things to get ideas, but at the end of the day, the response times you promise your clients need to be what your MSP is capable of achieving on a regular basis. It can be tempting to promise dazzlingly speedy response and resolution times to win a new client, but if you don’t think your desk can reliably respond to critical

issues within 4 hours, don’t make that promise — even if it means losing a potential client. Remember: a dissatisfied and disappointed customer does more harm to your MSP business than failing to close a prospect.

Customer Responsibilities

Your SLA should clarify not only what your MSP owes clients, but what clients owe your MSP. What are their responsibilities? When they have a problem, how should they go about reporting it to you? Be specific. Should they call or email? Does it depend on the severity of their issue? What about your clients’ IT environments — do they need to be up to date in certain respects?

There’s room for negotiation when it comes to finalizing an SLA with a particular client, but make sure to arrive at clear expectations that will allow both parties to benefit from accountability.

Consequences of Breach

Your MSP should of course strive to meet — or exceed — the standards set down in your SLA, but things happen. Even the best MSPs can deviate from their contracts from time to time. What’s important is that you have a system in place for compensating clients in the event of a service failure. A popular approach among MSPs is to provide clients with service credits. But whatever method you adopt, it’s vital that you explain in your SLA exactly how your system of remediation works. If you wish to give out service credits as compensation for service failures, spell out how the service credits will be calculated and distributed. Pick a system that’s fair and stick to it.

Also worth including in your SLA is a “force majeure” clause. The purpose of such a clause is to suspend standard obligations and penalties in times of extraordinary circumstances, such as a natural disaster or an act of terrorism.

The Importance of SLAs to Your MSP

As an MSP, your business depends crucially on recurring revenue generated by long-term clients. In short, you need to build strong, lasting relationships with the people to whom you are providing IT services. A good SLA sets a tone of trust and accountability, establishes your commitment to professionalism, and emphasizes the centrality of transparency and clear communication to how your MSP functions. All of these things provide a solid foundation on which to build healthy and fruitful business partnerships with clients.

Having an SLA and honoring it consistently can go a long way toward preventing unpleasant disputes with your clients, but when tensions do arise, your SLA can serve as a critical de-escalation tool. When your commitments and agreements with clients are written down in clear, unambiguous language, you have something objective and concrete you can point to when emotions are running high. You don’t want to ‘weaponize’ your SLA and use it to disregard your clients’ experiences, but in times of conflict —especially conflict that reaches the level of a legal dispute — protecting your MSP is imperative, and your SLA can help shield you from costly and time-consuming battles with dissatisfied clients.

Finally, a word on how to approach writing SLAs for your MSP. Firstly, focus on getting your “Master SLA” ironed out. This will serve as the template from which you construct specific SLAs for individual

clients. A good Master SLA will include the nuts and bolts of your business, and will be easy to alter to fit the unique needs of different clients.

When writing SLAs for different clients, keep their unique needs in mind, as well as the condition of their IT infrastructures. Again, “under-promise and over-deliver” should be your guiding principle when drafting specific components of an SLA.

You also want to make sure you train your staff thoroughly on the protocols and procedures contained in your SLA. When everyone on your team knows what your SLA lays out, you can all sing from the same sheet of music and operate more efficiently and cohesively to secure client satisfaction and build your brand.

Concluding Thoughts

A mature MSP needs robust documentation, which starts with an effective SLA. Your SLA contains all of the important information about your service delivery, and plays a key role in setting and managing client expectations. When you take the time to craft a detailed and comprehensive SLA, you end up saving many hours — and headaches — in the long run. However, even the best SLA can’t prevent client dissatisfaction altogether, which makes it all the more vital that your SLA defines your services with the utmost clarity. In the unfortunate event of a legal dispute with a client, you want an SLA without unnecessary vagueness, because the more ‘wiggle room’ there is, the more an angry client (and their lawyers) can leverage your SLA against you.

Here at The 20, we work with the law firm Ciardi Ciardi & Astin to ensure that our MSP members’ SLAs pass muster, even under aggressive scrutiny. We recommend thinking seriously about consulting with legal counsel to help you draft your SLAs, or to shore up SLAs that you’ve already written. In our litigious age, you really can’t be too careful.

Drafting SLAs and other critical documents for your MSP can be intimidating. The 20 is a group of MSPs who work together to conquer the ‘business side’ of IT. With our guidance and the collective expertise of our community of IT pros, you can navigate the challenges of growing your business with confidence and a proven model for success. Get in touch with us today to learn how we can help.