Here is a published article that I wrote about SLAs:
* A Simple Template for Service Level Agreements (SLAs) - NCMA CM
Magazine in April 2008
A PRACTICAL AND SIMPLE TEMPLATE
SERVICE LEVEL AGREEMENTS
Level Agreement” (SLA) is a document containing specific contractual service level obligations. A SLA describes the
minimum service performance criteria that a service provider contractually promises to meet while providing a service. It typically also sets out the remedial actions and any liabilities that will take effect if the service provider’s
performance falls below the contractually obligated services level obligations stated in the SLA. The SLA is an essential
sub-component of the larger overall contract between a service buyer-recipient and the service seller-provider. The SLA often
appears as a schedule, exhibit or addendum to a Statement of Work (SOW) under the Master Services Agreement between the service
buyer and the service provider.
Good SLAs are distinguished by clear simple language with a tight focus on business. The benefits of a good SLA, as a management tool for the provision of services, can be substantial.
A good SLA will improve quality, reduce risks, and strengthen relationships.
In my thirty-year contracts management career, I have reviewed,
drafted, and modified many SLAs. One thing I have noticed is that it is very difficult to find a good practical SLA
template that provides a simple outline of the key practical issues to address when initially reviewing, drafting or modifying
a SLA. So, I developed the following practical and simple SLA template that I routinely use as a guide when reviewing, drafting
or modifying a SLA:
SCHEDULE / EXHIBIT / ADDENDUM __________
SERVICE LEVEL AGREEMENT
STATEMENT OF WORK __________________
MASTER SERVICES AGREEMENT
This Service Level Agreement (SLA) is fundamental to the provision of services under the
associated Statement of Work (SOW) _________ issued under the Master Services Agreement (Master Agreement). This SLA essentially
documents and defines the parameters of the services relationship itself between the Client and the Consultant.
PURPOSE: This SLA is a negotiated agreement between the Client and the Consultant
that is incorporated, by this reference, into the applicable SOW _____ under the overall larger Master Agreement. It is designed
to create an agreement on the applicable services, priorities, and responsibilities. The use of this SLA has been designed
by the parties as a “mutual expectations-managing mechanism” with regard to service levels under the applicable SOW of the Master Agreement.
BACKGROUND: To develop this SLA, the parties collaborated by gathering information,
discussing ground rules for working together, developing the SLA document, generating respective buy-in, and completing all
applicable pre-implementation tasks.
DEFINITION OF SLA: This SLA is:
communications tool. The value of this SLA is not just in the final product or service. The very process of
establishing this SLA helps to open-up communications between the parties.
- A conflict-prevention
tool. This SLA helps to avoid or alleviate disputes by providing a shared understanding of needs and priorities
of the parties.
- A living document. This SLA is not a dead-end document consigned to the
file. On a predetermined frequency (______________ ), the parties to this SLA will review the SLA to assess service adequacy
and negotiate adjustments (if necessary and mutually agreeable).
- An “objective basis
for gauging service effectiveness”. This SLA ensures that both parties use the same criteria to evaluate service quality.
IMPORTANT SLA TERMS DESCRIBED IN THIS SLA: The following important terms are described below in this SLA: Stakeholders, Mandatory Outcomes, Minimum Requirements of supplier for each Mandatory Outcome, Minimum
Service Standards, Key Performance Indicators (KPIs) with associated Purpose and Measurement per KPI, and Performance Measurement
IDENTITY OF STAKEHOLDERS: The Client’s Stakeholders are as follows:__________________.
OF THE SERVICES TO BE PERFORMED BY CONSULTANT: The following
services shall be performed by Consultant:_______________________________________________.
The SLA Manager for Client is:_____________________________________________
2. The SLA Manager for Consultant is:__________________________________________
3. Each party to the SLA has appointed its above-stated SLA Manager who will work
with the other party's above-stated SLA Manager to manage the SLA. The SLA Manager's responsibilities of each party
Serving as the point of contact for problems
or concerns related to the SLA itself and the delivery of services described in the SLA.
Maintaining ongoing contact with the other
party's SLA Manager
Serving as the primary point of contact in
the escalation of problems process
Coordinating modifications (if mutually agreed
by the parties) to service delivery and to the SLA itself
Periodically assessing the effectiveness of
mechanisms selected for service tracking and reporting
Planning and coordinating service reviews
Facilitating or participating in conflict
resolution processes regarding service effectiveness
Regularly assessing and reporting on how the
parties can further strengthen their working relationship
Delegating responsibilities to, or seeking
the assistance of, colleagues, subordinates or members of the other party's staff to address issues that may arise under the
Planning training designed to foster a heightened
service attitude, create an enhanced awareness of the elements of high-quality customer service, and provide skills in service
MANAGEMENT REQUIREMENTS ELEMENTS:
The management requirements elements are as follows:
- How service effectiveness will be tracked:___________________________________________
- How information about
service effectiveness will be reported and addressed:________________
- How service-related disagreements and problem-management issues will be resolved:_________
- How the parties will review and revise the SLA (if
so mutually agreed) :____________________
SLA MANDATORY OUTCOMES: Mandatory Outcomes for the
Consultant’s services are as follows:________________________________________________________________________. [Note:
Required Mandatory Outcomes are items such as acceptable/proficient quality services provided in a timely manner, knowledge
shared/reused to achieve consistency without duplication of effort, maximize economies of scale and purchasing leverage, compliance
with Client’s policies/guidelines, retention of key Client staff, acceptable / proficient quality of performance, confidentiality
maintained, and avoidance of conflicts of interest (COI).]
SLA MINIMUM REQUIREMENTS OF CONSULTANT FOR EACH STATED MANDATORY OUTCOME: The Minimum Requirements for the Consultant’s services for each Mandatory
Outcome are as follows:______________________________________________________________________.
[Note: Minimum Requirements
are sub-requirements for each Mandatory Outcome, such as, accuracy, timeliness, quality, technology systems, processes, competitive
fees, good value, Client policies, Client guidelines, retention, succession, confidentiality, and COI.]
SERVICE STANDARDS FOR CONSULTANT: Minimum Service
Standards for the Consultant’s services are as follows: ________________________________________________.
[Note: Mandatory Standards are items such as capability, service skills, managing fees and expenses, timeliness, COI,
understanding Client needs, meeting Client needs, reporting, and resolving service complaints.]
KEY PERFORMANCE INDICATORS (KPIs):
KPIs applicable to the Consultant’s services are as follows:__________________________________________________________________________.
are items such as the following seven (7) factors: (1). knowledge/skills/expertise/results (on-budget, quality of services,
professionalism); (2) matter management / administration (efficient staffing of skills vs. tasks, cost consciousness,
control & reporting, cooperation, organization, planning, productivity, responsiveness, timeliness); (3) use of systems
/ processes and technology (timely detailed accurate plans, progress reporting, budgets, timely detailed error-free invoices,
accurate run-rate financial forecasting, effective communication, sensitivity to schedule & cost, use of processes); (4)
compliance with set goals, procedures, guidelines and policies (timely delivery, securing approval, prompt notice of
significant changes, compliance with procedures, guidelines & policies); (5) teamwork (within Consultant entity, Client
entity, and other contractor entities); (6) cost consciousness and control (willingness to consider discounts,
caps, value-based pricing, award fee agreements, budget vs. spend vs. progress reporting); and (7) Client Stakeholder satisfaction
(sensitivity to wants/needs, anticipation of wants/needs, willing cooperation, resolution of conflicts, understands Client’s
The individual KPIs for the Consultant’s performance will be evaluated
by Client every calendar quarter using the scoring range of 1 (significant improvement needed), 2 (some improvement needed),
3 (acceptable), 4 (consistently effective) or 5 (highly proficient).
MEASUREMENT: Quarterly (or as otherwise agreed-to by
the parties) the Stakeholders will review and report to Consultant on Consultant’s services performance under the applicable
SOW regarding: (1) compliance with Mandatory Outcomes; (2) compliance with Minimum Service Standards; and (3) achieving a
score of #3 (Performance Target) or higher on each of the above seven (7) KPIs.
SLA ASSESSMENTS: In the event the Consultant: (1) fails to comply with the Mandatory Outcomes or (2) fails to comply
with the Minimum Service Standards or (3) achieves less than the Performance Target of a # 3 rating on each of the seven (7)
KPIs, an assessment (fee reduction or fee rebate) will be made against the Consultant and paid to Client as follows:________________________________.
[Note: The SLA specific assessment details will be agreed-to by the parties prior to issuing the SOW and included in
SLA CREDITS: In the event the Consultant: (1) complies with the Mandatory Outcomes, (2) complies
with the Minimum Service Standards, and (3) achieves more than the Performance Target of a # 3 on any one or more of
the seven (7) KPIs, a credit [additional fee payment(s)] will be made by Client to Consultant as follows:_____________________________________________________________.
[Note: The SLA credit details will be agreed-to by the parties prior to issuing the SOW and included in this SLA.]
The parties have executed this SLA on the dates set forth below intending this SLA
to become effective on the Effective Date of the Agreement.
UNDERSTOOD AND AGREED
This simple and practical SLA template is certainly not exhaustive. Every service level commitment
arrangement has some unique aspects that may not be addressed in this template. However, if you routinely use
this practical and simple template as one of several resources when you are initially planning, reviewing, drafting or modifying
a SLA, you will be surprised with the large number of substantive and material service level issues that will be surfaced
for proper resolution.
JOHN (“JOHNNY”) E.
MILLER, a Texas and Missouri attorney, is a contracts management consultant who has worked in contracts management for many
companies in the last 30 years. He is a member of the Greater San Antonio Chapter of NCMA.