A service level agreement (SLA) sets out what services the supplier is expected to provide and to what standards. The SLA typically forms part of the more detailed supply of services contract between you and your outsourcing partner.
Typical SLAs include:
Read more about supplier service level agreements or see an example of key terms in an ISP service level agreement.
If service providers fail to meet agreed levels of service, SLAs usually provide for compensation, commonly in the form of rebates on monthly service charges.
Identify the most critical parts of the deal and have strict penalties for not meeting these. Build frequent performance reviews into the SLA. Try to build a flexible SLA, so that you can adapt it as your business needs change or new technologies evolve.
Find best practices to help you manage your suppliers.
When entering an outsourcing contract, you should ensure that you're interpreting the contract in the same way as the outsourcing company. This is a long-term partnership and misunderstandings could cause difficulties.
All outsourcing contracts should have an exit clause. You should ideally agree your exit strategy during the formation of the outsourcing contract. A clearly defined exit strategy should help you to avoid difficulties if the relationship with your provider turns sour.
SLAs are complex documents. If in doubt, seek advice from a service management consultant or a commercial lawyer.