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SLA — Service Level Agreement

What is an SLA?

A popular industry analyst firm defines a Service Level Agreement (SLA) as setting the expectations between the service provider and the customer and describes the products or services to be delivered, the single point of contact for end-user problems, and the metrics by which the effectiveness of the process is monitored and approved.

SLAs are a critical component of service delivery and management over specified time frames that enable better customer support. Service management tools are configured to provide performance reports and notifications in the case of an SLA breach. Helping enterprises conduct more effective identification of the problem areas.

3 Types of SLAs

The more common types of SLAs are: customer, service, and multi-level service-level agreements.

A customer SLA is created between a service provider and its customers. It can also be referred to as an external service agreement. In a customer-based SLA, a service provider and its customer reach a negotiated agreement on the services that will be provided and typically includes:

  • specific details of the service expected by the customer
  • provisions of the service availability, such as uptime
  • standards for each level of service
  • each party's responsibilities
  • escalation procedures for service desks and/or help desks
  • terms for cancellation of the service
  • failures to meet SLAs such as service credits

A service-based SLA is built around providing a common specific service to all customers; for example, a Service (SaaS) provider may offer an SLA for providing a specific service to multiple departments at an organization. 

A multi-level SLA is a customizable agreement that allows for the integration of multiple conditions into the same agreement to deliver an overall service to an organization. The multi-level SLA is typically divided into different areas: corporate (which is focused on the high-level details of the agreement, including how gaps in service levels will be handled), customer (which defines different service levels relevant to different departments or customers within an organization), service (which defines different services to the whole customer base), and issue (which defines the associated timelines and responses for different levels of issues or helpdesk tickets). They can also provide different price ranges for products that dictate different service levels. These different levels of service are then layered into the multi-level SLA.

Who Needs SLAs?

A customer SLA is a foundational agreement between an enterprise and its service providers, establishing fiscal responsibility and mutual trust. A customer SLA creates a mutual understanding between two parties that sets service expectations on both sides.

SLAs can benefit an IT team's relationship with service providers by minimizing technical and business risks, opening communications, and improving trust. By specifying what happens in the event of an SLA breach, they reduce uncertainty. For example, defining each public cloud service provider's responsibility is key to maintaining diverse IT network connectivity.

A Service Level Agreement (SLA) is used in helping enterprises manage their engagement with service providers; for example, by constantly reviewing and tracking SLAs as a part of communication and maintenance with cloud service providers. Enterprises can develop a shared understanding of how each service provider impacts their network operations and security posture. It also makes it much easier to isolate and address issues.

How Do SLAs Work?

Verifying the service provider's delivery levels is necessary to enforce a customer service-level agreement. If the SLA is not adequately met, an enterprise customer may be able to claim the compensation agreed to in the service contract.

For service providers to proactively keep their customers in the loop on how they achieve SLA performance requirements, service providers typically make their service-level statistics accessible through online dashboards. This reporting transparency enables customers to track in detail whether or not the proper service level is being maintained at each step of the service workflow. If they find it is not, the SLA dashboard may also allow their customers to see if they're eligible for compensation and will clarify the service levels that should be tracked and explain how to track them.

The Challenges of SLA Management

Tracking SLAs can be demanding, and changing them is even more challenging. SLAs seldom change or evolve at the same pace the business requirements do. A service provider may have established an SLA years ago, so the workflow to make the change is not a fast, easy process. 

Moreover, there may be little flexibility in reporting. Even though many unique circumstances influence SLA attainment, SLA reports aren't often easily set up for troubleshooting. So a customer may not even know if their service provider complies with the SLA. So, in some cases, detailed reporting may not be available for making changes to optimize the service offered.


Google distinguishes between an SLO and an SLA as follows:

  • Service Level Objectives (SLOs) are the targeted service levels typically expressed as a percentage of availability over some time.
  • Service Level Agreements (SLAs) are formal agreements that outline the level of service enterprises can expect from service providers. The provider can have significant consequences, often financial reimbursements, if these promises are not met.

An SLA typically involves an assurance made by a service provider to an enterprise customer using a service, such as those offered by an ISP that provides Internet connectivity, and should meet a certain level of availability over a certain period. If it fails to meet the availability requirement, then the service provider might have to pay some penalty to the enterprise customer. The penalty is typically in the form of service credits.

SLOs are similar to SLAs but refer to the performance or reliability targets as specific metric values agreed to within an enterprise.

Why Real-time SLA Monitoring Tools Are Needed

Although an SLA is an excellent expectations-managing mechanism, they should not be viewed as a remedy for poor-performing applications or underperforming networks. However, if monitored correctly, they can represent a key step toward improved digital experience, but that can only be achieved with real-time visibility into the entire service delivery chain, associated providers, and dependencies.  

ThousandEyes provides SaaS application and network provider outage detection, based on collective intelligence data, that enables IT operations to:

  • Identify, escalate, and resolve outage incidents for key service providers, including ISP, public cloud, and edge service provider networks, as well as SaaS applications to facilitate the productivity of your hybrid workforce
  • Visualize and correlate outages to user experiences
  • Provide input to their service providers for SLA governance management and optimization by using trusted, third-party data
  • Monitor SLAs and benchmark the performance of digital services over time to make better vendor decisions

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