Service Level Agreements (SLA)
A service level agreement is a part of a service contract where the level of service is formally defined. A service level agreement is normally a negotiated agreement between two parties wherein one is the customer and the other is the service provider. This can be a legally binding formal or informal "contract". Contracts between the service provider and other third parties are often (incorrectly) called SLAs — because the level of service has been set by the (principal) customer, there can be no "agreement" between third parties; these agreements are simply a "contract." Operating Level Agreements or OLAs, however, may be used by internal groups to support SLAs.
The SLA records a common understanding about services, priorities, responsibilities, guarantees, and warranties. Each area of service scope should have the "level of service" defined. The SLA may specify the levels of availability, serviceability, performance, operation, or other attributes of the service, such as billing. The "level of service" can also be specified as "target" and "minimum," which allows customers to be informed of what to expect (the minimum), while providing a measurable (average) target value that shows the level of performance. In some contracts, penalties may be agreed upon in the case of non-compliance of the SLA. It is important to note that the "agreement" relates to the services the customer receives, and not how the service provider delivers that service.
Service level agreements are, by their nature, "output" based — the result of the service as received by the customer is the subject of the "agreement." The (expert) service provider can demonstrate their value by organizing themselves with ingenuity, capability, and knowledge to deliver the service required, perhaps in an innovative way. Organizations can also specify the way the service is to be delivered, through a specification (a service level specification) and using subordinate "objectives" other than those related to the level of service. This type of agreement is known as an "input" SLA.
See SLA at different levels
