Service Level Agreements

These are negotiated agreements designed to create a common understanding about services, priorities and responsibilities. They form a schedule of an outsource agreement and have contractual implications.

They help the customer to monitor and control the performance of the service received from the supplier against the agreed standards.

Advantages of service level agreement

  • Customers have a greater awareness of the service received and the additional services that can be provided
  • Understanding and trust is created between customer and supplier
  • Service level monitoring is facilitated
  • Greater awareness of cost benefit of services and levels
  • Customer real needs are identified and associated costs made clear
  • Failure reports enable improvements to be readily introduced

Disadvantages of service level agreement

  • Joint drafting of SLAs, negotiation and measurement process can be costly
  • Potential increase in bureaucracy
  • Time wasted if clear goals and objectives are not set out initially, this leads to unrealistic expectations and acrimonious relationships, as well as giving the setting up of SLAs a bad reputation.
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