Service License Agreement (SLA)

A Service Level Agreement (SLA) is the part of a contract which defines exactly what services a service provider will provide and the required level or standard for those services.

An effective SLA should have the following components:

  • State the business objectives to be achieved in the provision of the services
  • Describe in detail the service deliverables
  • Define the performance standards the customer expects in the provision of the services by the service provider
  • Provide an ongoing reporting mechanism for measuring the expected performance standards
  • Provide a remedial mechanism and compensation regime where performance standards are not achieved
  • Provide a mechanism for review and change to the service levels over the course of the contract
  • Provide the customer the right to terminate the contract where performance standards fall consistently below an acceptable level.

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