Outsourcing IT: What to Expect from Your Service-Level Agreement

outsourced IT provider

If you’re a business looking to outsource your IT services, you will need to familiarize yourself with a service-level agreement, or SLA. Service-level agreements play an essential role in most vendor contracts, and IT is no exception. 

SLAs lay out what you can expect from your IT vendor, how you’ll measure performance, and how issues should be remedied. Here’s what else you should know about forming a service-level agreement and how it can benefit your business when outsourcing IT.

What is a Service-Level Agreement?

A service-level agreement lays out the specific expectations a customer has when outsourcing IT services to a third-party vendor. SLAs should list the detailed services the customer intends to receive, along with metrics to measure how well those services are being delivered, and remedies or penalties to help mediate any issues.

For example, an IT service-level agreement may require the vendor to promise 99.99% uptime for their systems, which adds up to roughly five minutes of downtime each year. Under such an agreement, if the vendor causes systems to exceed five minutes of downtime in a given year, the SLA will specify a penalty, like reducing how much the customer pays for the vendor’s services.

Uptime is a common metric used in SLAs for the IT world, and reduced cost is a common penalty for not meeting such metrics. Oftentimes, reduced cost penalties are set up on a sliding scale, meaning the customer’s price is reduced by a percentage based on the severity of the breach. For instance, exceeding the downtime cap by one minute might result in a 0.5% price cut, while exceeding the downtime cap by ten minutes might result in a 5% price cut.

Should You Write Your Own SLA?

If a business outsources their IT services without an SLA in place, they open themselves up to incidental or deliberate misinterpretations by the vendor. In the short-term, this can result in frustration. In the long-term it can severely harm your business’s IT availability and performance.

Most IT vendors will have a standard SLA they are ready to offer you, which can provide a good starting point for negotiation. However, it’s ideal that your SLA is reviewed and modified by your own legal counsel to ensure the vendor’s standard SLA is equally fair to both parties.

What to Include in an SLA

You’ll need to make sure that your SLA includes a thorough description of all services you expect along with the service level, metrics of performance, duties of each party, and penalties for breaching the agreement. Additionally, you need to define the proper protocol for modifying services, adding new metrics, and removing existing metrics.

Metrics need to be carefully chosen to ensure that neither party is unfairly penalized or rewarded due to actions by the other party. For example, if the customer doesn’t provide necessary information in a timely manner to help the vendor remedy a problem, the vendor should not be penalized if the customer’s lack of response causes additional downtime.

Common metrics to track performance include service availability, security, and business results. The best metrics reward the right behavior, represent aspects within the service provider’s control, and are easily monitored over time.

Additional best practices to follow when designing an SLA include setting reasonable baselines, tweaking your metrics as necessary, and communicating with your vendor if there’s ever any doubt about the service level you are receiving.

Partner with a Trustworthy IT Provider

If you’re looking for managed IT services from a reliable IT company, get in touch with AxiaTP. Our team will walk you through our SLA process and answer any questions you have about the services that will best suit your business needs.