Service Level AgreementsHow Having An SLA Can Save Your Business Money

They say “the road to Hell is paved with good intentions,” and indeed good intentions alone are sometimes not enough to salvage a business relationship if something goes awry. Unforeseen issues on one side or the other can quickly sour the arrangement, leaving both parties frustrated. One way to mitigate potential issues is with a type of contract called a Service Level Agreement (SLA).

What is an SLA?

It is, quite literally, an Agreement that determines the Level of Service you will receive. In an SLA, certain metrics are agreed upon that are measured, and if they are not met, the customer is compensated in some way (usually money). Many internet service providers, for example, will offer a certain amount of monthly uptime (as we discussed in a previous blog, even a few tenths of percentage points loss of uptime can lead to significant loss of revenue). If that uptime percentage is not met, the customer is monetarily compensated through a bill adjustment.

Why doesn’t everyone get an SLA?

SLAs are typically included in higher-level service tiers – meaning that they have at least an indirect cost. Each business has to decide for themselves if they are willing to accept a lower-tier service level in exchange for a cheaper monthly cost.

Fiber internet is the most reliable internet in the world, but if an errant construction worker or hungry squirrel physically damages a cable, there is always the possibility of an unexpected outage. Providers are always incentivized to complete repairs as soon as possible, but they are further incentivized to prioritize SLA customers. In a way, an SLA is like insurance for your internet connection. In case of fire or flood, act of God or squirrel, your business is protected against revenue loss.

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