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Nine Key Questions for Developing an Effective Service-Level Agreement

Service Level Agreements (SLAs) are integral documents for businesses that choose to hire external consultants or those who outsource a part of their activities. They can also be used as a reference for legal purposes for other managed services. These agreements can formally put in place key aspects to a fruitful business relationship vis a vis payment norms, service norms and scope, deadlines or timelines, service quality and so on. SLA’s can help ensure external suppliers / consultants follow a proper working format.

An SLA needs to be drafted keeping certain things in mind. An incomprehensive or unplanned one will reduce the liability of external supplies and agents. The first step when drafting an SLA would be to ask the right questions. Here are nine questions to ask before drafting an effective SLA.

What Services Levels to Include?
Depending on the kind of service you are hiring a supplier / consultant for, you should note down what service levels you want to cover in the agreement. Do you want to include aspects on delivery schedules / completion / Speed or rather on availability, compatibility, performance and more?

What is to be measured in each Service Level?
On the one hand, you can draft the service levels, but without a point of measure, how will it keep the supplier / consultant on track? For instance, if you have a service level for deadlines including, a specific period like one month should be included too.

What Performance Measure should be used?
How do you know it’s time to let go of an external consultant. Usually based on performance. By including a category on performance measure, you can include basis on what his performance would be evaluated.

Should there be a Measure Period?
It is crucial to also include the measure period during which the external consultant will be evaluated, for instance, first six months, one year from date of signing and so on.

What Kind of Regular Reporting should be there?
Ideally, if the supplier / consultant is being paid for a service, regular reports that share details of work done, work pending or simple status of tasks should be provided. This will help the business owner / customer keep a tab on overall tasks.

Will Target Levels Change?
If you are about to hire an external service provider, the agreement should not only mention target levels but should also include points on whether the targets will change before the agreement ends. With agreements that are to last for over a year or two, an increase in targets based on performance is the norm.

Should there be Service Level Credits?
If the provider was unable to perform a task within a particular deadline, then the customer should typically be allowed credit to raise it against another service.

Will there be bonuses?

The SLA should also include terms on bonuses based on performances – If there is optimum performance from the service provider’s side that is.

Termination of Agreement

Specifics regards to when and why the agreement would terminate should typically be mentioned to clear doubts and pave a clearer platform. Future discord in this aspect can only be avoided if terms of termination are agreed to in advance, mutually.

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