A service level agreement (SLA) is a contract between a service provider (either internal or external) and the end user that defines the level of service expected from the service provider. SLAs are output-based in that their purpose is specifically to define what the customer will receive. SLAs do not define how the service itself is provided or delivered. The SLA an Internet Service Provider (ISP) will provide its customers is a basic example of an SLA from an external service provider. The metrics that define levels of service for an ISP should aim to guarantee:
Though the exact metrics for each SLA vary depending on the service provider, the areas covered are uniform: volume and quality of work (including precision and accuracy), speed, responsiveness, and efficiency. In covering these areas, the document aims to establish a mutual understanding of services, areas prioritized, responsibilities, guarantees, and warranties provided by the service provider.
The level of service definitions should be specific and measureable in each area. This allows the quality of service to be benchmarked and, if stipulated by the agreement, rewarded or penalized accordingly. An SLA will commonly use technical definitions that quantify the level of service such as mean time between failures (MTBF) or mean time to recovery, response, or resolution (MTTR), which specifies a “target” (average) or “minimum” value for service level performance.
SLAs are also very popular among internal departments in larger organizations. For example, the use of a SLA by an IT helpdesk with other departments (the customer) allows their performance to be defined and benchmarked. The use of SLAs is also common in outsourcing, cloud computing, and other areas where the responsibility of an organization is transferred out to another supplier.