Service Level Agreements

Service Level Agreements (SLA) in the conditions of increased competition in the market are one of the most powerful means to attract new and retain old customers.

In short, the essence of the SLA is that the contract between the supplier and the consumer of services establishes certain requirements for quality of service, the performance of which is guaranteed by the supplier. Moreover, if the guaranteed conditions are violated, then penalties are applied to the service provider. On the other hand, by giving some guarantees, the supplier can increase the price of the services provided.

I managed to find the mention of SLA in the following documents:

• ITU-T - Recommendation E.860 “Framework for a Service Level Agreement” , 2002. E.801 “Framework for a Service Quality Agreement”, 2005
• ETSI - EG 202 009-3 “User Group; Quality of telecom service; Part 3: Template for Service Level Agreements ” , 2002

Maybe there are some more, but they did not come across to me. I will not get into the wilds (I’m sending everyone interested to follow the link to read the recommendation itself), but I’ll briefly say that the E.860 recommendation is specifically dedicated to the SLA , in which the SLA is interpreted as a formal agreement between two (or more) participants (the supplier and the consumer), defining the characteristics of the service, the responsibility of the parties and the priorities of each party.

When providing services, a supplier may be guided by the following policy options regarding SLA :

• do not apply;
• enter into SLAs individually at the request of the client (these are mainly the largest and most profitable clients);
• conclude a typical SLA at the request of the client;
• enter into a standard SLA with all customers, which in this case is an essential attribute of the service contract;
• offer differentiated SLA options that differ in quality of service and price.

The latter is preferred because it has the most flexibility.
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Approximate composition of SLA :

• Description of services
• quality indicators
• methods and means of control and reporting
• claims procedure and procedures for their processing
• fines (yes, yes, and what do you think :)
• supplier liability restrictions (different force majeure)
• change order
• additional conditions (most often confidentiality)

Indicators of quality of service, which occupy a central place in the SLA , are divided into special (dependent on services and technologies) and general (not dependent on services). I don’t see a full description of quality indicators, since it will take a lot of space ( and my time ), it’s hardly useful for anyone, and indeed this is a very specific area for any industry. For example, in the future we will operate on the concept of readiness.

Network readiness is a feature that characterizes the ability to immediately begin to ensure the exchange of information in any situation. Network readiness shows the network’s ability to serve subscribers in an arbitrary period of time (except for the planned periods when the network’s operation is not intended) and, from this point on, it will work smoothly for a given period of time.

Readiness assessment is performed as follows: a certain time interval is selected, after which the total idle time is determined and if it is less than the norm, the SLA requirement is met, if not, it is violated. The standards are determined by the requirements of regulatory documents, the wishes of the user and the SLA of competitors.
To select the standards of SLA, you can create an approximate algorithm.

This algorithm is in better resolution.

And does it really need this SLA? Let's look at an example.

Organization “A” leases a communication channel from the telecommunications operator “B” . Given that the main indicator used in the SLA is readiness (for the channel rental service), penalties will be applied for downtime not specified in the SLA . Usually, operators, if there is an idle time during a certain period of time, which entails fines, they apply a discount when paying for the next period. But in the regulatory documents it is indicated that in the provision of the channel rental service, compensation is provided regardless of the availability of an SLA . This means that if “A” did not enter into an SLA, it would receive a compensation, the essence of which is that payment for idle time of the channel is not taken. But if the SLA was concluded, then, in addition to compensation, “A” will receive from “B” also a penalty in a form agreed in advance in SLA (cash, discounts or other), that is, the SLA conditions provide not only that no fee is charged for services, but also a penalty for the fact that “A” was deprived of the opportunity to use these services (because of which it probably suffered any losses), and this is quite a large amount.
Because of this responsibility, the supplier is trying to insure the risks, as a result of which the prices for services grow significantly.
In general, the fines stipulated in the SLA should be large enough to force the service provider to really take care of its obligations, but on the other hand, not so large as to make the prices of services unacceptable to customers.

PS In general, the topic is large and complex, not to be described in one article. We can only say with confidence that there are no ready-made solutions and everything needs to be thought out (and prescribed in SLA :) in detail, so that later neither the supplier nor the customer would have any problems.