Service Level Agreement – Definition

Cite this article as:"Service Level Agreement – Definition," in The Business Professor, updated April 25, 2019, last accessed October 25, 2020,


Service Level Agreement (SLA) Definition

A service-level agreement (SLA) simply means the contract or agreement that exists between a service provider and the end user or client. SLAs refer to outputs from a service provider that the customer is expected to receive.

SLA describes the agreement and commitment to quality service, availability of service and fulfilment of responsibilities between a service provider and a customer. Whether it is an internal or external service provider, it is expected that the services and responsibilities included in the contract are met.

A Little More on What is a Service-Level Agreement

A service-level agreement can be a legal contract or informal agreement binding the relationship between service providers and their customers. SLAs define what a customer is expected to get from a service provider in a business agreement. However, any service rendered that is not in alignment with the contract between the service provider and the client is not a SLA.

The main focus of the service level agreement is the output received by the customer as a result of the service provided. SLAs can occur at different levels which include;

  • Service-based SLA: this is an agreement for all customers using a specific service, good examples are services provided by a mobile phone/service provider or a service provided by an email system that an organization uses.
  • Customer-based SLA: unlike the service-based SLA, this type of SLA is customer specific. It is an agreement between individual customers.
  • Corporate-level SLA: this is generic, it covers the agreement between a service provider and a corporate organization.

Other common levels of SLAs are multi level SLA, service-based SLA, customer-level SLA among others.

There are some major components of Service Level Agreements, these include;

  • The definition of services that a customer is entitled to.
  • The specifics of services to be provided by the service provider without leaving any detail.
  • The reliability and responsiveness of the SLA.
  • Monitoring of SLA and periodic reports on its effectiveness.
  • Modifications for reporting issues with the services provided.
  • Response time-frame from the service provider on the complains by the customer.
  • Periodic check on issues and time-range of when they will be resolved.
  • Consequences of failure to keep to the terms and conditions of SLAs both by the customer and the service provider.
  • The period for termination of service agreement.

Common metrics

There are certain metrics associated with service-level agreements, these metrics constitute the mode of operations and corresponding service-level objectives exhibited in service-level agreements. The common metrics of service level agreements include;

  • The time taken to complete a task during the phase of a project (TAT; Turn-around Time)
  • Time taken to recover after an outage of service. (MTTR; Mean Time to Recover)
  • The percentage of calls answered within a time-frame (TSF; Time-service factor)
  • The percentage of calls abandoned otherwise called (Abandonment Rate).
  • The percentage of incoming calls that can be resolved without the caller calling back the helpdesk. (FCR; First-Call Resolution)

References for Service Level Agreement

Academic Research on Service Level Agreement

level agreement in cloud computing, Patel, P., Ranabahu, A. H., & Sheth, A. P. (2009). •    Web service level agreement (WSLA) language specification, Ludwig, H., Keller, A., Dan, A.,

On maximizing servicelevelagreement profits, Liu, Z., Squillante, M. S., & Wolf, J. L. (2001, October). In Proceedings of the 3rd ACM conference on Electronic Commerce (pp. 213-223). ACM.

Analysis on service level agreement of web services, Jin, L. J., Machiraju, V., & Sahai, A. (2002). HP June, 19.

Service level agreement and provisioning in optical networks, Fawaz, W., Daheb, B., Audouin, O., Du-Pond, M., & Pujolle, G. (2004). IEEE Communications Magazine, 42(1), 36-43.

Autonomous service level agreement negotiation for service composition provision, Yan, J., Kowalczyk, R., Lin, J., Chhetri, M. B., Goh, S. K., & Zhang, J. (2007). Future Generation Computer Systems, 23(6), 748-759.

Service level agreement (SLA) in utility computing systems, Wu, L., & Buyya, R. (2012). In Grid and Cloud Computing: Concepts, Methodologies, Tools and Applications (pp. 286-310). IGI Global.

Service level agreement monitor (SALMon), Ameller, D., & Franch Gutiérrez, J. (2008). In ICCBSS 2008 proceedings: Seventh International Conference on Composition-Based Software Systems: 25-29 February 2008, Madrid, Spain (pp. 224-227). Institute of Electrical and Electronics Engineers (IEEE).

Service level agreement based allocation of cluster resources: Handling penalty to enhance utility, Yeo, C. S., & Buyya, R. (2005, September). In Cluster Computing, 2005. IEEE International (pp. 1-10). IEEE.

A multi-agent infrastructure and a service level agreement negotiation protocol for robust scheduling in grid computing, Ouelhadj, D., Garibaldi, J., MacLaren, J., Sakellariou, R., & Krishnakumar, K. (2005, February). In European Grid Conference (pp. 651-660). Springer, Berlin, Heidelberg.

Towards service level agreement based scheduling on the grid, MacLaren, J., Sakellariou, R., Krishnakumar, K. T., Garibaldi, J., & Ouelhadj, D. (2004, June). In Workshop on Planning and Scheduling for Web and Grid Services (pp. 3-7).

Adaptive and attribute-based trust model for service level agreement guarantee in cloud computing, Li, X., & Du, J. (2013). IET Information Security, 7(1), 39-50.

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