Service Level Agreements are prevalent in today’s society with more businesses relying on third-party IT companies to supply services in relation to their technology and telecommunications needs.
What is a Service Level Agreement?
As the name suggests, Service Level Agreements are agreements between service providers and its customers. The agreement will outline the type of services that are being offered by the service provider to the customer, and to what standard those services are being provided. It also outlines the obligations owed by both parties and what occurs if one party breaches those obligations.
The most common type of businesses that require a Service Level Agreement are those in the IT industry.
What are the fundamental characteristics of a Service Level Agreement?
A Service Level Agreement will generally always include provisions that refer to:
- the purpose or objective of the services being provided;
- the scope and extent of the services being offered;
- the obligations and responsibilities of the service provider;
- the obligations and responsibilities of the customer;
- service performance metrics; and,
- penalties for breaching terms contained within the agreement.
What is contained within each of these sections will vary depending on your type of business and the type of services you are offering. The content of these sections will also change depending on the customer you are providing your services to. For example, you may have more competitive performance metrics for a larger customer.
Therefore, it is always important to ensure that your Service Level Agreement is adaptable to whoever you plan to provide your services to. It is equally as important to ensure that you realise and are aware that you may need to change your Service Legal Agreement depending on the needs of your customer.
In all circumstances, we advise seeking the advice from one of our expert lawyers in the area who will be able to assist in ensuring that your Service Level Agreement is suitable for your business and your customer.
What benefits does a Service Level Agreement give to my business?
Service Level Agreements are mutually beneficial documents for both the service provider and its customer. This is because it is a document that outlines the service provider’s defined obligations and responsibilities. In return, it provides the customer with a guaranteed level of service from the service provider.
As such, there are various benefits associated with the use of a Service Level Agreement in your business, these includes but are not limited to:
- It will provide clarity on the services you provide and the services you do not provide
- It clearly outlines the obligations expected from both parties
- It offers quantifiable data on what level the customer can expect the services to be performed
- It manages the expectations of clients
- It defines procedures on how services are provided and how a customer can make a complaint
- Improves the understanding between the service provider and the customer
Depending on how detailed and how bespoke your Service Level Agreement is to your customer, there may be far more benefits for your company. Though, with how competitive the industry is now and how high the expectations are from clients, a Service Level Agreement has become a necessity for any service provider who wants to protect their business and interests.
Service Level Agreements are a necessary legal document for your business if you are providing services to customers – particularly if your business is within the IT industry.
We always advise clients to seek legal advice when drafting their Service Level Agreement as it is important to ensure that the obligations and services that you are presenting to the customer in these documents are reasonable and accurate reflection of your business and its capabilities. Getting this wrong can be damaging on your business in the long-term.
If you have a Service Level Agreement that requires a review, or if you need a standard Service Legal Agreement drafted for your business needs, we urge you to contact one of our expert lawyers who will be happy to assist and guide you through the process.