Service Level Agreement Risk Analysis

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SLAs are an important part of any subcontracting and technology provider contract. Beyond expectations for type and quality of service, ALS offers remedies if requirements are not met. Set a good base number. Defining the right measures is only half the fight. To be useful, measures must be set at reasonable and achievable performance levels. In the absence of solid historical measurement data, you should be prepared to review and adjust parameters later through a predefined process specified in ALS. The ALS should contain not only a description of the services to be provided and their expected levels of service, but also metrics to measure the services, obligations and responsibilities of each party, corrective measures or penalties in the event of a breach, and a protocol for adding and removing measures. Any meaningful contract without associated ALS (verified by legal advisors) is open to deliberate or involuntary interpretations. AlS protects both parties in the agreement. Technical quality: in the development of outsourced applications, measurement of technical quality by business analysis tools that study factors such as program size and coding errors. Most service providers provide statistics, often through an online portal.

There, customers can check whether ALS is being met and whether they are entitled to service credits or other penalties under ALS. However, in the case of critical services, customers should invest in third-party tools to automatically collect sLA performance data that provide objective performance measurement. IT service organizations that manage multiple service providers may wish to enter into Operational Level Agreements (OLA) that explain how some parties involved in the IT service delivery process interact with each other to maintain performance. As an expert in third-party risk management, you will probably hear the term level of service… A Service Level Contract (SLA) defines the level of service a customer expects from a provider and defines the metrics on which that service is measured and corrective actions or penalties, if they exist, if agreed service levels are not met. As a general rule, SLAs are located between companies and external suppliers, but they can also be between two divisions within the same company.

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