Service Level Agreement

September 25, 2025
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What is a Service Level Agreement?

A service level agreement is a formal contract between a service provider and a client that outlines the expected level of service. It defines measurable performance standards, responsibilities, and timelines to ensure both parties understand what they’re delivering and how they’ll measure success. SLAs are common in industries such as IT, telecommunications, and managed services, where service quality, availability, and support are critical. The agreement helps manage expectations, reduce misunderstandings, and provide a basis for accountability.

SLAs are often part of larger contracts, but can also stand alone. They usually include details such as response times, resolution times, service availability, and escalation procedures. Both parties typically review and revise SLAs regularly to ensure they stay relevant as business needs evolve.

Key Points

  • A service level agreement sets clear performance expectations between a provider and a client.
  • It includes specific, measurable metrics such as uptime percentages and response times.
  • The agreement helps prevent disputes by documenting service commitments.
  • SLAs may include penalties or remedies if service levels are not met.
  • Regular monitoring and reporting ensure transparency and ongoing performance evaluation.

Related Terms

  • A statement of work outlines the detailed tasks, deliverables, and timelines that support the promises made in a service level agreement.
  • An operational level agreement defines internal support relationships that help meet the commitments outlined in the service level agreement.
  • Key performance indicators are metrics used to assess whether the targets in a service level agreement are being met.
  • Change management plays a role in updating a service level agreement when there are shifts in service scope or business requirements.
  • Risk management helps identify and mitigate potential issues that could prevent meeting the conditions of a service level agreement.

Service Level Agreement: Example

A cloud hosting company provides services to an e-commerce business. Their SLA promises 99.9% monthly uptime, with a maximum response time of one hour for critical support requests. If the provider fails to meet these terms, the client receives a service credit. This agreement ensures that the e-commerce site remains accessible and minimizes potential revenue loss from downtime.

Service Level Agreement: Best Practices

  • Define clear, realistic, and measurable performance standards.
  • Include both service expectations and consequences for failure to meet them.
  • Review and update the agreement regularly to reflect any changes in your needs.
  • Clearly communicate SLA terms to all stakeholders.
  • Use monitoring tools to track performance and generate regular reports.

Additional Resources

Service Level Agreement - Service Level Agreements A Complete Guide - 2021 Edition     Service Level Agreement - A Guide to the Project Management Body of Knowledge (PMBOK Guide)

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