The Importance of Service Level Agreements (SLAs) in Business Operations

Chayanika Sen
June 28, 2023
min read
September 19, 2023
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SLAs are essential in business operations, and a well-defined SLA can benefit both the service provider and the customer.
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Suppose you're on a road trip without a map. You don't know when the next gas station will arrive where you can fuel up your car or when you can stop for a quick coffee break.

But with a detailed roadmap, you clearly know the key milestones and expected arrival times.

Similarly, a Service Level Agreement (SLA) outlines the key service levels and performance metrics that the service provider will deliver. It also helps the service provider and customer to stay aligned and avoid misunderstandings or conflicts. 

SLA is a contract between the service provider and the customer that documents all the services the service provider will provide with the service level standards the provider is supposed to provide. 

What is a service level agreement & why is it important?

SLAs are essential both for service providers and customers as it safeguards the interests of both the party. 

It helps service providers manage customer expectations while benchmarking the service levels and conditions under which the service provider is not liable for any performance issues. 

SLAs are important for customers, too, because it describes the performance level and what to expect from the service. The customers can easily compare the SLAs of different service providers and make informed decisions while redressing service issues. 

A clearly crafted SLA can improve customer satisfaction, establish clear communication channels between the customer and the service provider, and increase overall operational efficiency. 

An SLA describes the services and service levels and should also document the metrics against which the services would be measured. It should clearly state each party's duties, the penalties in case of a breach, and the protocol to add or remove any metrics. While defining the metrics, you must remember that they should be designed so that when a service is not met, either party is not rewarded. 

Here's an example. 

Suppose the customer didn't offer the required information to the provider to complete a task leading to a breach, then the provider shouldn't be penalized. 

This article will discuss all the benefits of SLA and how you can simplify creating and sharing process documentation with your team members. 

Benefits of a service level agreement

Better customer service

A well-crafted service level agreement dramatically decreases the response time and improves overall customer engagement. 

Facilitates communication

An SLA facilitates better communication and maintains transparency between the two parties. For example, the service provider can refer to the SLA document to determine how the priorities are set and maximize their efforts in higher priority tasks. The service provider can also refer to the period assessment report to inform customers how they perform.

Document procedure

One of the major benefits of having an SLA is documenting the procedure to follow for the service provider and customers. 

Single source of truth

Since the customer and the service provider agree to the SLA, it can be referred to as a written reference in case of disagreements. 

Sets standards for customer service

An SLA offers confidence to the customer about the level of service they can expect from the service provider. It also clarifies what kind of support the customer needs to extend to receive the provider's expected service level. 

Establish a strong relationship with the user

An SLA is an agreed-upon document between the two parties which means there are lesser chances of arguments. It helps to foster trust between the customer and the service provider. SLA is the first document that lays the foundation for a strong future relationship. 

Avoid conflicts

Conflicts are bound to happen when two businesses partner and are natural to the process. The SLA helps you to handle the conflict in a better way. For example, if you're a service provider and your customer complains about your staff not being available 24 x 7, SLA can help you solve the conflict quickly. On the other hand, if an SLA is violated, you must be ready and willing to take the necessary steps to fix the violation. 

"Without the SLA in place, we could have had irreversible damage to our reputation, having a more significant impact on our revenue, and leading to hours of wasted time attempting to resolve the issue independently." — Diana Stepanova, the Operations Director from Monitask

Improve productivity

SLAs set the direction for your team. They can easily plan their work hours and set priorities when they have a guide to refer to. 

Here's a sample SLA

"An SLA protects you, especially young companies, as they tend to compromise by neglecting SLA just to get a client.
Neglecting the SLA could have cost us so much of our time and effort only to know they would not be pushing through the project. There was also the risk of rendering the design services for free, and if they didn't like our design or proposal cost, the resources and energy we would have spent would go in vain." — Chiam Canda, Project Manager for Pencil Studio

Creating a service-level agreement

Creating a Service Level Agreement for the first time can be overwhelming. But with the right tools and template, you can easily create your first service-level agreement. Scribe is a documenting tool that simplifies creating and sharing process documentation with team members. With Scribe, you can create and update process documents in real time while working on a project, thus keeping your document up-to-date. With this powerful tool, you can easily create templates and convert your basic templates into a customizable Scribe page. But don't just take our word for it. Here's what one Scribe user had to say!

"Scribe has been a game-changer for our team. We used to spend hours creating and updating process documentation, but it's a breeze with Scribe. The intuitive interface and real-time collaboration features have made our team more efficient and effective." 

Give it a try, and create your first Scribe!

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