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Service Level Agreement White Paper

Establishing SLAs that are meaningful for customers and achievable by IT
A white paper from Indicative Software, Inc.

Indicative Software, Inc. 724 Whalers Way, Building I Fort Collins, CO 80525 970.530.0790 info@indicative.com www.indicative .com

MARCH 2004


Service Level Agreement White Paper

Executive Summary
Service level agreements(SLAs) are contracts for the delivery of a specified level of service. The contract is typically between the enterprise IT department as the provider of the service, and the line of business organization as the customer. SLAs are also used between IT departments and external customers, or even between external service providers with enterprise IT as the customer. In all cases, SLAs connect IT moredirectly to the service requirements of businesses or customers. As this happens, delivering the necessary service level becomes more material to business results. IT departments have justified their investment to develop robust SLAs in terms of an increase in operational efficiency, increased customer satisfaction and even increased business opportunity due to identifying competitiveadvantages.1 Successful SLAs consist of one or more very clear service level objectives (SLOs). The SLOs define the level of service covered by the overall agreement and must be measurable and achievable by the IT organization. Developing such meaningful SLAs requires a commitment to a broader service level management (SLM) process on the part of IT and the business customer. This is an evolutionary,iterative process of identifying service levels, measuring and managing their delivery, and evaluating the impact on the business.
Table of Contents Executive Summary 02. The Challenge: 03. Stalking the Elusive SLA What should SLAs Measure? 05. What Should SLA Tools Deliver? 08. A Checklist for 09. SLA Management Tools. SLA Benefits 11. Summary: 12. Service Level Agreements as a New View of ITReferences 12.

On the side of the business customer, the challenge is to ensure the contracted level of service achieves the necessary business result. A bigger challenge exists for the IT department. IT traditionally has organized itself around infrastructure and components, and has processes and tools to monitor and manage the performance of the infrastructure. But to manage SLAs successfully, IT mustconstruct and manage a meta-view of component behavior based on the impact on service levels. Adjusting processes and tools to provide the necessary SLA meta-view will support the transition from an infrastructure-component-based IT management to customer-service-level-based management. In making this transition, IT increases its accountability and value to the business. At the same time, thebusiness entity obtains a better way to evaluate IT investments in terms of business results.

Indicative Software, Inc. 724 Whalers Way, Building I Fort Collins, CO 80525 970.530.0790 info@indicative.com www.indicative .com MARCH 2004


Service Level Agreement White Paper

The Challenge: Stalking the Elusive SLA In the experience of many IT organizations, SLAs are easier to talk aboutthan to implement. That’s because SLAs capture the customer view of a given service. Yet the IT infrastructure consists of individual components, each of which may represent one facet of service delivery. In addition, the complexity of the IT infrastructure has continued to increase in almost every area, including new applications, data growth and the 24x7 use of Internet-based services. Customerexpectations of the service have not changed, and the growing complexity has increased pressure on IT organizations striving to meet their SLAs. Customers care about the end result and not about the components required to deliver the service. For example, a customer order entry system may be comprised of network access, Windows systems, an Oracle database and third-party fulfillment services. A...
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