What Are Service Level Agreements (SLAs)?

The SLA definition is - An SLA is a written contract outlining quantifiable service quality standards between a service provider and a client. Typically, it includes response times, uptime, and error reporting.

The Basics of Service Level Agreements (SLAs)

An SLA involves a commitment to service users, ensuring that the service's availability Service Level Objective(SLO) meets a specified level within a defined timeframe.

For example, an agreement between service provider and customer can state how much time an incident will be acknowledged. Non-critical incidents should be acknowledged in one hour and critical incidents in fifteen minutes.

Failure to meet the agreed-upon level may result in penalties, such as partial reimbursement of membership charges or the addition of free subscription time.

Typically, an SLA contains the following:

• Service scope and description

• Service hours

• Support details-whom to contact, when and how can we connect

• Respond and fix times

• Deliverables and time scales

• Change approval and implementation

• Signatories

• Responsibilities of both parties

• Review Process

• Glossary of terms

• The timelines for providing services

• Service points

What is incident management system software? Learn more about it here!

What You Need to Know About Service Level Objectives (SLOs)

Service-level objectives (SLOs) set goals for how well a business process or system should perform. They provide measurable targets to ensure the system always meets or exceeds the desired standards.

For instance, an SLO will be set for uptime of a service.

SLO: Ensure that at least 99.9% of the time the service is available.

Now, we know about what is SLO, let’s understand the elements in an SLO:

The particular system or service to which it is applicable, such as the trade API.

The quantifiable objective is to achieve average API transaction times of under one millisecond.

The timeframe for achieving a target over a particular one-minute trading day.

How often are you measuring your progress toward the goal? Do you do it every second during trading hours?

Understanding Service level indicators (SLIs)

An SLI measures and assesses how well a system is performing.

An SLO (service level objective) is measured by an SLI (service level indicator).

So, for instance, if your SLA states that your database query will return response in 200 ms your SLO is most likely 200 ms response time , and your SLI is the actual measurement of your uptime. It might be 180 ms or 150ms.

The SLI must fulfill or surpass the commitments set in that agreement to continue complying with your SLA.

Here are the key elements of SLI:

  • The observation system
  • The performance indicators, often known as monitoring metrics or KPIs,
  • The results obtained
  • The frequency of measurement and reporting for the metric
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Why SLAs, SLOs, and SLIs Matter for Your Business Success

There are times when we get confused between the terms SLA vs SLO, or SLO vs SLI, but here’s the basic difference between SLA vs SLO vs SLI:

SLA: An agreement between service provider and customer

SLO: Objectives set by the the organization based on SLI

SLI: Service level indicators set by the organization to assess the performance of the resource.

Companies can set up, assess, and monitor the commitments made to their service consumers through SLAs, SLOs, and SLIs.

SLAs, SLOs, and SLIs assist teams in building user trust in their services by enhancing how they handle and respond to concerns over time. Ensuring that the services uphold the necessary standards and keeping them constantly upgraded are major concerns of SLA,SLO and SLI.

Advantages of SLAs

Now that we know what is SLA and its example, let’s explore how it benefits an organization:

Service Assurance: SLAs provide a clear framework for defining and assuring the quality of services. They establish specific metrics and performance targets, ensuring the services meet or exceed the desired standards.

Customer Satisfaction: SLAs help in setting and managing customer expectations. By clearly outlining the service levels and commitments, SLAs enhance customer satisfaction and trust in the services' reliability.

Accountability and Transparency: Service Level Agreements promote accountability by clearly defining the responsibilities of both the service provider and the customer. They create transparency in the relationship, ensuring all parties know their roles and obligations.

Incident Response and Resolution: The agreement provides incident response and resolution guidelines. They help prioritize and allocate resources effectively, ensuring timely incident resolution and minimizing customer impact.

What is incident response lifecycle and it's phases? Checkout the details here!

Compliance and Legal Protection: SLAs provide legal protection for the service provider and customer. They establish a contractual agreement that can be enforced in case of breaches, ensuring compliance with regulatory requirements and minimizing potential legal disputes.

Advantages of SLOs

Implementation of SLO in software can help to achieve below goals:

  • Clear service quality standards
  • Align your team's efforts
  • Track progress and enhance customer experience
  • Evaluate business performance effectively.

For example, If you own an online store, your SLO might mandate that 99 percent of orders are processed within 24 hours.

To help you understand better, here are some advantages of SLOs:

Ensuring Quality Service: The primary benefit of having an SLO is guaranteeing that your system meets or surpasses the desired standards.

Defining Business Goals: An SLO helps define business goals and objectives by setting a target quality of service for a specific process or system. It provides a clear benchmark to strive for, aligning the team's efforts toward meeting customer expectations.

Tracking Progress: It allows you to monitor and measure the performance of your system, providing valuable insights into areas that need improvement and areas where you are excelling.

Business Performance Evaluation: An SLO provides a framework for evaluating your business performance. It enables you to assess whether you are meeting your targets and identify areas for optimization and refinement. This data-driven approach helps in making informed decisions for business growth.

How to Prepare for On-call as an SRE? Read the detailed guide here!

Advantages of SLIs

Performance Measurement: SLIs provide a clear and measurable way to evaluate the performance of a system.

By defining specific metrics, such as response time or availability, SLIs allow teams to assess how well the system meets its performance targets.

Data-Driven Decision-Making: Teams can improve system performance by making data-driven decisions by routinely monitoring SLIs to spot trends, patterns, and opportunities for improvement.

Service Improvement: Teams can detect performance bottlenecks, rank improvements, and gauge the effects of system modifications or optimizations by monitoring SLIs over time.


SLA Best Practices: Tips for Successful Service Level Agreements

SLA meaning, key elements of SLA, and its advantages helped you understand how important it is to enter the right information in the agreement to avoid conflicts between you and the customer.

To help you out in this situation, here are some best practices which you need to follow while creating a Service Level Agreement(SLA):

  • Track and create unique SLAs for each IT service
  • Make SLAs quantifiable
  • SLAs should be in line with the objectives of the client
  • Regularly evaluate and modify SLAs
  • Make sure SLAs cover common and uncommon exceptions
  • Keep the language simple to avoid misunderstandings between you and the customer
Are you struggling to write incident postmortems?Checkout the detailed guide here!

SLO Best Practices: Strategies for Setting Effective Service Level Objectives

Now we know SLO meaning and its key elements, here are some SLO practices that we need to be aware of:

  • While designing SLOs, less is more, i.e define SLOs that support the SLA or business objective.
  • Not every metric can be an SLO.
  • Focus on the SLOs that matter to clients and make as few commitments as possible. For example, Setting low or unrealistic SLO targets can lead to inaccurate product decisions and increased costs.

SLI Best Practices: Techniques for Measuring Meaningful Service Level Indicators

It's easier to set SLIs when you know SLI meaning and its key elements. As you define SLIs, remember the following:

• Not every trackable metric should be declared as SLI

• Set realistic targets for your SLI

• Ensure SLIs are aligned with business goals

• Regularly review and monitor the effectiveness of an SLI

Essential Resources:

If you want to know more about SLA, SLO and SLI in detail, do checkout the below resources:

General FAQ for SLA, SLO & SLI

What does SLA stand for? SLA stands for Service Level Agreement. It is an official contract between the service provider and the client.
What is the objective of SLO? An SLO (service level objective) is a specific metric agreed upon within an SLA (service level agreement), such as uptime or response time.
What is SLI? SLI stands for Service Level Indicators that helps assess the performance of a resource and set an SLO based on its values.
What advantages do SLO and SLI offer? SLOs (Service Level Objectives) and SLIs (Service Level Indicators) offer several advantages such as: Provide measurable goals for service performance Enable organizations to track and improve service quality Enhance customer satisfaction Facilitate better incident management Promote transparency and accountability in meeting service standards.
Can you provide an instance of an SLA? An SLA(Service Level Agreement) is an agreement between a supplier and a customer. For example, the contract between the cloud service provider and a customer where uptime details are mentioned can be described as SLA.
What is the reason for using SLA? Here are three reasons why SLA is important: Sets clear guidelines/expectations for customers and vendors. It gives peace of mind to customers in case the vendor does not provide the services; they can hold him accountable. By adhering to customers' demands, being open, and maintaining a high level of service, SLA creates more business opportunities.
What do SLO standards entail? Service Level Objective (SLO) standards specify the desired level of performance or quality for a particular service. These standards define measurable metrics such as uptime, response time, or error rates that must be met or exceeded to ensure satisfactory service delivery. SLOs provide a clear target to strive for and help organizations monitor and improve their service performance.
What is involved in the SLO process? The SLO process entails evaluating data, goal-setting, using data to gauge progress, and modifying teaching in light of gathered data.
Could you provide an example of an SLI in SRE? An example of an SLI in SRE is how quickly a website responds to user requests. It measures the percentage of requests that get a timely response, like 95% of requests being answered within 200 milliseconds. By tracking this, teams can ensure the website is fast and responsive for users.
What is the definition of SLO in software? In an SLA, a specific statistic, such as uptime or response time, is agreed upon as an SLO (service level objective). SLOs are the promises you make to your customer, whereas the SLA is the legal agreement between you and your client.
Why is SLO necessary? Having an availability Service Level Objective (SLO) is crucial for making informed decisions about the reliability of a service. It allows teams and stakeholders to assess whether the service should be made more reliable or less reliable, considering cost, development speed, and stakeholder needs.