Service level agreements are designed to help parties to
a service agreement agree on minimum standards of performance.
Whether you are a customer or a supplier, here are some tips on
negotiating the perfect SLA to suit you.
If you're a customer:
Rebates: In theory, rebates for epic fails by
the supplier to meet SLAs should cover your loss. In practice, they
rarely do. A financial rebate won't change the fact that your
system is down. Instead of pushing hard for rebates, consider what
else can be done in practice to identify issues quickly and address
them properly. Alternatively, think positive – ditch the
rebate and propose a bonus for perfect SLA scores.
Support hours: Support during US business
hours won't help Australian-based companies. Make sure support
is available when you need it, particularly if you're engaging
an offshore provider.
Resolution times: If your supplier won't
commit to resolving an issue within a specific timeframe, try to
negotiate target resolution times, particularly for business
Termination: Negotiate rights to terminate if
the supplier fails to meet SLAs, including for repeated breaches.
You don't want to be stuck with a crap supplier who doesn't
have the right skills and experience to properly support your
If you're a supplier:
Be clear about your service offering: It might
seem obvious, but you must know the limitations of what you can and
can't do. Don't close a deal you can't deliver on. It
will come back to bite you.
Response times: Ensure that response times are
achievable. Unless you're compensated for making changes,
don't vary your tried-and-tested severity levels and response
times for anyone.
No double dipping: Don't be pressured into
providing indemnities for failing to meet SLAs if rebates are
already in place. Ensure the SLA states that rebates are your sole
Rebate claims: Develop a notification and
payment process for rebates with your customer. It should ideally
be off your books quickly (1-2 months). No one likes a lingering
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Do not depart from the contract terms, or encourage the other party to do so, unless you plan to alter the contract.
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