What are the key components of a good SLA?

An SLA includes all common components of any legal agreement. List of parties, start and end date, inclusions, exclusions, non-performance penalties, remedial measures, etc. Let's look at some of the relevant components.

Nature of Service:

A comprehensive Service Level Agreement must carry a detailed description of all services offered by the provider to the business. These should be divided into categories & sub-categories. If some services are specific to a department, then it should be mentioned. Hours of operations & resolution times are important components for any IT Services business, and these should be explicitly mentioned leaving no scope for ambiguity. Both vendors and partners must also mention application & license ownership to steer clear of any conflicts

Key Performance Indicators (KPI):

An important aspect of any SLA is how the provider's performance is measured. It should clearly mention the KPIs for the evaluation of service levels.

Risk Management:

Risks to individual processes & risk ownership must be clearly mentioned in the SLA.

Disaster Recovery:

Make a note of disaster recovery measures that each party is liable for & the cost involved towards each of such situations.

Exclusions:

This is another very important component. Both parties must agree on all the exclusions.

Penalties:

Situations that can be considered as exceptions must be clearly identified. This is an important clause and the most common cause of conflicts; hence your document must be very explicit with this clause.

Reporting:

Reporting is a time-consuming process and there is a cost associated with it. Clearly mention the type of reports & frequency of submissions of each of these reports. It should also mention the cost of additional reporting which may be demanded by the client from time to time.