Service Level Agreements for Managed Services

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As I see it, one of the most essential ingredients of a successful managed services operation is the services level agreement (SLA).  In fact, it’s so crucial that it’s part of our standard definition for managed services that I mentioned in my last blog post.

CompTIA Managed Services Definition:
The ongoing management, monitoring, and maintenance of networks, software, hardware, and related IT services by an external organization.

Managed services are often marked by detailed service level agreements (SLAs), which typically include provisions for performance, security, efficiency, accountability, response times, and relevant upgrades.

So show of hands (yes, I know this is a blog), how many of you actually read all of your services level agreements, assuming you all use them?  I assume  some hands are  down.  Ok, how many of you actually require all of your technical and sales staff involved in your accounts to read them?  Your clients and all of their IT staff?  Again, I assume  most of your hands are now down.  Based on previous discussions, I suspect that most of you view these agreements more like an insurance policy, a legal document that you sign and forget.  These  contracts should be your roadmap, your ‘services constitution’ if I may be so bold.  If used correctly, the Services Level Agreement can be your most effective sales tools and the ultimate source of your profit and protection.

So what goes into an effective service level agreement?  The answer is simple: everything (including the following):
•    What you cover
•    What you DO NOT COVER
•    Warranties & limitations
•    Knowledge/labor services in detail
•    Definition of terms (include a glossary of terms)
•    Customer obligations (make sure you get their agreement)
•    Specific non-compliance remedies (better than your client making them up)
•    Termination rights for BOTH parties (you might need an out)
•    Performance, security, efficiency, accountability, response times, and relevant upgrade details
•    Automatic renewal clause (why not)?
•    Attorney review (yes I know, but they have to earn their money somehow)

So is this going to be a long tedious document?  You bet!  But a good half of it should be a master services agreement which never changes (saves you on legal costs) and the rest of it is a statement work particular to the needs of your client.  If you don’t like writing so much, include a checklist of all of your services and go through all of the services one-by-one with your client.  Heck, you might even want this to be an electronic document. In any event, I guarantee that your attention to detail will score points with your clients. Your willingness to both state and abide by a remedy (of your own choosing) for non-compliance will also be endearing and will save you from having your client name the penalty. Time spent on your agreement is time well spent. To this end, CompTIA’s Managed IT Services Executive Forum is working on  a template for a best practice managed services service level agreement for our members.  Watch our member site in April for more details.

Finally, don’t forget then to review your SLA every quarter.  It’s a great excuse to communicate with your client, see if improvements  need to be made and discover new services opportunities.

Make sense? I welcome your comments: Paul Bittorf
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