Operations

Why SLAs and SLOs are Important for Efficiency

6 November, 2020

The concept of service-level agreements (SLAs) isn’t new. They were first used in mission-critical environments and as incentives for service vendors to provide timely services (at the risk of financial penalty if they weren’t completed on time). Now they’ve spread to several other service industries where long response times can create downtime that might affect production. They’re also used as competitive differentiators—a managed services provider (MSP) who has an SLA in their agreement is more likely to win a contract over a competitor who doesn’t. This is especially true of larger, more mature clients.

To have or not to have an SLA

When you add an SLA to your managed services agreement, you must deliver on specific service levels or risk a financial penalty. Like I mentioned above, SLAs can be a competitive advantage, but you should put a lot of thought and data behind creating them. For efficiency’s sake, they’re not required to be SLAs—they can simply be service-level objectives (SLOs). You could also have a combination, or you could implement SLOs and then convert them later into SLAs. SLOs are internal rather than external and don’t carry a direct financial penalty to your business. I personally recommend creating SLOs and testing them for several months to be sure of the levels you can maintain before converting them to SLAs.

Why are SLAs and SLOs important to efficiency?

My primary reason for listing SLAs and SLOs as important for efficiency is they allow you to create a formal, defined process around key measurements of performance. It makes expectations clear for your team as well as your clients. In addition, many PSA and ticketing systems have built-in features for handling SLAs, including an escalation process to notify management if any SLA breaches occur. Even if you’re not using a PSA or ticketing system for SLAs with your customers, you can use them to keep track of your team’s efficiency and ensure your team resolves issues on time. This allows managers and owners to manage by exception rather than hunting overdue tickets.

Regardless of whether you use SLAs or SLOs, both help to set expectations with your team and the end user. If you have an SLA for first response and subsequent updates, you’ll likely have less phone calls throughout the day for status updates. If you say you’ll respond to all tickets within 30 minutes during work hours and provide updates at the end of every business day, end users will be less likely to pick up the phone or send an email asking for an update. For your team, setting expectations of when things should be done removes any ambiguity about when certain task must be done. It’s also something you can look at improving over time. Those improvements will only come from the improvement of your processes and automation that allows you to do the same work faster.

What not to do with SLAs

With SLAs, it’s important not to over promise—and specifically not to make promises on things you can’t control. Clearly set expectations by defining metrics and penalties. Address liabilities. Clarify any client or third-party obligations that could affect the SLA. And make sure you engage a lawyer to review your SLAs.

SLAs can be a good thing for you and your customer. They’re rarely asked for except by larger customers. But when they do ask, SLAs can be essential to winning the contract. If you do not need SLAs, use SLOs instead but employ the same features of your PSA tool to monitor, report, and escalate on these important performance metrics.

Eric Anthony is the head operations nerd at SolarWinds MSP. Before joining SolarWinds, Eric ran his own managed services provider business for over six years.