A Service Level Agreement (SLA) is a formal and structured contract between two parties– the Managed Service Provider (MSP) and the vendor (in our case). It outlines the expectations that are mutually agreed upon, such as diagnosis and troubleshooting, and resolution of technical problems. An SLA can be a physical or an electronic document, but representatives from both parties (with permissions) must sign it.
The SLA is not simply a document that lists rules to be followed by both parties; it plays a crucial part in helping the parties protect their business, manage service level consistency, and mitigate any disputes. When drafted correctly, it helps a Managed Service Provider ensure that it runs its operations smoothly and manages customer relationships well.
This article is a comprehensive MSPs' guide to Service Level Agreement, what it is, why it matters, and discusses the best practices making it measurable. We have also put together the critical components of an SLA to help MSPs create a practical SLA.
What is a Vendor SLA?
A vendor SLA is a technology sales contract between a vendor and an MSP and includes information about the contracted services and expected level of service (from the vendor) into a document. It clearly mentions responsibilities, metrics (to measure the service), and remedies/penalties if the vendor did not provide the agreed service. If any problem arises, the parties can't claim they were unaware of some aspects of the service provision. An SLA ensures that the vendor and the MSP have the same understanding of the expectations and requirements.
In other words, an SLA protects the parties as to any contract without it is susceptible to misinterpretation. It also functions as a blueprint of the services and resources the vendor will provide and sets the service standards. Ideally, a vendor SLA should be aligned with the business objectives/technology to avoid any negative impact on the offer price, customer (MSP) experience, and quality of service delivery.
The vendors usually have standard SLAs based on different service levels and features, such as pricing. However some vendors, such as ElectroNeek (an RPA vendor), have custom SLAs for strategic partners.
Why is an SLA important?
With the evolving RPA industry, the portfolio of MSPs is growing. As businesses grapple with uncertain economic conditions and have moved their employees from offices, factories, call centers to digital workspaces, MSPs have also realized they should change their operation methods to keep enjoying a profitable year. The ongoing disruption to normal operations has created more responsibilities for them, with many expectations from the clients.
The technological trends we previously believed would take years to emerge now take a few months or a year to become mainstream due to Covid-19. Considering how technologies (Robotic Process Automation, Artificial Intelligence, Machine Learning, etc.) impact business performance, establishing an SLA between an MSP and a vendor has become crucial. A well-crafted SLA promotes the stability of the relationship between both parties; it goes a long way towards maintaining customer experience for a service provider.
On the other hand, some issues are attributed to vendors even when these are not their responsibility or function. That is why from a regulatory perspective, an SLA must identify the duties and responsibilities of the vendor and MSP expectations to avoid any potential conflicts. An MSP may have informal expectations that the vendor has not committed and may create problems with vendor risk management and enforceability. Therefore, it is essential to have a vendor SLA to clarify accountability and mitigate potential disputes.
SLAs are important:
- To provide a clear picture of where a vendor's responsibilities begin and end and prevent the MSP from holding it responsible for issues that do not fall under its duties.
- To set the scope of the services–when it comes to customer's hardware and software/applications outside the vendor's remit (such as printing devices which an MSP should be responsible for handling supported by another copier vendor).
- To protect the vendor from unrealistic and undeclared expectations that take more time than an MSP is entitled to. A vendor should clarify the days and hours to provide support to an MSP.
- To resolve issues within the agreed timeframe in the SLA.
- To include a pricing model such as charges for the services and other resources and the penalties or remedies applicable on non-compliance.
The key components of an SLA
A well-organized SLA has these key components:
- Agreement overview: The first section outlining the agreement basics, the start dates, parties involved, and a brief description of the services, including the excluded ones.
- Goals and description of services: Details of the contract purpose and the services offered by the vendor with timelines. The description should also include whether the vendor will provide maintenance service, opening hours, and a list of tools, resources, and technologies/applications involved.
- Stakeholders of the contract: Identifying the parties involved in the contract– the vendor and the MSP.
- Periodic review and changes: A regular review of the SLA, timelines, and key performance indicators.
- Service tracking and reporting: Clearly defining the reporting processes, monitoring/tracking of objectives, and service level commitments.
- Service agreement: Outlining the critical components for which the vendor will take responsibility. It also mentions MSP's requirements, the protocols to follow in case of changes to services, and how to communicate these changes.o
- Service management: Covers service availability and service requests– telephone support, remote assistance, and response time for service requests.
- Reimbursement: Determination of compensation in case the vendor does fulfill its duties properly.
- Termination process: The SLA should specify the conditions which will terminate the SLA and setting up the notice period.
- Signatures: All parties must sign the SLA to show their approval for all the details.
Best practices for SLA between an MSP and a Vendor
As an MSP, your success depends on how you comply with the terms of the contract. Even before entering into an agreement with the vendor, the SLA will determine how the relationship will go between the parties.
To ensure you create a well-crafted SLA, we present some best practices every MSP can benefit from:
Establishing a clear description of the service:
MSPs may only have control over some resources, which should be mentioned in the SLA. The vendor should also highlight which IT assets are covered under its support to avoid ambiguities about what each party is responsible for. All assets/resources should be defined to mitigate the potential for loopholes.
Setting clear expectations about reporting issues:
An MSP should exactly understand how to contact its vendor if it needs any assistance– ticket portal, phone, chat, or email. Defining this will help the vendor track all requests in a well-organized system and ensure that nothing remains unresolved.
Setting a realistic performance metrics benchmark:
SLAs include performance metrics (such as alerts from the Orchestrator) for a service. These metrics should be relevant and attainable. Hence, a vendor will provide a reference for the MSP on what to expect from its service.
Describing the responsibilities of both parties
The SLA should outline all parties' responsibilities, which also includes an obligation to follow certain practices to avoid any breaches. For instance, if an MSP installs a malicious application and causes service interruptions, the vendor can't be liable for this.
Acquire mutual understanding
Both parties need to agree on what is required and encourage discussion to resolve any differences before creating the first draft of the SLA to save time and effort.
ElectroNeek Partnership Agreement
- Expand their RPA capabilities.
- Build their brand by using our platform.
- Leverage the best enterprise-level tech to deliver more value to customers.
- Generate more leads and grow business by using our Marketing and Sales collateral.
- Take their business to new heights with our technical and support enablement programs.
It is a multi-tiered program that fits the varying needs of service providers– enablement resources, flexible contract terms, and training. As a part of its Partnership Program, ElectroNeek offers extended SLAs to help MSPs businesses grow. With this partnership program, ElectroNeek wants to ensure that it provides all the necessary tools and resources to enhance the capabilities of partner MSPs.
To know about the partnership program, please get in touch with any of our sales representatives or book a demo to learn more about how this partnership will help you build and grow your RPA business.
An SLA is probably an essential document for MSPs regarding their relationships with vendors; therefore, they should give it proper attention. This article explained what a Vendor SLA is, why it is vital for MSPs, and its key components. It also described best practices for SLA between an MSP and its vendor.
We created this content in an easy-to-understand style for MSPs. The components of SLA do not change very often, but they should be in line with the evolution of your MSP business. We hope that this article provided a better understanding of a standard SLA that most vendors offer. Lastly, you should review it periodically and check your duties and obligations to avoid any contract breach.