A Service Level Agreement is normally not by itself an agreement, but sets out the standards, or service levels, that the supplier commits to as part of the main services supply agreement.  The types of service levels will depend on the nature of the services; for example, for hosted software/SaaS, the key service level is likely to be service availability/uptime, whereas for on-premise software the key ones are likely to be fault response and resolution times.

Issues to consider include:

  • For a service availability/uptime service level, over what period will availability be measured? As well as an aggregate limit on outages, should individual outages be subject to a separate service level?  Are out-of-hours outages dealt with in the same way as outages during core hours?  Is scheduled or planned maintenance excluded from the availability calculation, and if so is excluded maintenance subject to a cap and/or prior notice?
  • For a service delivery service level, should the non-availability of minor, non-critical elements be disregarded?
  • For a response/resolution service levels, should different severities of fault be subject to different response/resolution times?  Are response/resolution times measured during the supplier working hours, or on a 24/7 basis?  How does the customer report fault?  What constitutes a resolution, eg is a work around sufficient?
  • Should the service levels apply from Day 1, or does the supplier have an initial grace period to allow the service to be bedded in?
  • If service credits are payable for breach of service levels, are total service credits subject to a cap?  Can the customer claim multiple service credits for breaches of different service level arising from the same default?
  • Do service credits constitute the customer’s sole remedy in respect of the breach?  Or do the service credits, in effect, operate as a prepayment in case the customer’s losses exceed the value of the service credit?  How severe do service level defaults need to be before the customer can terminate for breach?
  • What is the process for claiming service credits?  Is there a time limit for claiming service credits?