What are the most important SLA terms to negotiate with a service provider?

1 Scope and objectives

The first thing you need to define is the scope and objectives of the service. What are the specific tasks, deliverables, and outcomes that you expect from the provider? How will they align with your business goals and strategies? You should also specify the roles and responsibilities of each party, the communication channels, and the escalation procedures. A clear scope and objectives can help you avoid scope creep, misunderstandings, and conflicts.

2 Service levels and metrics

The next thing you need to negotiate is the service levels and metrics. These are the standards and measurements that you will use to evaluate the provider's performance and quality. For example, you might agree on availability, reliability, response time, resolution time, throughput, accuracy, or customer satisfaction. You should also define how and when the metrics will be collected, reported, and verified. A good SLA should have SMART (specific, measurable, achievable, relevant, and time-bound) service levels and metrics.

3 Service credits and penalties

Another important term to negotiate is the service credits and penalties. These are the incentives and consequences that you will apply if the provider fails to meet the service levels and metrics. For example, you might offer a bonus or a discount for exceeding the expectations, or impose a fee or a termination clause for underperforming. You should also specify the conditions and procedures for claiming or applying the service credits and penalties. A fair SLA should have balanced and realistic service credits and penalties.

4 Change management

One more term to negotiate is the change management. This is the process that you will follow if you or the provider need to modify the scope, objectives, service levels, metrics, or any other aspect of the service. You should define the types and categories of changes, the approval and notification requirements, the impact assessment and risk analysis, and the implementation and testing methods. A flexible SLA should have a clear and efficient change management process.

5 Dispute resolution

The last term to negotiate is the dispute resolution. This is the mechanism that you will use if you or the provider have any disagreements or conflicts over the service. You should define the steps and stages of resolving the disputes, the roles and authorities of the parties involved, the mediation and arbitration options, and the legal jurisdiction and laws applicable. A robust SLA should have a fair and effective dispute resolution mechanism.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?