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Best Practices on How to Create a Service Level Agreement for MSPs

A Service Level Agreement (SLA) isn’t just a list of services, metrics, and penalties. It is a crucial part of your Managed Services Agreement (MSA). MSP SLAs help determine expectations and how to measure them, so you can keep clients satisfied and eliminate potential disputes.

An SLA might not be the most exciting part of MSP work, but it is essential for building solid client relations. In this article, you will find tips on how to draft a thorough and clear SLA agreement.

What is an SLA?

A Service Level Agreement (SLA) is a contract that specifies the description of expected services, the required level of those services, and corresponding metrics. An SLA is usually part of a managed services agreement (MSA). An MSP SLA gives clarity on what happens if one or both parties fail to meet the agreed terms and obligations. It also determines the remedies and penalties applicable.

Why Do You Need an SLA?

1. Clarify areas of responsibility

Your client should have a clear vision of where your responsibility begins and ends. Specify the issues that are outside of your control. If you are responsible for the clients’ hardware and software, determine the systems that are outside of your remit.

1. Formalize communication

An MSP SLA helps avoid unrealistic expectations and determine the exact procedure to follow when any issue occurs. In addition, both the MSP and the clients get clear descriptions of priorities, escalation processes, and resolution times. It also helps define a clear schedule for the MSP technicians to save personal time.

1. Minimize disputes

It’s nearly impossible to avoid disagreements. However, a detailed SLA contract can help resolve disputes more easily. To use this advantage to its fullest potential, you have to report thoroughly that your response time corresponds to the SLA timeframes. The more detailed the description you get in your SLA, the fewer questions and unnecessary disputes arise along the way.

1. Protect both parties

A well-crafted SLA makes sure that the MSP and client are on the same page with expectations. Having clear, easily measurable guidelines define the responsibilities and obligations, which is a must-have for a stress-free collaboration process.

1. Lay out consequences for unmet expectations

The SLA document offers transparency in terms of standards and obligations. If either party fails to meet the requirements, the MSP SLA contract helps resolve most issues without leaving space for doubt. Knowing what happens when things don’t go as planned gives peace of mind to both parties.

SLA Overview: How To Write a Service Level Agreement?

The Service Level Agreement (SLA) should cover two main areas: services and their management. There are several areas that the SLA should cover.

1. Provided services. An overview of solutions and products a client can expect from their MSP. If needed, it can also cover the excluded services.
2. Performance. A list of metrics, reporting procedures, and expected performance measurements. It should be based on a mutual agreement between an MSP and a client.
3. Troubleshooting and problem management. It should cover the procedure of how issues that arise will be solved.
4. Responsibilities. Your agreement should clearly outline each party's area of responsibility.
5. Escalation. Any SLA agreement needs an established order of operation for different types of emergencies. Each party will know what to expect and how to act, which will determine the workflow and facilitate the communication process.
6. Reporting. An accurate and transparent reporting process is fundamental for effective collaboration between an MSP and a client.
7. Resolution. Availability is one of the main factors clients require. An MSP should have a clear idea of how long it takes to resolve different issues. Include the information about working outside your typical business hours.
8. Availability. In terms of availability, it is necessary to specify the uptime hours, contact details in case of downtime, extra charges related to downtimes, any specific times when services aren't available for any technical or other reasons. Be clear and realistic because miscommunication and vague terms can easily lead to disputes.
9. Scalability. To avoid unnecessary changes to your MSP SLAs, determine scalability and its integration.
10. Termination. Having termination conditions established will prevent any potential future disagreements and protect both MSPs and their clients.

Service Level Agreement Best Practices

1. Set realistic and achievable goals.

Even though an SLA agreement is an opportunity to state the value of your MSP business, don’t over-promise. It is much better to stay on the safe side and opt for an offer you can manage than to represent your business’s abilities inaccurately, hoping that a disaster you can’t handle would not happen. You can potentially win new clients with promising resolution times, but you risk your reputation, which is hard to recover if anything goes wrong. In the end, the promises you can’t keep don’t make you look better.

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1. Track response times properly.

Make sure that your SLA document excludes the time your customers take to respond. To provide the best service, an IT department has to measure the response time effectively. A slow-responding client can make your response times look worse than they are in reality. Measuring MSP SLAs might get complicated. However, ensure that your service desk team is tracked according to their actual performance.

1. Be specific and accurate.

Uncertainty is one of the worst enemies of your SLA. Both parties should have a clear vision of each procedure, service, and metric. This creates realistic expectations that facilitate the working process. The MSP and the client have to understand the area of their responsibility to avoid unnecessary disputes. There is no such thing as too much detail in an SLA.

1. Avoid complex SLAs.

Breaking up large SLAs into smaller ones is a great practice that simplifies the measurement and reporting processes. In addition, updating MSP SLAs gets less complicated.

1. Train your team.

To minimize potential miscommunication, your employees need thorough training on MSP SLA protocols. They have to clearly understand what issues are within their responsibility and what is outside their reach. In addition, they should be aware of the disaster recovery protocol to distinguish various priority levels and respond to problems accordingly.

1. Include compensation for your clients.

You have to show that you care about your clients, including in your SLAs. The basics include penalties for any SLA contract violations on your part. This will assure the client that your company can be held accountable. An MSP SLA often incorporates a money-back guarantee. For instance, some violations might give a specific discount for the next month’s service.

1. Specify the timing.

Some services should keep running 24/7, while others have to be restricted to regular business hours. It is nearly impossible to provide 24/7 support for every offered service. Some issues require instant attention, while others can wait for a weekday response. It is all about setting the right priorities, so make this clear in the SLA.

1. Incorporate a hold harmless clause.

Including a hold harmless clause in your SLA can be very helpful, considering that MSPs work with several autonomous environments. Your organization might be left vulnerable because of exposure to various distinct elements, especially in today’s remote work landscape. Hold harmless clauses in your SLA can protect you from unexpected risks that are out of your control.

Most Common SLA Mistakes

1. Turning SLAs into marketing materials

Putting your best foot forward in your SLA contract isn’t a bad idea, but don’t try to make conditions look better than they actually are. Quite often, MSPs tend to add large chunks of marketing text. However, an SLA isn’t the right place for describing your services like you’re trying to sell them. Instead, focus on the services offered and how to measure performance while avoiding unnecessary information.

1. Shifting focus mainly to your needs forgetting about those of your clients

An SLA is a document mainly centered on the services you provide. However, it is essential to take into account both parties. An MSP SLA has to clearly state your clients’ responsibilities, ways to report issues, and measurement techniques. Having a clear data management protocol is also essential to create a collaborative working environment.

1. Promising the five-9s approach

Five-9s (99.999%) availability is one of the most popular promises in an SLA document. It literally means that you will not have more than 5.26 minutes of downtime per year. Even this time can be too much for some businesses. However, think well before actually offering this level of availability. The five-9s promise might sound appealing, but remember that any system failure takes considerable recovery time. And hoping that nothing will occur isn’t the best solution for the long run.

1. Aiming for absolute perfection

This includes both unrealistic high levels of performance and drafting your contract to perfection. Try to do your best but don’t concentrate on reaching ideal standards. The best thing to do would be to direct your attention to building a long-lasting relationship that will be mutually beneficial.

1. Not reassessing your SLA regularly

After you are done with crafting your SLA, don’t forget to reassess it regularly. It is natural that over time services change. You should also revise your MSP SLA to match changes in regulatory requirements and industry standards.

Conclusion

Producing a robust Service Level Agreement (SLA) begins with a practical approach that can protect both customers and the MSP. A well-crafted service level agreement is a strong foundation for a long-term relationship with your clients. Having clear expectations from both sides will improve the workflow, letting you concentrate on providing great services. Following the SLA best practices listed above can help you be a reliable commercial partner.

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