Why Service Level Agreements Fail

Service Level Agreements (SLAs)can be a great tool if done right. Most times however, SLAs are done just so it can be said such a tool exists and the details of these poorly thought out agreements can cause all sorts of chaos. Remember an agreement is just that and must be beneficial to both parties with constant review and update.
Here are just some of the mistakes that are made in SLAs:

1. Wrong Metrics: Parties enter into SLAs with a purpose in mind. This is usually to improve one or more business objectives. This includes cutting costs, improving customer service, reducing risk, increasing capacity or simply becoming more efficient. To have an SLA with real value it must have metrics that show performance of these objectives. If the metric(s) show a decline in performance then action should be taken to avoid violation of the SLA. Likewise, if performance is too high action should be taken to avoid excessive waste. Are you measuring what the SLA was designed to improve?
2. Wrong Goals: You might have the right metric(s) but the wrong goal (or both). A good SLA should have both metrics and g0als or targets. For example, a typical ISP SLA states it will keep up-time to 99.999% which sounds great. It is only when you read the fine print that you realize this goal is only for their core network which is fully redundant. It does not mean your business will have 99.999% up-time. In fact, it likely has not goal for that.
3. Poor Design: An SLA needs to be comprehensive enough to cover more than a few key metrics. It must have enough detail for both parties to be able to measure and improve key performance issues. Continuing with the ISP example, the SLA should contain not only up-time but also connection quality. While up-time is nice the line could be saturated causing dropped packets which is not technically "down" but makes doing business extremely difficult. Look for complimenting metrics that can be used to "troubleshoot" the service should it degrade.
4. Poor Management: Creating a good SLA is hard work. Don't waste all that work by not monitoring the performance against the SLA. SLAs not only need up front investment to create but ongoing investment to monitor and improve throughout the life cycle of the contract.
   
5. Low Value and Misused Penalties and Incentives: Quite often parties want an SLA because they are unhappy with existing service levels and want to punish the other party with the violation of the SLA. This creates a poisonous service relationship and ultimately results in either a termination of service or legal action. Instead, SLAs should be designed as a tool to help highlight opportunities where focus can be applied to ensure service levels remain adequate. This often means an investment by the service provider and could result in an increase in cost by the customer to receive the increase in service. In the ISP example, a customer receives a free day of service when there is a loss of service. This penalty is inconsequential to the provider and is also meaningless to the business who may have lost thousands of dollars due to the outage.
   
6. Creating a Static Document: Things change. What was acceptable today won't be tomorrow. Don't write an SLA that does not consider this. As funding changes for a service that service level will fluctuate. Both parties must work together to ensure desired changes in service levels are matches with a sufficient investment. Any agreement is a promise between two parties. You are making a promise to deliver or receive for a monetary amount. Ensure you are able to do this knowing things change.