Internal Service Level AgreementsInternal Service Level Agreements

An SLA (Service Level Agreement) is traditionally a contract between an organisation and an external service provider, such as an ISP (Internet Service Provider), a SAASP (Software as a service provider) or an MSP (managed Service Provider), that outlines specific performance levels and expectation between both parties.

For legal and financial purposes, SLAs are a necessary contract or agreement to ensure that the level of service requirements are defined for all systems, services and processes, from help desk services to network performance and availability, application performance and availability, disaster recovery procedures and internal support processes.  But what if all I.T services are managed in-house?    Internally, service agreements are equally important to ensure a level of service is consistently offered and maintained.

Internal SLAs between IT and other departments provide numerous benefits to the entire organisation. Managing expectations, boosting productivity, and increasing employee morale are all direct advantages. SLAs also provide indirect benefits. They can help the IT group prioritise work, and as an incentive to provide good service, they lead to better overall system performance. They can also help foster good relations between IT and other departments.

When done correctly, the process of drawing up a formal SLA brings more attention to potential issues, identifies objective lessons learned, sets expectations, and increases the likelihood of continual improvements.

Typically when the subject of a service level agreement is raised, network administrators, engineers, and other IT staff members get defensive and are often quick to say that they are already meeting KPIs and capturing metrics used to report to their managers and they and the systems are exceeding in their performances and that everything is fine, as is. 

Benefits of an Internal Service Level Agreement

  • Improve customer service and contribute to long-term customer loyalty and engagement
  • Facilitate communication and understanding between your business and your clients
  • Define procedures
  • Provide a basis for conflict resolution
  • Documented agreement
  • Sets standards for customer service
  • Negotiated and mutually accepted

What to consider in a Service Level Agreement

Understand your customer’s needs.

By understanding your customer’s organisation, the organisation’s core business objectives, and the core daily operations of all staff members you will have a better understanding of how to best help your users and the priority of service you give to both users and the systems they use.

Clearly define your own support metrics

Meet with your team and decide on your own set of realistic service levels within your IT service desk team. You will all have a good idea of the average time it takes to troubleshoot and perform certain tasks.  Once you have practised these for a short period of time, you will soon find if they are working. Most of your informal severity level settings are already being met comfortably.

Define requirements and expectations

Clearly defined expectations are key to an effective SLA. It is a good idea to get different departments involved with this by either a small survey or setting up some time to discuss their expectations on the level of service.  Stress that these should be realistic and not so strict that the items become unreachable and prepare with some examples of current performance reporting.

Get the right people on board.

It’s important to cover all legal, technical and business perspectives when creating a Service Level Agreement so ensure that you involve all relevant parties.

Define baseline requirements and means of measuring performance

You cannot enforce an SLA without establishing means to be able to measure performance against the SLA. When creating these measurements ensure that they are realistic whilst encouraging continual improvement. If there are any current metrics and KPIs being used, bring those to the table. The key is to avoid an overload of metrics to be captured, but discover the optimal amount to fulfil your business objectives.

Establish a system of rewards and penalties for compliance and noncompliance.

In order to motivate or give incentives to follow the SLA, it’s important to attach a system of performance penalties and rewards. Penalties for below-par performances in a typical internal SLA will include budget decreases or if the business has an internal payment process, service reimbursement fees. Rewards for meeting or exceeding service levels could include cash bonuses, parties, and extra vacation days. The penalties and rewards do not need to be excessive; they just need to provide performance-based incentives.

Implement tools to monitor SLA compliance.

Unless you monitor performance, you have no way of knowing if you and your team are meeting its obligations and metrics.

Sign and review. 

Once the terms of the SLA are agreed upon, the SLA should be signed by the parties involved 

Periodically review SLA contents for timeliness and accuracy

Technology changes quickly, and your SLA should reflect these changes in a timely manner.  In order to keep up with these changes, your SLA should be reviewed on a schedule at least once a year.

Structure of a Service Level Agreement

Descriptions of service 

At the heart of your SLA are the services you provide. Writing specific descriptions of your services requires you to understand what you can offer your customers and affirms to your customers that you know what they need. Service providers will often create a service catalogue to make describing what they offer to their clients easier. The catalogue should contain all of the services you provide, including applications, infrastructure, and other business functions.

Definition of terms

Not everyone will know the terms used; define terms to the lowest common level.

Escalation procedures 

State the escalation path and time for each severity level. Spend more time perfecting the lower levels of SLA. If you get this right then your escalation process will be more realistic and work better.

Telephone, web and email response times 

Phone requests will be answered in less than 20 seconds, Web requests within 30 seconds and emails within four hours.

First contact resolution by the IT service desk (e.g. IT service desk level 1 will resolve at least 70% of all cases received)

Reporting methods 

Weekly management reports, Monthly performance metrics, Quarterly Customer Satisfaction Surveys

Service standards 

Once you have established the services that you’re providing, you’ll be ready to consider your standards, which would include concepts like availability and reliability as well as response and resolution times. You’ll also need to determine what you can offer to your customers if a disaster or emergency happens. Will you be able to provide the same hours of operation during one of these scenarios? Other standards that you may wish to include involve response times and resolution times.


Your Service Level Agreement should specify when the agreement begins and expires. Duration information is one concept that carries over from items you would find in a typical contract. The start date of your SLA allows you to begin tracking IT performance on the same date (unless otherwise specified).

Roles and responsibilities 

Managing your customers’ expectations and those of IT can be tricky if you do not designate everyone’s responsibilities in your SLA. You and your customers have obligations to each other that must be well defined.

Service level manager 

Finally, the person who is responsible for IT service level management usually referred to as the service level manager is accountable both to the IT customer and the IT department. The IT service level manager is responsible for negotiating, maintaining, and reporting against the SLA with your customers. That person will also meet regularly with the customer representative to discuss performance and any service concerns.

Evaluation criteria

Without evaluation criteria, you’ll have no objective means to determine how well your IT organisation is performing. Use caution when you sit down with your customer representative to select metrics. Be sure that your IT organisation has tools in place to track what your customer is asking for before you agree to the measurement. One of the mutual benefits of an Service Level Agreement is that you and your customer determine how you will judge the service they are receiving.

Marketing your Servise Level Agreement

Once you have started working on the structure, wording and goals of the Service Level Agreement, it is time to begin communicating with your customers about the new agreement between you both. You can do this while on the phone with them at the IT service desk. Another approach is to email periodic “Progress Updates” that explain the SLA, benefits and implementation plan. Sending these out every other week will get them prepared. They will be ready to support the SLA when it is approved.

Why service Level Agreements Fail

Too Complex

The most common downfall is that the Service Level Agreement document is too complex. These documents included in the SLA should be short and very precise in defining the services you provide and the level of service you and your customers agree on. If they are longer than 3-5 pages, then you are doing it wrong.

No measurements

If you do not have the technology and toolsets to track and report the timed-service events by responsiveness and resolution for the various severity level classifications, then SLAs will fail. Without continuous feedback on performance, the loop is incomplete and the SLAs become documents and nothing more.

Unrealistic management expectations

Often management does not acknowledge the amount of time needed to implement service level management, and therefore they do not staff it adequately. This cannot be a part-time job! It must be managed full time.

Unrealistic objectives and goals

Frequently, IT management and customers set unrealistic objectives and goals. This usually happens because there were inadequate measurements done prior to implementing the SLA. It is critical to baseline the current service performance prior to beginning to negotiate the SLAs with customers.

No alignment and buy-in at all levels of management

It is important that all levels within the organization understand the value of implementing a service-level management culture. Without this commitment throughout the organization, it will be difficult for the line staff to understand it, want to participate in it and for the Support Center staff to enforce it.

No existing Operational Level Agreements (OLA) within IT

Some organisations believe they can implement customer SLAs without first having established their own internal IT support OLAs. OLAs are basically a service level agreement between each service group. The IT service desk should have an OLA between each service department to it sends cases.

Underestimating the scope

An organisation implementing service level management must understand that this is a company-wide initiative. It will have impacts on staffing, technology, and the company’s culture. This is NOT a project assigned only to the IT service desk.

Measuring Success

The success of service level management can only be measured by reporting on what percentages of cases by Severity Level were resolved within the goals of the SLA. The reason that you want to measure each Severity Level is that it is absolutely critical to resolve high severity level cases consistently within the SLA. However, sometimes lower severity level cases can fall outside the goals. In other words, we would like to say that we resolve 100% of all Severity Level 1 cases and 90% of Severity Level 4 cases within the times stated in the SLA. Customers will appreciate the process more when they know that if they are really in trouble, there will be resources there to help them.


Internal Service Level Agreements can be used as a tool to help improve customer and employee satisfaction. Providing a clearly defined expectation and measurable metric to evaluate compliance are key steps in establishing an effective agreement.  By taking the time to properly set up SLAs, any misconceptions and hesitation experienced by the various stakeholders will be addressed. SLAs provide executives and staff, and IT and their internal clients with the structure, confidence, and reassurances necessary for healthy working relationships to succeed. Formal Service Level Agreements bring all parties involved together and make a positive impact on the initiative as a whole. When done correctly, they boost morale and create value to the organisation.

Download Free Example of an Internal Service Level Agreement Template

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