Service Level Agreement

A Service Level Agreement is a contract between service provider and customer defining expected service standards, performance metrics, and consequences if standards aren't met. SLAs create accountability for reliability, availability, and performance in B2B products and services. Typical SLA components include availability targets like ninety-nine point nine percent uptime, performance standards such as response times, support response times for different severity issues, maintenance windows for planned downtime, consequences like service credits for violations, measurement and reporting methods, and exclusions like customer-caused outages. For example, an SLA might guarantee ninety-nine point nine five percent monthly uptime excluding scheduled maintenance, with service credits if violated. SLAs serve multiple purposes: setting clear expectations with customers, creating accountability for reliability, providing metrics for monitoring, defining compensation for failures, and differentiating service tiers. They're particularly important for enterprise B2B products where reliability directly impacts customer operations. Defining SLAs requires balancing customer expectations with realistic capabilities, considering technical architecture and costs, analyzing historical performance, calculating buffer for variability, and pricing appropriately for commitments. More aggressive SLAs require greater infrastructure investment. Benefits include customer confidence through commitments, competitive differentiation, clear success metrics, and forcing reliability focus. Challenges include cost of meeting aggressive SLAs, liability for violations, difficulty predicting performance, and customer expectations exceeding capabilities. Best practices include setting achievable but competitive targets, monitoring continuously, investing in reliability, automating measurement and reporting, having clear escalation processes, and reviewing regularly. Common mistakes include overpromising capabilities, vague definitions enabling disputes, inadequate monitoring, or treating SLAs as purely legal rather than operational. Product managers should understand SLA commitments, ensure product capabilities support them, balance commitments with costs, and use SLAs to drive reliability investments. Strong SLAs create trust while focusing teams on delivering reliable services customers depend on.