How to Negotiate a Service Level Agreement for Your IT Business

Service Level Agreement Best Practices for Your IT Business

An SLA, or service level agreement, is an essential part of entering into any new service contract, especially for IT businesses. Whenever you gain a new client or vendor, this agreement is there to make sure all parties involved know exactly what to expect out of the relationship and what will happen if those expectations are not met. Negotiating this agreement is an important is vital for keeping terms as favorable as possible for your small IT business, while also protecting your other stakeholders.

Service Level Agreement Best Practices

Start with a Standard SLA

Though each SLA for your business may end up a bit different, you need a basic starting point. You can work with a legal representative to craft a basic template for find a template to start with online.

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Alter Agreements for Different Situations

From there, you should change up the specific verbiage so it’s applicable to different situations. If you offer different levels of service, then you should craft a few different SLA templates to use for those specific situations. If not, you can simply update your basic SLA for each new opportunity so that it’s most applicable to that particular stakeholder.

Speak with All Stakeholders

It’s important to get input from anyone throughout your organization who may be impacted by your new agreement. Consult with your customer support or technical team to make sure you’re able to deliver on promises made in the agreement. Talk to investors or bookkeepers about rates. Be sure to get a comfortable range from each relevant party so you know what is possible during the negotiation period.

Seek Legal Advice

It’s also a good idea to consult with an attorney to make sure your agreement actually covers you in the case of any incident. It should be a solid contract that protects all parties involved. So an experienced professional can make sure you don’t leave any holes that leave your IT business vulnerable.

Leave a Safe Margin

It’s also important to consider your vendor contracts in context with your client contracts. Clearly, you cannot sell a product or service at cost and expect to sustain your business. So you need to leave some kind of margin to protect your business and support your operations.

Dan Goldstein, director of marketing for GMS Live Expert, a 24/7 Outsourced Help Desk and NOC for MSPs, said in an email interview with Small Business Trends, “When reselling services (help desk, NOC, SOC) or products with support contracts in place it is best to leverage your suppliers SLAs with a built in margin of safety.”

Pay Attention to Details

But SLAs aren’t just about the rates and the big picture stuff. They can also include smaller details that have the potential to impact your business. So if you’re provided with an SLA or yours is amended, you need to read through the entire thing carefully.

Include Incentives for Surpassing Expectations

SLAs shouldn’t just be about specifying what happens if something goes wrong. They can also include incentives or details that reward exceptional performance. These details can help to ensure that there’s always a reason for the service provider to continue delivering the best possible service even if the basic terms of the agreement have been met.

Don’t Be Afraid to Move On

SLAs are there to protect all parties involved. If the other party insists on terms that don’t leave you any margin or that you’re not comfortable with, then they’re probably not right for your business. Don’t force agreements into existence if it’s not a good fit.

Goldstein says, “If an opportunity requires you to stretch an SLA beyond your comfort zone, it’s likely best to move on.”

Monitor Performance

Once an SLA is signed, it’s important that you actually track your metrics so you can be sure you’re receiving and delivering what was promised. For instance, if you promise a very small amount of downtime for your service, then you need to carefully monitor that downtime and have alerts set when you get close to the limit so that you don’t go over.

Update SLAs Regularly

Throughout the years, your vendors, services and other aspects of your business are likely to change. So it’s important that your SLA can be amended from time to time. Leave room for updates and then set periodic reminders to review your standard agreements to make sure they’re up to date with your current practices.

Photo via Shutterstock

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Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends, covering entrepreneur profiles, interviews, feature stories, community news and in-depth, expert-based guides. When she’s not writing she can be found exploring all that her home state of Michigan has to offer.

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