What is an SLA (Service Level Agreement)?

SLA (Service Level Agreement) is a formal, documented commitment between a service provider and a customer (internal or external) that defines the expected standard of service.

A typical SLA specifies service quality, availability (often expressed as Uptime), responsibilities, and the consequences (penalties or service credits) if the agreed-upon targets are not met.

Why SLAs Are Key to Building Trust

An SLA acts as a governance tool that creates structure and accountability between provider and customer.

• Sets Expectations: Removes ambiguity by defining objective metrics for performance and availability.
• Provides Legal and Financial Recourse: For external customers, backs the commitment with a penalty structure (such as service credits) for non-compliance.
• Drives Internal Priorities: Influences how teams prioritize reliability work and incident response by defining the maximum acceptable impact on the business.

Common Challenges

• Setting Unrealistic Goals: Promising extreme Uptime or ultra-low MTTR that the underlying architecture and operations cannot reliably deliver.
• Defining Ambiguous Metrics: Using vague phrases like “system operational” without specifying latency thresholds, error rates, or which components are in scope.
• Confusing SLA with SLO: An SLA is a contractual commitment; a Service Level Objective (SLO) is an internal target used to manage a service proactively. They should be aligned, but they serve different purposes.

How to Define the Right SLA

• Be Clear and Measurable: Ensure all terms (such as MTTR and Uptime) are defined with precise, objective metrics that are logged and auditable.
• Align with the Business: Focus on indicators that directly affect business value or user experience, not just underlying infrastructure health.
• Use SLOs as the Foundation: Set internal SLOs slightly more aggressive than the external SLA to create a buffer—if you consistently meet your SLO, you will meet your SLA.