What is the purpose of a service level agreement (SLA)?

A service level agreement (SLA) serves as a formal contract that establishes the expected levels of service between service providers and their customers. It details the specific services to be provided, the metrics by which those services are measured, and the responsibilities of both parties involved. This creates a mutual understanding of service expectations, quality criteria, and potential penalties for not meeting those standards. SLAs are essential in ensuring accountability and fostering trust in business relationships, as they help manage expectations and provide a framework for assessing service performance.

In contrast, while organizational hierarchy is important, it does not pertain to the specific commitments and standards of service delivery that SLAs address. Likewise, while employee performance reviews may need assessment criteria, these are not the primary focus of an SLA. Reporting and analytics standardization, on the other hand, refers to data management and interpretation processes rather than service delivery standards. Thus, the emphasis on defining service expectations is central to the purpose of an SLA.