In order for the details of the activities to be aligned between the requester and the service provider, it’s essential that a Service Level Agreement, also known as SLA, is established. In this scenario, the contract characteristics involve both expectations about the result and the service itself.
Above all, the SLA usually involves IT services related to essential activities within companies, with constant national and international growth. Even in times of crisis, companies bet on advanced technology to stand out among competitors in the market.
With these questions in mind, we talked to our business analyst, Ronan Rodrigues, and we developed this article to explain how an SLA works, what its main benefits are, how to establish this contract with business partners, and how management software can help in this activity. Check!
Service Level Agreement (SLA): what is it?
Service Level Agreement (SLA) is nothing more than a contract between the customer and the service provider, to maintain a time-focused service standard.
Usually, this type of document is applied in the IT department or even in areas such as maintenance and general activities, which appropriate this concept. In addition to the service description itself, it’s important to define other details, such as the quality level to be ensured by the contracted company.
Directly, institutions that provide services under an SLA methodology must achieve higher quality standards in the activities they offer. In most situations, these specifications are linked to compensations, in case of due above the target, or even in fines for non-compliance with the contract particularities.
In all cases, the terms of this contract are defined directly between the customer and the supplier. Despite this, some of the agreed characteristics must be periodically reviewed, since the primary goal is to maintain a high standard of quality.
Service Level Agreement benefits
In an increasingly competitive and fierce scenario in the search for potential customers, the market, as a whole, wants to pay a price that justifies the quality and expectations that are generated in the service provided.
As Ronan explains, this situation could not be different, especially for the maintenance managers, who dedicate hours of commitment and punctuality to provide above-average service. Above all, experience and due time are important elements to get ahead of competitors.
To serve these increasingly routine requirements, customers and companies are looking for different ways to improve this interaction. In this sense, the Service Level Agreement (SLA) has been gaining more supporters, mainly because it offers several benefits to all involved, such as:
- Check if the time to perform each service is within the limit;
- Apply fines, if necessary;
- Access the detailed history to understand if the service providers can provide the organization’s demand;
- Optimize downtime, responses, interference in production, execution, and completion of assistance, so that they are within SLA parameters;
- Reduce costs related to production interference and downtime and the costs with corrective maintenance.
How to establish a Service Level Agreement (SLA) with a business partner?
As we have seen, SLA is responsible for establishing objective goals, in measurable terms, of the services agreed between areas of the organization itself, customers, suppliers, and another business partner.
According to Ronan, among the purposes of the SLA are mainly the goals related to quality providing a service, technical support, due times, repair time, and minimum error rates. All these issues are fundamental to achieving the maximum possible efficiency in the process.
In this sense, equipment assistance contracts have been incorporated into the service provider documents in the SLA model. In these agreements, most suppliers present a preventive maintenance schedule to avoid the occurrence of interruptions due to machinery failures.
To prevent the committed party from canceling its contractual responsibilities, organizations must protect themselves by establishing fines in case of non-compliance. If the rules are broken, the contractor must be financially burdened or, depending on the severity of the situation, have the agreement ended.
This dynamic has been impacting the productivity routine of organizations of various sizes and areas of activity. Above all, this fact is justified by the high hiring of outsourced companies to work in specialized areas within the institution.
What are the necessary precautions to establish the best criteria?
The contractual relations involving these guidelines are so serious that the ABNT, Brazilian standard, provides some premises for the establishment of this type of agreement. NBR ISO-IEC-20000-1 points out that the SLA is a mandatory document that involves certain dues from an external supplier.
Thus, the standard determines that to ensure the effectiveness of the indicator, it’s necessary to continuously review the established parameters. This condition ensures that the contractor will provide all the needed services and support during the stages of the process, not limited to the initial due.
To hire an outsourced company, let’s consider the hypothetical situation of the machinery maintenance market in an industrial park. In this sense, the performance of some questions can guide the establishment of crucial issues for the determination of solid SLAs, such as:
- What services will be performed by the provider?
- What equipment will be covered in the contract?
- What is the maximum service time?
- What sanctions will be applied in case of non-compliance with the agreement?
- Which indicators will be the basis for controlling the service provided?
Above all, the clearer the answers provided, the more precise and feasible the agreements established to achieve tangible deliverables. These premises will not open room for discussions, which makes the relationship between the parties involved increasingly healthy.
Establishing an SLA in the context of maintenance is not much different from other areas. However, it’s important to meet some specificities related to the diversity of systems, equipment, and services of the business, defining goals for critical activities and available assets.
How can management software help?
Management software plays a key role in implementing and managing SLA. This tool allows the inclusion of simple contracts, based only on service time, the same as complex agreements, specified by assets, area of operation, or services, with the establishment of criteria for availability, work period, performance, and penalties.
Ronan points out that these platforms allow managers to monitor all available variables, notifying those involved and issuing alarms when rules are not complied with, or deadlines are violated. Some of the most characteristic features are:
- Registration of various data concerning the service;
- Activity history storage;
- Planning of the services to be performed;
- Automatic scheduling of activities;
- Spare parts tracking;
- Automatic issuance of work orders;
- Cost calculations and analysis of production occurrences and losses.
Engeman® software is a solution that prevents the occurrence of failures and problems that can cause significant damage to the company’s production processes. If maintenance is improperly supplied and results in an interruption of activities, for example, this situation will be established in a contract for the contractor to compensate the customer for this loss.
Above all, the Service Level Agreement is a contract that brings more security to the parties involved during the service provision. This agreement establishes deadlines and goals that, if not respected, generate significant losses for contractors, and contractors will be held liable with fines and repayments. Engeman® is configured as a complete tool to avoid failures and even bigger problems.
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