Adv Louis Nel Business Review Advice: SLA: Specific aspects to address

My first SLA article addressed the steps you should take when drafting a SLA – I will now focus on some of the aspects that you should consider including or avoiding to ensure that your final document is a success. 

As mentioned the Key Performance Areas (‘KPA’) linked to the Key Performance Indicators (‘KPI’), also known as ‘Metrics’, are crucial for a successful SLA, measuring all aspects in an ongoing basis. This is best done mutually by the parties in an honest and transparent discussion, clearly indentifying responsibility, accountability, flexibility, realistic targets, reviews, and review periods and processes.  

KPI/METRICS

These will by definition differ from product and service and what is important to the parties in each case. Whilst the suggestions below are generic, the following should be included: how it will be measured; frequency, who will be involved, and the reporting chain.

Examples:

• Availability and access
• Compliance and failure e.g. time to rectify/reinstate defective product or service
• Security: quality and rectification of breaches
• Impact on sales
• Tracking compliance
• Response times   

COMMON MISTAKES AND CHALLENGES/BEST PRACTICES

• Draft the document jointly & engage all levels of management
• Marketing ‘hijacking’ the document (keystonelaw.com)
• Misalignment between sales & marketing (‘In a recent LinkedIn survey, 60% of global respondents believed that misalignment between sales and marketing could damage financial performance’ - blog.hubspot.com)
• Drafting the document ex post facto/after the event – it must be drafted in advance and as part of the primary contract
• It must be beneficial reciprocally – focus on the relationship (and then the money will look after itself!)
• K.I.S.S. – if it is too complex, not only does it impact negatively compliance but it also makes reviewing and reporting a nightmare – ‘If longer than 3 – 5 pages you are doing it wrong!’ (givaninc.com) & it may result in the party reviewing the document having to ‘extract a ton of raw data, write custom queries, and build elaborate Excel formulas and reports’ (atlassian.com)
• Consider not only penalties but also incentives for under/over performance
• Adequate measurement of under/over performance
• Reviews should occur regularly – avoid long periods between reviews
• Align it with the parties’ business priorities
• It must be linked to a breach
• An indemnity clause is worth considering for incidents where breach/non-performance results in claims for damages   
• If you have internal SLA’s these should be linked

© ADV LOUIS NEL

LOUIS-THE-LAWYER

JUNE 05 2023

 DISCLAIMER - Each case depends on its own facts & merits - the above does not constitute advice - independent advice should be obtained in all instances