Service Level Agreement (SLA)
A formal contract defining the expected performance, availability, and support standards between a service provider and customer.
Definition
A Service Level Agreement is a contract between a service provider and customer that quantifies the minimum performance standards the service must meet. SLAs typically define uptime guarantees (e.g., 99.9% availability), response times for support requests, performance benchmarks, data handling procedures, and the remedies or credits available when standards are not met.
Related concepts include SLOs (Service Level Objectives), which are internal targets, and SLIs (Service Level Indicators), which are the actual metrics measured. Together, these three form a hierarchy: SLIs measure reality, SLOs set goals, and SLAs are the contractual commitments.
Why It Matters
SLAs set clear expectations and accountability between vendors and clients. Without formal SLAs, disputes about service quality devolve into subjective arguments. With SLAs, there are measurable criteria and defined consequences for underperformance.
For businesses evaluating technology vendors, SLA terms directly impact reliability risk. Understanding the difference between 99.9% and 99.99% uptime (8.7 hours versus 52 minutes of annual downtime) helps teams make informed procurement decisions.
Examples in Practice
A cloud hosting provider's SLA guarantees 99.95% uptime, meaning no more than 4.38 hours of downtime per year. When a major outage exceeds this threshold, affected customers receive service credits worth 25% of their monthly bill.
An agency's SLA with their client specifies a 4-hour response time for critical website issues during business hours and a 24-hour response for non-critical requests, with monthly reporting on adherence to these targets.