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Service Level Agreement (SLA)

In SaaS businesses, a Service Level Agreement is a legal document that defines the services a vendor will provide, and guarantees their availability. It can either be a standalone document or a part of a larger SaaS contract. 

SLAs are designed to enable customers to focus on their core operations without worrying about services and their availability through the course of the agreement. Their other benefits include an assurance of service, increased accountability, and legal protection for both parties. 

Contents of an SLA

In SaaS businesses, SLAs broadly contain service agreements (related to the specific features and functionalities) and service management (how the service will be measured to ensure adherence to service agreements). Broadly speaking, an SLA will have a combination of the following: features, guarantees such as uptime, penalties, exclusions, escalation and dispute resolution, reporting, pricing and billing, and termination

Best practices 

  1. Update SLAs as business needs change and include reviews after a predetermined period
  2. Ensure that the SLA complies with any security/industry-specific regulations 
  3. If and where possible, account for grace periods as part of the learning curve where penalties will be exempt.

Related terms

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