QUESTION 2:

Explain, what is Service Level Agreement (SLA), and justify why SLA is important?

Service Level Agreement (SLA) is an agreement between the IT organization and the
customer. The agreement defines the contractual responsibilities of the IT organization towards
the customer receiving the services. In simple words, SLA specifies what the customer will
receive and clarifies what can be expected from the IT organization as a service provider. The
agreement also describes the services in nontechnical terms, from the viewpoint of the customer.

Under SLA, there are four components in each service commitment. First, which is the
service or action that the IT organization provides. Second, the measurement (metrics) to capture
defined intervals. Third which is the obligations. Some SLA have obligations which clearly state
duties and responsibilities to be fulfilled in order for the SLA to be enforceable. The last
component which is the penalty for breach. There will be consequences if the IT organization
failed to comply with the obligation stated in the SLA.

There are several reasons why SLA is important. First and foremost, SLA helps to
quantify expectations of customers about the service provider in measurable terms. Clarifying
expectations could reduce the chance of any misunderstanding between provider and customer.
Next, SLA focuses on customer service. This will ensure that the service provider remains
focused and follows the customer’s requirements.

Besides that, SLA is important because it establishes measurable standards. SLA sets
clear, measurable standards on the performance of the service provider. Customers are able to
compare and measure the performance of the service received with the other service provider. It
serves as the standard for measuring service and redressing service issues. Last but not least,
SLA is important because it penalizes any non-performance. In the case the service provider did
not fulfill its obligations as agreed, the service provided will be penalized and the customer can
compensate for the losses.