How do you negotiate IT service level agreements with vendors?

IT service level agreements (SLAs) are contracts that define the expectations and responsibilities of both IT providers and customers. They specify the scope, quality, availability, and performance of the IT services, as well as the penalties for non-compliance. SLAs are essential for ensuring customer satisfaction, managing risks, and resolving disputes. But how do you negotiate SLAs with vendors that meet your business needs and budget? Here are some tips and examples to help you.

1 Understand your requirements

Before you approach any vendor, you need to have a clear idea of what you want from the IT service. What are your goals, priorities, and constraints? What are the critical success factors and key performance indicators (KPIs) for the service? How will you measure and monitor the service quality and outcomes? You should also conduct a risk assessment and identify the potential impacts of service failures or disruptions. Having a well-defined set of requirements will help you communicate your expectations and negotiate the best terms for your SLA.

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Chris Eversfield
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Organisations and key decisions commonly get heavily focused on numeric SLAs for historically good reason but the key driver should be business impact from outage or disruption. Service availability must mirror business need and these traditionally simple numeric SLAs without reference to wider implications of outage or poor service can be troubling. Be cautious about simply setting, measuring and then reporting on SLAs which whilst may be technically adhered to by a vendor but the business is -ve impacted. A spirit of mutual collaboration to deliver a service or solution is therefore key to overcome these issues and has seen the emergcy of Service Partnership principles. SP can work alongside or in place of traditional SLAs.

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Joe E. Sanchez PMP,LSSGB

Project Manager
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-In my experience there are exceptions and or waivers in the contract to allow the vendor to meet high level SLA's consistently. Contract review and deep understanding of the metrics is recommended. Many factors including the swap out of hardware or equipment or providing workarounds stop the SLA clock and allow vendors to meet near 100% uptime SLA's.

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2 Research the market

Once you have your requirements, you should research the market and compare different vendors and their offerings. You should look for vendors that have experience and expertise in providing the IT service you need, as well as a good reputation and track record. You should also check their references and testimonials from previous or current customers. You should also review their standard SLAs and see how they align with your requirements. You should look for SLAs that are realistic, measurable, and flexible, and avoid SLAs that are vague, unrealistic, or rigid.

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Joe E. Sanchez PMP,LSSGB

Project Manager
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Researching the market is key to success to understand the level of SLA needed. Support in a hospital setting compared to other industries may not need critical SLA's close to 100% uptime as an example.

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3 Negotiate the details

After you shortlist a few vendors, you should negotiate the details of the SLA with them. You should focus on the aspects that are most important for your business, such as the service scope, quality, availability, performance, security, and support. You should also discuss the SLA duration, review, and renewal processes, as well as the escalation and resolution procedures for issues and complaints. You should also negotiate the costs and fees, as well as the incentives and penalties for meeting or missing the SLA targets. You should aim for a win-win situation, where both parties benefit from the SLA and share the risks and rewards.

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Joe E. Sanchez PMP,LSSGB

Project Manager
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-Target SLA optimization year over year to increase efficiency and reduce the downtime involved for the customer. This also forces the vendor to look for efficiencies and drive quicker response times and reduce downtime.

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4 Review and sign the SLA

Before you sign the SLA, you should review it carefully and make sure it covers all the aspects you agreed on. You should also verify that the SLA is clear, concise, and consistent, and that it does not contain any errors, ambiguities, or loopholes. You should also consult your legal and technical advisors and get their feedback and approval. You should also ensure that the SLA is aligned with your other contracts and policies, and that it complies with the relevant laws and regulations. Once you are satisfied with the SLA, you should sign it and keep a copy for your records.

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Benny Herlambang

IT Service Management | Change Management
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Some items need to be considered when reviewing the SLA: - It should all consistent in the agreement, the copy of it and in the system. Ensure that the ticketing system used reflect SLA as per agreement. - It covers most of the potential variables; i.e. number of users/locations/devices impacted that may change the SLA from 3 days to 6 hours. These criteria should be clearly stated. - Conditions such as whether SLA still counted on weekends/public holiday/certain condition; i.e. when the escalation goes to other vendors/3rd party. - If the SLA agreed require the workforce to work extra hours, ensure this still comply with our local government/union policy.

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5 Monitor and manage the SLA

After you sign the SLA, you should monitor and manage it throughout the service delivery. You should collect and analyze the data and reports from the vendor and verify that they meet the SLA targets and standards. You should also communicate regularly with the vendor and provide feedback and suggestions for improvement. You should also conduct periodic reviews and audits of the SLA and evaluate its effectiveness and efficiency. You should also be prepared to adjust and update the SLA as needed, based on the changing business needs and market conditions.

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Joe E. Sanchez PMP,LSSGB

Project Manager
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-Auditing and deep understanding of the metrics are necessary to produce the desired results. Root Cause analysis should be implemented to identify the problem and avoid in the future.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you negotiate IT service level agreements with vendors?

1

2

3

4

5

6

1 Understand your requirements

2 Research the market

3 Negotiate the details

4 Review and sign the SLA

5 Monitor and manage the SLA

6 Here’s what else to consider

IT Management

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How do you negotiate IT service level agreements with vendors?

1

2

3

4

5

6

1 Understand your requirements

2 Research the market

3 Negotiate the details

4 Review and sign the SLA

5 Monitor and manage the SLA

6 Here’s what else to consider

IT Management

Rate this article

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