Service level agreement

A service-level agreement (fondly known to all as an SLA — that is an ess-ell-aye, not a “slah”) defines the level of service you expect from a vendor, laying out the metrics by which the service is measured, and your remedies and penalties should agreed-on service levels not be achieved.

It is a critical component of any vendor contract.

Thus, in a stroke, the SLA demonstrates the folly of outsourcing: an internal resource may be expensive, truculent, workshy and in need of holidays and a pension, but (at least in theory) to get a decent job out of her you don’t need an SLA: the better the job she does, the more the bonus she’ll get!<ref>IN THEORY. OK folks I know it doesn’t really work like that but the collective is often gripped with a madness a crowdish delusion that it is somehow different.<ref>

But once you have outsourced the role to a free agent patrolling the free market, that calculus changes. Now your very assumption is that your agent will do as little as he humanly can to comply with the blackest of the letters of your agreement. Anything more is economically irrational (so sayeth the Smiths, Friedmen and Hayeks of this world). Your service provider has agreed a fixed fee for its services, it is his sole and constant interest to expend as few resources as are humanly possible to earn that fee.

The difference between the fee and those resources is his profit margin. This, and only this, is what he turns up for.

If you have a contract to provide cleaning services for the firm, he can roll up with one minimum waged fifteen year-old with a bucket UNLESS YOU HAVE AN SLA.