Table of Contents


Concept of service level agreements


A service-level agreement (SLA) is defined as an official commitment that prevails between a service provider and a client . Particular aspects of the service – quality, availability, responsibilities – are agreed between the service provider and the service user. The most common component of an SLA is that the services should be provided to the customer as agreed upon in the contract.

Who is the agreement between?

The service provider

As described in the definition, an SLA is between a service provider and a service user. Given the context of AIT, a service provider in this instance can refer to any provider of a service within the ICT industry. The service could be standalone, such as a company that provides IT support, or could come bundled with a product, such as support services that come with a customised software product.

The service user

Typically, when the term service user is used in an SLA, we tend to think the term is referring to an organisation, where one business (a service provider) provides another business with a service (a service user). This is called a B2B solution (business to business). While a B2B SLA is commonplace, the service user could also be an individual consumer. This is called a B2C (business to consumer) solution. Sometimes other forms of legal agreements are used in this situation such as an End User Licence Agreement (EULA) or ToS (Terms of Service).

Differences between SLA, EULA and ToS

While there are aspects of Service Level Agreements that are similar to those founds in Terms of Service (ToS) and End-User Licence Agreements (EULA, they do differ in what is set out in them. An EULA agreement gives the purchaser (the buyer) the right to use a copy of your software after they have paid for it, as per whatever terms of the licence you have set out. In contrast, a Terms of Service (ToS) is a legal document that more widely covers expected user behaviour and the rules for users when they use your software and may include sections on acceptable use, dispute resolution, and payment details. However, the SLA is a legal agreement between the customer and the service provider that sets out details of the service itself, rather than the relationship between the parties. [5]


When outsourcing an ICT service such as software development or IT support, it is important to set up an SLA to establish a clear provision of the services that the outsourcing company will provide. Depending on the service provided, outsourcing SLAs will need to be established individually to lay out clear expectations between the two organisations.

Advantages of an SLA

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Managing SLAs

Service level management is the process to monitor and control the quality of the IT services that service organisations provide. The service level management process helps to ensure that the IT service delivery conforms to the agreed upon quality levels. Service level management involves the following tasks:

  • Set up the SLAs to define the service and its level of quality.
  • Define the service targets based on the available service metrics.
  • Set up the thresholds and violation thresholds for measuring services against the SLAs.
  • Configure the notifications or escalations for SLA violations.
  • Define the acceptable and unacceptable levels of service.
  • Define the liability on the part of the service provider and the customer.
  • Define the actions to take in specific cases of SLA violations or risks of violation. [3]

Penalties and incentives

An SLA typically sets out what happens if the service provider does not meet the performance as set out in the agreement. Most typically consequences for not meeting the performance are financial penalties, typically in the form of credit on service. However, this is like getting offered a free meal at a restaurant after you have just eaten some terrible food. SLAs therefore try and find a good balance between penalties for when the SLA performance are not met and incentives for when the SLA performance is met or exceeded. There is no perfect solution that works in all instances, and each SLA needs to be negotiated on an individual basis.

Features of service level agreements


Feature - a distinctive attribute or aspect

This dot point in the syllabus refers to the attributes and aspects outlined in the variety of Service Level Agreements in the ICT industry. There are some common features that are laid out in all SLAs and some features that are specific to particular SLAs. Commonly, SLAs will outline what services will be offered, the quality of those service, the availability of the product/service, the responsibilities of the service provider, as well as the service user, and the consequences of the service provider of not meeting the quality or availability outlined in the contract.

Availability of service


Availability of service refers to a feature of a Service Level Agreements which is a guarantee by the service provider typically as a percentage of time that the service is available to be used (as opposed to the time where the service is down). The main way of calculating availability is as a percentage of available time, as compared to the total time, using the following formula:

(total time - downtime)/total time x 100

As an example, Internet Service Providers (ISPs) will commonly include service level agreements within the terms of their contracts with customers to define how often the service will be available and therefore agreeing to a maximum time the service will be down for in a given timeframe.

Other ways of measuring the quality of service

Availability, in and of itself, may not be a suitable metric to measure a service provider as it only calculates how often the service is up for. To determine how reliable the service is, how quickly the service is repaired when there is a failure and how long it takes to recover may use metrics such as time between failures (MTBF), mean time to repair (MTTR) or mean time to recovery (MTTR).

Data rates, throughput and jitter may also be useful in measuring the quality of services provided over networks.

When the service does not meet the availability in the SLA

Most SLAs will offer a credit on future services if they do not meet the availability defined in the agreement.

Types of service


A Service Level Agreement specifies the types of service that the service provider will provide to the service user and will typically include any additional details of how that type of service will be provided.

Types of services offered in an SLA

Service Level Agreements are commonplace in the ICT industry. Here are but a few examples of where you might see SLAs in the ICT industry and what might be included in them.

Software as a Service (SaaS) products

Software as a service (SaaS) is a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet, as such, SaaS is a form of cloud computing. SaaS removes the need for organisations to install and run applications on their own computers or in their own data centres. This eliminates the expense of hardware acquisition, provisioning and maintenance, as well as software licensing, installation and support.

Businesses using SaaS must rely on outside vendors to provide the software, keep that software up and running, track and report accurate billing and facilitate a secure environment for the business' data. Some features of a SaaS Service Level Agreement may include:

  • limits to service disruptions (ensuring availability of service)
  • limits to changes in service offerings
  • commitment to data security [2]

Hardware products

Businesses using third-party hardware products must rely on vendors to keep the hardware (and applicable software) up and running, provide on-site hardware support, and replacement of parts or . Some features of hardware SLAs may include:

  • onsite hardware support
  • replacement of parts or broken equipment
  • timeframes for issue turnaround

Managed hosting

Managed hosting is an IT provisioning model in which a service provider leases dedicated servers and associated hardware to a single client. The equipment is at the hosting provider's facility and managed there by the service provider. Some features of managed hosting SLAs may include:

  • setting up and configuring hardware
  • installing and configuring software
  • technical support
  • patch management
  • backups and disaster recovery
  • DDoS prevention and mitigation [4]

Quality aspects for types of service

Not all types of service will cause downtime. Other metrics are used to measure quality aspects for the types of service offered in SLAs. For example, an application software vendor releases a new version of the software that when the customer uses it, does not work as expected. The SLA may outline a priority for the bug/improvement based on how it affects the customer typically P1 (critical business impact) to P5 (cosmetic change). The SLA will then determine the time resolution for these issues based on the priority, so a P1 issue may have a 24 hours turnaround, whereas there may not be any time resolution for a P5 issue.

It is up to the service provider and service user to negotiate the metrics to measure each aspect for each type of service that will be provided.

When the service provider does not offer a service as agreed to in the SLA

As with availability of service, most SLAs will offer a credit on services not provided as expected.

Advantages of local and global outsourcing compared with in-house production


advantages - put in a favourable position

local - in the vicinity, with local outsourcing typically they are referring to in the same state or country

global - in this sense, global outsourcing refers to sourcing human resources outside of Australia

outsourcing - the contracting out of a business process, operational, and/or non-core functions to another party

in-house  - refers to a process or operation that is performed within an organisation. When companies start out most production tends to be done in-house, however as a company expands it may often seek to contract out some of its processes or operations to other companies.

production - the action of making or manufacturing from components, raw materials or the process of being manufactured. This includes the creation of physical production of ICT products such as hardware and networks, or the digital creation of products such as software and multimedia.

This dot point in the syllabus covers why an organisation would choose to outsource the production of physical and/or digital products to another organisation either within their state/country or overseas over producing the same product within their own company. It also requires you to compare the benefits of local and global outsourcing.

Products that are outsourced


Not just production - outsourcing services and data

While this dot point specifically mentions production, within the ICT industry various service can also be outsourced including but not limited to:

  • Data entry
  • ICT service desk
  • Website management
  • Data management
  • Data security
  • Software development
  • Software testing
  • Network management

In house vs outsourcing of production

Advantages of Outsourcing

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Disadvantages of Outsourcing


Local vs global outsourcing

Advantages of local outsourcing

Disadvantages of local outsourcing

Advantages of global outsourcing

Disadvantage of global outsourcing

Outsourcing and SLAs

Outsourcing involves the transfer of responsibility from an organisation to a supplier. This new arrangement is managed through a contract that may include one or more SLAs. The contract may involve financial penalties and the right to terminate if any of the SLAs metrics are consistently missed. Specific SLAs are typically negotiated up front as part of the outsourcing contract and used as one of the primary tools of outsourcing governance.

Purpose of outsourcing data management

Offsite data storage and management is one way of distributing the workload of companies IT resources out of their business to specialist IT companies. By managing data outside of the business, they can focus on their core business. This can help reduce infrastructure and resource management costs, remove the burden of hiring and training IT specialists in non-IT businesses, and improve productivity.

By storing and managing company data offsite, there are a number of risks that need to be managed.

Evaluation of software

Evaluation criteria - comparing software

Purchasing software across an enterprise can be a significant cost to a company, and therefore evaluating and comparing software for purchase is extremely important. When evaluating software it is important to think about all aspects of the software and how it will affect different users. User groups that may need to take into account are

  • Developers
  • IT support
  • Data entry clerks
  • High-frequency (expert) users
  • Low-frequency (casual) users
  • Users from different departments/areas of the company


The usability of the software by all user groups is arguably the most important aspect to purchasing new software. If software is not usable by each of the user groups, it has the potential to cause disharmony with the product, reducing staff morale and productivity. Usability does not just refer to using software. It encapsulates all the aspects it takes to make the product usable within your company include:

  • Understandability - Easily understood?
  • Documentation - Comprehensive, appropriate, well-structured user documentation?
  • Buildability - Straightforward to build on a supported system?
  • Installability - Straightforward to install on a supported system?
  • Learnability - Easy to learn how to use its functions?

Sustainability and maintainability

There is no use in purchasing a product that will no longer work or no longer be supported in a year's time. The software needs to be sustainable and maintainable by the company to ensure that the costs to train and up-skill staff are a viable long-term solution. Criteria for sustainability and maintainability include"

  • Identity - Project/software identity is clear and unique?
  • Copyright - Easy to see who owns the project/software?
  • Licencing - Adoption of appropriate licence?
  • Governance - Easy to understand how the project is run and the development of the software managed?
  • Community - Evidence of current/future community?
  • Accessibility - Evidence of current/future ability to download? (NOTE: This is different to accessibility as taught elsewhere in AIT, meaning how accessible it is/will be to retrieve the software.)
  • Testability - Easy to test correctness of source code?
  • Portability - Usable on multiple platforms?
  • Supportability - Evidence of current/future developer support?
  • Analysability - Easy to understand at the source level?
  • Changeability - Easy to modify and contribute changes to developers?
  • Evolvability - Evidence of current/future development?
  • Interoperability - Interoperable with other required/related software?


Apply project management techniques to meet client requirements


Apply -

Project management techniques -

Meet - satisfies the want or need (exceed - goes above the want or need)

Client requirements - the wants and needs of the person/organisation utilising the product or service

Apply a design process to create a digital solution


Apply -

Design process -

Create -

Digital solution -

Use appropriate tools to evaluate the effectiveness of a digital solution in accordance with the design brief


Appropriate -

Tools -

Evaluate -

Effectiveness -

Digital solution -

In accordance -

Design brief -



Why use surveys?

Using surveys to evaluate effectiveness of a digital solution

Client feedback


Why use client feedback?

Using client feedback to evaluate the effectiveness of a digital solution



Why use self-reflection?

Using self-reflection to evaluate the effectiveness of a digital solution

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