What are SLAs? Companies that want to be sustainable cannot do without SLA!

I. What is SLA?

SLA stands for "Service level Agreement" which is understood as a commitment between service providers and customers.

This commitment does not stop at the aspect of "Quality", but also includes factors such as Quantity, Availability, Supplier Responsibilities... as agreed by both parties.

What is an SLA Commitment? Why is it important to commit to an SLA?

To take a very real example, the minimum Internet speed that your carrier states in your contract is a form of SLA.

A telecom company's SLA can guarantee a network availability of 99.999% (calculated for about 5 minutes and 25 seconds of network outage per year). However, this time may still be too long for some companies.

Accordingly, telecommunications companies also pledge to reduce the percentage of charges paid to customers if the above commitment is not achieved, usually based on a comparison scale based on the impact of the violations.

To some extent, SLA can be understood simply as the expectation to be achieved between the customer and the supplier. Commitment to quality assurance SLA is the only sustainable way to retain customers, create credibility and seriousness of the company.

II. Why do companies need SLAs?

The SLA model has a long history of development in professional service companies around the world. These companies use SLA - Service level Agreement thoroughly as a useful tool for professional service management.

That will help improve customer satisfaction with commitments as well as the fulfillment of promises as promised, contributing to boosting sales, profits as well as capturing market share.

SLA is considered as one of the very important models for companies today, especially if companies want to manage well in Marketing or sales department, etc…, they should apply this model.

This is also a fairly sustainable way to help companies ensure brand development, affirm their credibility and get potential customers for themselves.

III. How is SLA different from KPI and OPI?

1. Distinguishing SLA and KPI

While what an SLA is a rather vague term, KPI is a concept that can be measured in numbers and is often used to accurately measure the progress of a particular job.

The SLA will be able to adjust for some of the following metrics:

- Agreements related to the field of information technology

- Receipts to ensure the quality of service

- Continuous service improvement

- Adjustment in the process of warehouse management

- Adjust inventory reporting accuracy

- Issues related to customer feedback when using the service

- Adjustments to cost reduction agreements

Besides, KPI is an indicator used to measure and evaluate the performance of each employee, individual and the whole enterprise. KPI is an acronym for Key Performance Indicator - a job performance indicator.

KPIs will contribute to the success of businesses by providing continuous updates on their vital signs.

KPIs themselves are often used as a tool to gauge how well SLA expectations are being achieved.

Imagine that you hire a mechanic to install air conditioners for your bedroom, the KPI is whether he completes the installation before your expectations or not, sooner or later.

Cross-departmental KPIs are capable of informing the following end-to-end performance factors:

- Orders accepted, processed and completed without issue (Perfect Order)

- Gross profit

- Inventory level

- Cost of goods sold

- Cost of inventory

- Total logistics costs

KPIs are often based on factors that are easy to measure (time, …) and are used to gauge how effectively a person is working.

2. Distinguishing SLA and OPI

Unlike KPIs or SLAs, OPIs measure a specific function or activity – often one of the bottlenecks for your company.

IV. How to implement the SLA model in the enterprise

Once you have a solid grasp of what SLA is, here are the steps to apply this model to your company:

Step 1: Set basic standards based on pre-existing activities to build a management model.

Step 2: Survey objective opinions to assess which aspects do well and which need improvement.

Step 3: Design a draft SLA from the information collected above, we build an SLA simulation. Its aim is to eliminate redundant service and provide valuable service to customers.

Step 4: Apply from small to large scale to evaluate the effectiveness of the SLA model.

V. Ending

To make it easy to understand, just remember: SLA (Service level Agreement) is Desire – KPI is Metric. Indeed, most KPIs are born after you have an SLA. You define your expectations, and then use KPIs to measure those expectations.