Service credits are useful for incentivizing the service provider to improve performance, but what if service performance is significantly lower than expected? If the SLA contained only one service credit, the customer, unless the service provided was so bad that it constituted a substantial breach as a whole, might be able to pay for an overall unsatisfactory service (albeiving at a reduced rate). The solution is to include a right for the customer to terminate the contract if the provision of services becomes unacceptable. Therefore, the SLA should include a level of critical service level failure below which the service provider has this right of termination (and the right to bring an action for damages). For example, if service credits come into effect, if a service level outage has occurred twice in a given period, the SLA could indicate that the customer has the right to terminate the contract for major breaches if, for example, the service level has not been reached eight times in the same period. As with service credits, each service level must be considered individually and weighted according to commercial significance. In the case of an online service, the availability of that service is essential, so you can expect the right of termination to occur sooner than if you failure to provide routine reports in a timely manner. In addition, the SLA could consolidate certain service levels for the purpose of calculating service credits and the right to terminate in the event of a critical failure; SAs sometimes contain aggregated point evaluation systems for these purposes. Compiling an SLA can be a difficult process – because it is often about documenting processes that have been created organically within an organization. However, if you follow your business goals and follow the tips in this article, every SLA you create should improve your business relationship with your service provider and help you get the service you expect. Maybe you don`t want to think about it, but there should always be formal consequences when a goal is not achieved under an SLA. But don`t panic – these consequences aren`t always end-of-business situations.
Add some form of compensation to the end user of the service if the service does not meet its agreed objectives. In external LSAs, according to PandaDoc, this remuneration can take the form of “service credits”. Take pandaDocs free SLA template here to learn more….