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SLA vs. SLO vs. SLI: The Difference Explained

SLA vs. SLO vs. SLI: The Difference Explained

As a modern-day managed services provider, you should know that the key is not which services or solutions you provide. It is how you deliver your services. This means that, at any given moment and during the whole lifetime of your company, you should strive towards achieving operational excellence.

And, while your team may be great at solving technical issues, and your helpdesk works nearly flawlessly, your clients might expect you to do still more. Why? Because you have not properly defined your service metrics during onboarding:

  • A service level agreement (SLA) is a contract that allows you to define those expectations.
  • Service level objectives (SLO) and service level indicators (SLI) allow you to set internal objectives for reaching SLA goals and track them. Together, the service level agreement, objectives, and indicators form a clear framework for communication between you and your clients.

Moreover, creating clear SLAs, SLOs, and SLIs can be the basis for your organization to switch to a more professional, client-oriented, ITIL-based structure of operations.

In this article, we will overview the difference between SLA, SLO, and SLI.

What Is an SLA?

An SLA, or service level agreement, is a contractual agreement between you and each one of your customers that overviews how you deliver your services and what the key performance indicators are. It also states how customers can contact you, specifies your working hours, defines the reasons for closing tickets, and describes the escalation practices.

Sometimes, your clients want you to set exact time frames for ticket responses and issue resolution, and to add penalties for not accomplishing the metrics.

Typically, you start with three main key performance indicators:

  • First response time;
  • Time to begin solving the issue;
  • Time to resolve the issue.

Remember, you shouldn’t set strict times to resolve the issue, since the resolution in many cases cannot be guaranteed, due to external factors.

Further reading Top Help Desk Metrics for MSPs

Why Do You Need SLAs?

The SLA is a necessary customer-facing document, since it states how you deliver your services and sets a certain level of expectations for your customers. Moreover, if you don't create it carefully and you fail to achieve your set KPIs, you can be taken to court. Your clients, with their picky lawyers, will happily demand penalties from you.

So you should create or at least review your basic SLA with your lawyer. Whenever you make significant changes for one of your customers, you should also consult your attorney.
Also, a rule of thumb while setting the metrics for the SLA is to make them a bit higher than your real average numbers. This will allow you to over-deliver in the eyes of your customers, which is good for your reputation.

What Is an SLO?

Service level objectives, or SLOs, are the objectives you set for your team in order to meet the service level agreement key performance indicators. These objectives are not typically shown to the customers; they are needed for you to monitor your team's success in achieving the SLA you've previously set. Moreover, SLOs should be stricter than your metrics in the service level agreement, thus ensuring that you always achieve the SLA.

Why Do You Need SLOs?

Service level agreement metrics are customer-facing. They typically lack technicality and complexity. You only need to show your customer a small set number of KPIs related to your services. However, there are many interconnected processes between those services and you need to understand how well they work in your organization. So, you set more detailed SLOs for each of your SLA metrics in order to monitor the efficiency of your processes.

In a Nutshell

  • A service level agreement is an official document that you sign with your customer. It sets the standards of your helpdesk and support operations.
  • Service level objectives are internal objectives that you set for your team to accomplish your SLA metrics.
  • Service level indicators are real-life statistics that you should track for each of the SLOs in order to understand whether you are reaching your service level objectives or not.

Conclusion

Entering the managed IT providers market is quite easy nowadays. You don't need to buy expensive equipment or do a lot of on-prem projects. Everything has gone to the cloud and you are now managing Office365 solutions more than any other activity. This simplicity, though, makes succeeding in the market truly difficult.

You see, today’s competitive landscape is tough, since all MSPs are trying to standardize their solutions stack as much as possible. Basically, nearly everyone is using the same solutions for their clients. Even a startup MSP can use near-enterprise-grade solutions from day one, thanks to the MSP-friendly pricing that many vendors are employing.

So, you should seek a competitive advantage somewhere else. And, as you know, word of mouth is the best marketing in the managed IT game. And your clients won’t refer to you as to the people who use the most advanced solutions stack. They will refer to you in terms of the excellent complex operations that you flawlessly provide.

That’s why you should strive for operational excellence nowadays. Creating clear SLAs for your customers and clear SLOs for your team, and gathering SLIs to understand where you are at in achieving your clients’ expectations are the keys to thriving in the tough MSP market.

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