What is SLA (Service Level Agreement)?

An SLA specifies exactly what you can expect from a service, expressed in measurable terms. The most common metrics are availability (uptime percentage per month), response time (how quickly the supplier acknowledges an incident), resolution time (how quickly the problem is fully resolved), and reporting frequency (what performance data is shared and when).

A concrete example for a cloud platform: minimum 99.5% uptime per calendar month, response to critical incidents within 2 hours, full resolution within 8 hours, monthly availability report delivered within five business days. If the supplier fails to meet these targets, the SLA triggers the agreed consequences — typically a credit note or invoice reduction under a penalty clause.

For businesses relying on IT systems, payment terminals, or booking platforms, SLAs are particularly important. Four hours without a working point-of-sale system is a direct revenue loss. The SLA determines whether you can claim compensation for that loss.

A common mistake is accepting a contract with no SLA, or with one so vague it cannot be enforced. "The supplier will use reasonable endeavours" is not an SLA. "Response within 4 hours, resolution within 24 hours" is.

An SLA also functions as a communication tool: it forces both parties to agree upfront on what good performance looks like, reducing disputes about expectations later.

Without an SLA you have no yardstick. When a supplier consistently responds slowly or system availability falls short, you can only complain informally. With an SLA you can demonstrate that the agreed standard has not been met and activate the contractual consequences.

For SMBs, an SLA also sets realistic internal expectations. It documents what you are entitled to, what the supplier has committed to, and what recourse you have — keeping the relationship productive and professional.