Service Level Agreements: Definition, Levels & Importance to VoIP

This article is part of a larger series on VoIP.

1. 1 Importance of SLAs
2. 2 Types of Service Level Agreements
3. 3 Examples of VoIP SLAs
4. 4 Different Levels of Uptime SLAs
5. 5 VoIP Providers With High Uptimes
6. 6 Frequently Asked Questions (FAQs)
7. 7 Bottom Line

A service level agreement (SLA) is a formal contract between a service provider and the customer outlining performance expectations, quality metrics, and consequences for violations. It is widely used in IT-related areas like the internet, business cloud communications, and managed services. Service level agreements manage customer expectations and define specific remedies if the provider fails to meet its obligations.

In this article, we answer the question, “What is a service level agreement?” and discuss its importance when selecting a voice-over-internet-protocol (VoIP) service provider.

Importance of an SLA

A service level agreement is a critical part of any business procedure as it protects both the customer and service provider from possible disputes. It ensures both parties understand their requirements, responsibilities, and the entire scope of the agreement. Here are reasons having an SLA is important when committing to a service provider:

• Protects both parties: The SLA protects each party from unnecessary losses and ensures non-compliance is prevented or penalized. For example, a client may demand a fine if the provider doesn’t deliver the minimum service quality stated in the contract. The vendor is protected against excessive demands or improper claims made by the client.
• Establishes service standards: An SLA provides clear and measurable standards to determine whether the provider is fulfilling its obligations. When specific metrics are being met, this indicates the provider is committed to quality service delivery.
• Manage client expectations: A well-defined SLA manages client expectations by thoroughly stating the service to be delivered, how it will be delivered, and the expected quality. It eliminates ambiguity between customer expectations and what the supplier understands.
• Defines consequences for unmet obligations: An SLA features a clause stating the course of action or consequences if obligations aren’t met. It declares an agreement that seeks to compensate one party for loss caused by the other party. It may take the form of legal penalties, monetary compensation, or the ability of a client to terminate the contract.

Types of Service Level Agreements

Now that you understand what service level agreement is and its importance, let’s explore the different types. SLAs are mainly classified into three categories—customer, internal, and multi-level SLAs. Below we discuss how each one is utilized in different situations.

Also called an external service agreement, the customer SLA is the most common type of service level agreement. It defines the level of service to be delivered by a third-party provider to an individual or group of customers. The contract includes the pricing details, each party’s responsibilities, escalation procedures, and terms of cancellation.

An internal SLA is between two separate teams within the same organization. For instance, the sales department might collaborate with the marketing department for lead generation efforts. The agreement contains service targets, dictates reporting, and ensures that both teams are working together to meet the company’s goals.

This type of SLA divides the contract into different levels to cater to the specific needs of multiple end-users. This is often utilized by providers whose customers pay for different tiers of service plans (e.g., Basic, Premium, or Enterprise). It enables clients to customize the agreement and add several conditions to create a tailor-fit service.

Examples of VoIP SLAs

SLA examples vary depending on the industry and service offered. In VoIP services, providers create SLAs outlining the minimum service a client should expect based on the plan purchased. Here are illustrative examples of VoIP service commitments included in SLAs.

VoIP providers use percentages to convey their network availability to clients. In business phone systems, the most common standard for uptime is 99.999%, or the so-called “five nines,” meaning the network stays operational 99.999% of the time. Every additional nine a provider adds to their uptime score is equivalent to a slight increase in reliability and costs.

Call quality is a primary consideration for anyone looking to utilize a VoIP system. For calls to be successfully transmitted, everything must work in conjunction, from router settings, endpoint hardware, and network connection. That is why quality assurance should be communicated in the SLA to ensure the best service possible for clients. For example, a VoIP platform should include a status portal for detailed information about potential issues.

It is common for phone systems to provide an estimated response time for customer support, as clients consider it essential when inquiring about troubleshooting or account configuration. If a VoIP provider promises to provide 24/7 customer service, clients should be able to receive the assistance they need at any time. The SLA should also state the type of customer service channel used, whether via phone, email, or chat.

VoIP solutions, like any cloud-based service, are vulnerable to security risks. VoIP providers work hard to ensure the information stored and passed through their servers is safe from malicious attempts. In this case, the provider should define the types of security protocols deployed to secure their clients’ digital assets and guarantee peace of mind. These include industry compliance, encryption measures, access controls, and penetration testing.

Different Levels of Uptime SLAs

Service uptime is a critical factor when considering a hosted VoIP phone system. Uptime numbers should be as close to 100% as possible to ensure lesser chances of service disruptions and potential outages. Take a look at our detailed uptime breakdown below to determine how uptime is measured: