What Should be Include in Managed Services SLA?

What are Service Level Agreements or SLAs?

An SLA is an agreement between a client organization and a Managed Services Provider(MSP). At its most fundamental level, the contract spells out both the client services required and the MSP’s expected level of performance. A great MSP helps you define your service expectations.

After the client company defines its needs and required service expectations, the Managed Service Providers will start drafting the SLA. The service expectations are the foundation of the SLA. Next, you’ll define the components of your SLA. SLAs should be aligned to the technology or business objectives of an engagement. Finally, let’s break down what’s inside a good SLA. Knowing what’s inside the agreement gives you the confidence to receive the level of service your business requires.

A managed services SLA commonly covers:

• Service scope: The systems, locations, applications, and infrastructure included in the agreement.
• Availability commitments: Agreed uptime targets for covered services.
• Incident response: Timeframes for acknowledging and beginning work on reported incidents.
• Restoration targets: Expected timeframes for restoring affected services, where contractually agreed.
• Monitoring and reporting: Methods for measuring service performance and communicating results.
• Escalation procedures: Steps for handling unresolved incidents and major service disruptions.
• Responsibilities: Obligations assigned to the provider, customer, and relevant third parties.
• Remedies and exclusions: Service credits, corrective actions, exceptions, and other contractual provisions.

SLA vs. SLO vs. SLI: What Is the Difference?

Businesses evaluating managed services providers should understand the distinction between SLAs, SLOs, and SLIs because each serves a different purpose in performance management.

Term	Meaning	Business application
Service-Level Agreement (SLA)	A formal agreement defining service commitments and potential consequences for noncompliance	Establishes contractual accountability between a business and its MSP
Service-Level Objective (SLO)	A defined performance target for a service	Establishes the expected availability, response performance, or other service outcomes
Service-Level Indicator (SLI)	A metric used to measure actual service performance	Shows whether the agreed performance objective is being achieved.

For example, a business may establish a 99.9% monthly availability SLO for a covered service. The corresponding SLI measures the service’s availability during the reporting period. If the SLA incorporates the availability commitment, the agreement should specify how the business calculates performance and what happens if it misses the commitment.

Agreement & Service Description

The service level agreement is where the client organization and MSP document the agreed-upon terms and conditions. The client organization and MSP also develop a list of all acronyms relevant to the specific client situation. Additionally, the SLA defines what’s included in the services the client purchases from the MSP.

The services provided to the client are clearly spelled out with quantitative performance metrics. The agreement also clearly defines the responsibilities of both the MSP and the client.

What Should Every Managed Services SLA Include?

An effective managed services SLA should define measurable service expectations while accounting for the organization’s operational requirements, infrastructure dependencies, and business priorities.

1. Service Scope and Coverage

The agreement should identify exactly which services and assets the provider is responsible for managing.

For example, an organization outsourcing IT infrastructure operations should clarify whether the agreement covers network devices, servers, cloud infrastructure, monitoring, incident management, configuration changes, and after-hours escalation.

For businesses operating across multiple locations, the agreement should also specify covered sites, supported environments, service hours, and any location-specific limitations.

2. Availability and Uptime Commitments

Availability targets describe the expected proportion of time that a covered service remains operational.

A business-critical application may require a different availability commitment from an internal reporting system. The SLA should define the applicable target, measurement period, calculation method, planned maintenance treatment, and exclusions.

Organizations should also determine whether to measure availability at the infrastructure, application, network, or end-to-end service level.

3. Incident Response and Restoration Targets

Response time refers to the period between an incident being reported or detected and the provider acknowledging it or beginning the agreed response activity.

Restoration time refers to the period required to restore an affected service, according to the agreed measurement rules.

These are different measures. A provider may acknowledge a critical incident quickly but cannot restore the service immediately because the incident requires investigation, vendor assistance, or customer approval.

Businesses should define incident priorities, response targets, escalation thresholds, restoration expectations, and when targets can be paused or excluded.

4. Monitoring and Reporting Requirements

The SLA should explain how the provider monitors service performance and reports results.

Reporting requirements may include availability, incident volumes, response-time compliance, restoration performance, recurring issues, SLA breaches, and corrective actions.

Enterprise customers should establish the reporting frequency, report recipients, data sources, and procedures for challenging inaccurate or incomplete measurements.

5. Escalation and Communication Procedures

The agreement should specify who contacts whom when a critical incident occurs, who escalates an issue, and how they communicate progress.

For organizations with multiple offices or business-critical systems, escalation procedures should account for operational impact, service dependencies, business hours, and incident severity.

The agreement should also clarify when the provider must engage customer stakeholders, third-party vendors, or specialist support teams.

6. Responsibilities, Exclusions, and Remedies

A well-structured SLA defines both parties’ responsibilities. These may include providing access, approving changes, maintaining supported configurations, supplying accurate asset information, and coordinating third-party vendors.

It should document exclusions, dependencies, service-credit conditions where applicable, and procedures for addressing repeated failures.

Businesses should review these provisions carefully to avoid situations where the headline SLA target looks attractive but excludes important services or scenarios.

Key Components of a Service Level Agreement (SLA)

Availability & Responsiveness

Outages or service-affecting incidents are defined, along with what the reporting and response process is if an outage occurs. For Network monitoring services, it is common to use percentage goals such as 99.99% network uptime for a year. Service availability includes database accessibility, data center resources, and network uptime. Additionally, Service Level Agreements may also consider scheduled maintenance and other known factors. Finally, your MSP will have a monitoring system to measure uptime and other metrics included in your SLA.

Responsiveness measures how fast the MSP responds to the initial call/chat/email/ticket and performs the services required to close the incident. To receive timely service, the customer will also have their responsibilities detailed for how to report issues, etc., in the service agreement.

Procedures for Reporting Problems

Make sure that the following items are spelled out in detail.

• Who does the client company contact? 
• How does the client initiate contact?

Clients should be able to report problems through the agreed communication channels:

• Portal or ticketing system: Submit a ticket describing the issue and its business impact.
• Email: Send incident details to the designated support email address.
• Phone call: Contact the support team for urgent or critical incidents.
• Chat: Request assistance through the designated chat channel

What are the escalation procedures? You and your MSP will agree on how more complex incidents escalate to more senior technical staff. Further, the SLA will detail different types of problem severity and the response times for each type of incident.

As an example, the resolution time in an SLA across four severity levels looks like this:

Priority	Priority Definition	Resolution SLA
P1 (Critical)	Business Impacting Full Block outage One or more Routers are hard down Clients cannot log into network Entire Block or Blocks are affected	4 Hours
P2 (High)	Partial site outage/Loss One or more Switches are down Customer experiencing degradation of service, or loss of services Multiple Locations/Buildings are affected	8 Hours
P3 (Medium)	Incident/ Impacting Access Points are experiencing issues, however is not causing a wide loss of service beyond a building unit or Floor.	24 Hours
P4 (Low)	Incident/Non-Impacting Service issues but low-level incident required to investigate minor issue or Access Points, Switches or Routers flapped for a very brief time Single User issues	48 Hours

Monitoring and Reporting

Now that most of the SLAs are developed, we need a way to measure what is happening that may affect your SLA.

Items to include:

• Data to collect and how often
• Types of reports generated
• Types of reports the client can access

What Are Common SLA Metrics to Track?

SLA metrics help businesses determine whether a managed service provider meets its contractual obligations and delivers the expected operational outcomes.

Metric	What it measures	Why businesses track it
Service availability	Percentage of the measurement period that a covered service is available	Helps assess service reliability
Incident response time	Time taken to acknowledge or begin responding to an incident, as defined in the agreement	Measures responsiveness to operational issues
Restoration time	Time taken to restore an affected service	Helps evaluate the impact and duration of service disruptions
SLA compliance rate	Percentage of eligible incidents or measurements meeting the applicable SLA target	Shows overall compliance with contractual commitments
Incident recurrence	Frequency of repeated incidents or recurring failures	Helps identify underlying operational problems
Reporting compliance	Whether required reports are delivered accurately and on schedule	Supports governance and service reviews
Escalation compliance	Whether incidents are escalated according to the agreed process	Helps assess incident management discipline

Businesses should select metrics that reflect actual service outcomes rather than measuring activity alone.

For example, a high volume of monitoring alerts does not necessarily show that organizations deliver effective service. Organizations should evaluate whether they handle alerts appropriately, escalate critical incidents, and address recurring problems.

Consequences for not meeting service Obligations

The SLA will spell out metrics and penalties for each service included in the SLA. Your MSP will specify under what conditions your firm will receive a credit against your monthly charges for an SLA “violation.” Monthly service credit is the most common type of remediation. In rare cases, there may be a refund. Finally, your SLA may also include termination options.

Service Credit in SLA

Service Credit in service Level Agreement (SLA) is a contract between two parties where one party agrees to provide a certain level of performance for a fee. The other party agrees to pay the first party a penalty if the agreed-upon level of performance is not met.

Escape Clauses or Constraints

Certain conditions may exempt the MSP from the terms of the SLA; conditions like a force Majeure may excuse the MSP from the penalties specified in the SLA if service drops below a defined threshold. This is where you’ll detail other exclusions and how to handle third-party claims.

Managed Services SLA Example for Businesses

Consider a business that outsources network monitoring and infrastructure support across several office locations. The organization wants clear commitments for critical incidents, reporting, and operational escalation.

The following table illustrates how an SLA might be structured.

SLA component	Illustrative commitment	Business purpose
Monitoring coverage	Continuous monitoring of specifically listed infrastructure	Helps detect covered service issues outside normal business hours
Critical incident response	Acknowledge within 15 minutes	Establishes an expectation for urgent incident handling
High-priority incident response	Acknowledge within 1 hour	Defines responsiveness for significant service degradation
Performance reporting	Monthly report with agreed operational metrics	Enables governance and provider performance reviews
Critical incident escalation	Escalate according to documented severity thresholds	Helps engage the appropriate technical and business stakeholders
Service review	Quarterly operational review	Supports improvement planning and review of recurring issues

How Businesses Should Evaluate an SLA Example

Before adopting a sample SLA, organizations should ask:

• Does the agreement cover every required location, system, and service?
• Are response, resolution, and restoration targets clearly distinguished?
• Does the provider offer the required after-hours and weekend coverage?
• How are uptime and SLA compliance calculated?
• Are incident priorities and escalation procedures documented?
• What happens if the provider repeatedly misses agreed targets?
• Are third-party dependencies and customer responsibilities clearly defined?
• Can the provider supply reports that demonstrate actual performance?

Treat an SLA template as a starting point for commercial and operational discussions, not a substitute for an agreement tailored to the organization’s requirements.

SLA Templates by IT Service Use Case

Different IT services have different operational requirements. Businesses should adapt their SLA templates to the services being outsourced rather than applying identical performance targets across every environment.

Managed Network Monitoring

A network monitoring SLA may cover monitoring availability, alert acknowledgment, incident escalation, reporting, and coordination with network support teams.

Organizations with distributed offices should clarify which network devices, connections, and locations are covered and whether the provider is responsible for monitoring, troubleshooting, remediation, or all three.

Managed Server and Infrastructure Support

A managed server SLA may define availability expectations, incident response, restoration objectives, backup monitoring responsibilities, escalation procedures, and maintenance windows.

Businesses should distinguish between monitoring a server, diagnosing a fault, restoring a service, and resolving the underlying problem. These activities may have different contractual targets.

Help Desk and IT Support

A help desk SLA typically defines response targets by ticket priority, support hours, escalation requirements, reporting, and the responsibilities of different support tiers.

Organizations should clarify whether targets apply to first response, resolution, or both. They should also define how tickets awaiting customer information or third-party action are handled.

Cloud and Application Support

Cloud and application support agreements may include availability, incident response, service restoration, change management, and coordination across infrastructure and application teams.

Businesses should identify which party is accountable for each service component, especially when cloud providers, software vendors, and an MSP share operational responsibilities.

What Are the Best Practices for Managing SLAs?

Manage an SLA as an ongoing operational agreement rather than a document reviewed only when a contract is signed or renewed.

Align Service Targets With Business Impact

Identify which services support revenue, customer experience, employee productivity, and regulatory obligations. Use those priorities to determine appropriate availability and incident-handling expectations.

Not every system requires the same service level. Applying the highest target to every asset may increase costs without delivering equivalent business value.

Define Measurable and Realistic Commitments

Avoid vague phrases such as “rapid response” or “maximum uptime” unless you support them with precise definitions.

Specify measurement periods, applicable thresholds, time zones, coverage hours, exclusions, and reporting requirements. Ensure the provider has the operational capabilities needed to meet the commitments.

Establish Clear Ownership

Assign responsibility for monitoring, incident acknowledgment, troubleshooting, remediation, customer approvals, and third-party coordination.

Where responsibilities are shared, document handoffs and escalation paths to reduce delays during incidents.

Review Performance Regularly

Use service reviews to examine SLA compliance, recurring incidents, capacity concerns, service changes, and outstanding corrective actions.

Organizations should investigate repeated breaches rather than focusing exclusively on monthly compliance percentages. A provider can meet an individual response target while recurring technical problems continue to affect business operations.

Connect SLA Reporting to Business Outcomes

Translate technical metrics into operational impact. For example, explain how network outages affected business locations, how recurring incidents influenced service availability, and whether remediation reduced repeat failures.

This approach enables IT leadership, procurement, and business stakeholders to evaluate the provider’s contribution to operational reliability.

Document Remediation and Contractual Remedies

Define what happens when service commitments are missed. Depending on the contract, this may include incident reviews, corrective action plans, service credits, or other negotiated remedies.

Businesses should confirm the eligibility requirements, exclusions, claim deadlines, and limitations associated with any remedy.

How Often Should a Managed Services Agreement Be Updated?

Review a managed services agreement at planned intervals and whenever material changes affect the services, risks, or responsibilities defined in the contract.

Many organizations use quarterly operational reviews and annual contract reviews as a starting point, although the appropriate schedule depends on service complexity and business requirements.

An agreement may need an earlier review when:

• The business opens new locations or expands into new markets.
• Infrastructure, applications, or cloud environments change significantly.
• The provider’s scope of responsibility expands or contracts.
• Repeated SLA breaches indicate that current targets or operating procedures need attention.
• New security, compliance, or reporting requirements emerge.
• Contract renewal or commercial renegotiation is approaching.

An update should not simply change the target values. It should also review measurement methods, service coverage, exclusions, escalation procedures, dependencies, and reporting obligations.

Changes to contractual commitments should be documented and approved by the appropriate parties. This helps ensure that operational teams and business stakeholders work from the same expectations.

How Should Businesses Evaluate an MSP’s SLA Before Signing a Contract?

When comparing managed service providers, businesses should evaluate the complete SLA alongside the proposed service scope, operating model, technical capabilities, and commercial terms.

A practical evaluation should consider the following:

Coverage and service scope: Confirm which locations, systems, and support activities are included.

Performance commitments: Confirm whether availability, response, and restoration targets are measurable and aligned with business priorities.

Operational capability: Assess how the provider monitors services, handles incidents, escalates critical issues, and coordinates remediation.

Reporting and transparency: Verify that performance reports provide enough detail to evaluate compliance and identify recurring issues.

Accountability: Review the provider’s obligations, customer dependencies, exclusions, and remedies for missed commitments.

Scalability: Determine whether the agreement can accommodate additional sites, infrastructure, workloads, and changing operational requirements.

Commercial alignment: Compare the proposed service levels with the pricing, service coverage, and support responsibilities being offered.

A provider offering a lower price may not be the best choice if it excludes critical coverage, incident handling, or reporting requirements. Conversely, paying for higher service levels across every system may not be necessary when business priorities vary.

SLAs: The Bottom Line

In summary, SLAs provide one of the essential items in the service provider-client relationship. SLAs set expectations! When you sign the contract, both parties to the agreement know what to expect. If this is the first engagement between the client and the MSP, the initial SLA can set the foundations for mutual success.

Initially, perhaps only a certain amount of IT infrastructure or functions can be included in the agreement with the opportunity for growth. As the relationship progresses, the MSP can take on more of the client’s IT functions. This is how the SLA is the foundation for success.

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