Best practices for an efficient SLA in a SaaS contract
What to include in a SaaS SLA? What is its purposed and how to avoid traps?
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The SLA (Service Level Agreement) is a key element of a SaaS contract. It defines the provider's commitments in terms of availability, performance and support of its services.
It is in the interest of both parties to have a solid and consistent SLA, in order to avoid any uncertainty about the commitments of the SaaS provider.
Here are the best SLA practices that I recommend you implement.
An SLA must contain clear and measurable performance indicators (KPIs), including some or all of the following indicators:
These indicators may vary depending on the level of customer engagement. The service provider can thus offer more stringent SLAs in return for a greater financial commitment from the customer.
These commitments must be accompanied by precise measurement and monitoring arrangements. SaaS providers generally have an availability monitoring page on their website, which allows the customer to monitor the availability of services independently. The customer can generally choose to be notified in case of unavailability.
The SLA may contain sanctions applicable in case of breach of contractual commitments. These penalties may take the form of:
It is common for the parties to negotiate on the liberalization of penalties: this means that by paying them, the provider is exempt from any other compensation for the breach in question. While the liberatory nature of the penalties is not included, they do not exclude the application of damages if the customer suffers significant harm as a result of this breach.
These provisions allow the customer to have a means of pressure on the SaaS provider if it does not provide a service that meets its contractual commitments.
If the service is regularly faulty, the customer will want to be able to disengage easily. An SLA can include:
It is not recommended to provide for the possibility of automatic application of this right, or an application at the first violation of service levels. Rather, it is to be expected in the event of non-compliance with them several times in a given period (for example 3 times over 12 months or 2 consecutive months).
In a SaaS contract, the SLA is difficult to customize for each customer, as the infrastructure is shared between all users, which complicates the specific adaptation of commitments for each and makes their monitoring complex for the service provider.
The most pragmatic option for the service provider is to provide SLA levels adapted to each type of customer.
It is also possible to personalize it for key customers, provided that this does not compromise the consistency of service.
A well-written SLA is a driver of performance for the service provider and customer satisfaction.
It guarantees the quality of service, oversees responsibilities and protects both parties in the event of a dispute.
A good SLA is based on clear commitments, adapted penalties and taking into account the specificities of the service.
I can support SaaS providers to think about their SLAs, and write them in an effective and service-appropriate manner, and SaaS service customers in order to match SLAs to their operational constraints.
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I have been supporting software and SaaS companies for more than 10 years, to structure their business, protect their intellectual property and improve their contracts.
