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Points to consider when drawing up a Service Level Agreement

10 May '23

Author(s): Matthijs Gardien and Lars Boer

In an previously posted blog we wrote about common mistakes when drawing up IT contracts. One of the common mistakes we mentioned in our previous blog is the failure to make clear agreements on the maintenance and management of the purchased or supplied software, with all the consequences this entails. We also mentioned that this mistake can be avoided by concluding a Service Level Agreement (or in short "SLA"). In this blog, we will zoom in on the SLA by, among other things, dwelling on the function of a SLA and mentioning some points of interest when drafting it.

What is an SLA?

A SLA is an agreement entered into alongside a main agreement between the buyer of an ICT service and an ICT supplier. Whereas the main agreement usually stipulates the features and delivery time of the software, the SLA contains agreements on the maintenance and management of the software that the ICT supplier provides to the customer. The SLA thus stipulates, among other things, what the customer can expect when the software does not function properly.

The absence of an adequate SLA can lead to problems. In case of a possible malfunction of the purchased software, the customer will quickly be of the opinion that the ICT supplier must solve the malfunction, while the ICT supplier shall rather be of the opinions that its obligations have ended with the delivery of the software. Such (often long and costly) discussions - possibly resulting in a trip to court - can be avoided by concluding an adequate SLA.

What are the points to consider when drafting an SLA?

1. Agree what the buyer can expect from the software

Both customer and supplier benefit from properly recording what the customer can expect from the software. In this way, the customer avoids unpleasant surprises and the supplier avoids unsatisfied customers. With this in mind, it is a good idea to agree in advance how much "uptime" the customer can expect. The "uptime" is the percentage of time the software should be available. When determining uptime, the time the supplier needs to perform software maintenance and updates at pre-arranged times can also be taken into account. In addition, it can be defined whether the supplier will perform updates at all.

Further agreements can be made about who is responsible for making backups and possibly about the manner (e.g. by phone or e-mail) in which the supplier will provide support. What is agreed in this respect will always depend on the customer's wishes and the supplier's offer.

2. Agree on what the buyer can expect from the supplier if the software does not function

It is also important to record what happens if the software does not work flawlessly. For instance, it can be recorded which errors are solved by the supplier and which types of errors are handled by the customer's IT department. For those errors that are resolved by the supplier, it is a good idea to establish the timeframe within which the supplier should resolve such errors and also whether the supplier may charge for resolving these errors. Again, what exactly should be agreed on always depends on the wishes of the customer and what the supplier wants to offer. In addition, the SLA can also be used to limit the ICT supplier's liability.

3. Make practical arrangements

Finally, it is important to make practical agreements in the SLA. This will facilitate pleasant cooperation. Agree who the contact persons of both parties are, how (first) notifications should be made, categorise malfunctions according to their degree of urgency, agree on the step-by-step plan after a notification and discuss the duration of the SLA (this need not always be the same as the main agreement).

Conclusion

In short, the importance of a good SLA should not be underestimated. Do you need help drafting a SLA? Or would you like to have an assessment of whether the SLA you have drafted is adequate? Then contact Matthijs Gardien or Lars Boer.

Contact

Attorney at law, Partner

Matthijs Gardien

Expertises:  Contract law, Litigation, IT-Law, Cybersecurity , Privacy law, Start-up and Scale-up, Commercial Contracts, E-commerce, Artificiële intelligentie,

Attorney at law

Lars Boer

Expertises:  IT-Law, Privacy law, Procurement law, Cybersecurity , Technology, Media and Telecom, Commercial Contracts, Start-up and Scale-up,

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