What is an SLA? A Guide for Businesses

When outsourcing critical services or procuring telecoms and IT infrastructure, one acronym you’ll encounter again and again is SLA – shorthand for Service Level Agreement. But what is an SLA in concrete terms? Why are SLAs so indispensable in B2B contracts? And how do you evaluate one effectively?

This article explains what a service level agreement is, the core elements of service level agreements, and what to look out for in real world SLAs (especially in leased lines, connectivity and network services).

What is a Service Level Agreement (SLA)?

A service level agreement (SLA) is a formal contract between a service provider and a customer that defines the expected level of service, along with remedies if those expectations aren’t met. In essence, an SLA sets out the rules of engagement:

• What the provider promises to deliver (e.g. uptime, response times, throughput)
• Under what conditions those promises apply
• What happens if the provider fails to meet those promises

In B2B technology and telecom environments, SLAs are the backbone of accountability. Without them, customers bear the risk that performance will fall below requirements, with no recourse. Thus, understanding what is an SLA, or what is a service level agreement, is vital for any business buying outsourced infrastructure, connectivity or managed services.

Where and Why SLAs matter (especially for Networks & Leased Lines)

SLAs are most frequently used in technology, telecommunications, cloud computing, and managed services contracts. That includes:

• Leased lines
• Internet connectivity / Ethernet circuits
• Managed network services (SD-WAN, MPLS, VPN)
• Cloud platforms, software as a service (SaaS)
• IT outsourcing, hosting, data centre services

For a leased line, for example, an SLA will typically define:

• Uptime / availability (e.g. 99.9%)
• Latency, jitter, packet loss
• Response and repair times for faults
• Change management windows (notice period before maintenance or upgrade)
• Exclusions, e.g. when external factors hinder performance
• Compensation / penalties if service levels aren’t met

Because network services are highly technical and failure is costly for businesses, the SLA becomes a key instrument to balance risk and enforce guarantees.

Core components of a Service Level Agreement

To answer “what are SLAs” and “what are SLA s” in practice, here are the standard building blocks:

1. Service Description

A clear definition of the services covered. This helps prevent ambiguity – both parties should know exactly which parts of the infrastructure, connectivity or application are within scope.

2. Performance Metrics (Service Levels)

These are the quantifiable metrics that the provider agrees to meet, and commonly include:

• Availability / uptime (e.g. 99.95 %)
• Response / initial response times for support
• Mean time to repair (MTTR)
• Throughput / bandwidth
• Latency / jitter / packet loss

SLAs may also separate metrics by severity levels (e.g. P1, P2, P3 incidents) or by different service tiers.

3. Monitoring, Measurement & Reporting

Defines:

• How performance is measured
• What tools or systems will monitor (automated vs manual)
• Frequency / interval of reporting
• Access to dashboards / data
• It’s not enough just to set metrics – you must be able to verify they’re met.

4. Support & Escalation Procedures

This describes how customers raise issues, the escalation path, who is accountable, and staff responsibilities at each level of severity.

5. Change Management / Maintenance Windows

The SLA should specify how the provider may schedule maintenance, how much notice is required, and windows during which performance metrics may be relaxed (e.g. during maintenance).

6. Exclusions & Limitations

Circumstances beyond the provider’s control (force majeure, third-party failures, acts of nature) are typically excluded. Also, misuse, improper handling or configuration by the customer may void certain SLA guarantees.

7. Penalties, Remedies & Credits

If the provider fails to meet agreed service levels, the SLA should define the compensation mechanism. Common models include:

• Service credits (a discount on the next invoice)
• Monetary penalties (rare in B2B telecoms)
• Right to terminate contract or switch providers

8. Review & Revision Clause

Because services and business needs evolve, good SLAs allow periodic review and renegotiation.

What makes a good SLA? – Best practices

When evaluating SLAs, here are recommendations you should demand:

• Clarity, not ambiguity: Terms and metrics should be unambiguously defined
• Realistic but aspirational metrics: Too lax and they offer no value; too strict and they may be unachievable
• Alignment with business impact: Ensure the SLA metrics reflect what matters most to your operations
• Transparency: You should have access to measurement data and dashboards
• Appropriate remedies: Compensation or credits should meaningfully offset failure, but not be so punitive as to deter providers
• Balanced exclusions: Exclusions must be reasonable – providers shouldn’t be able to excuse faults too easily
• Escalation clarity: You want defined escalation paths, roles, and deadlines

A mature service level agreement is not just a legal document; it becomes a living operational contract.

Summary: What is an SLA?

• It’s a contract between customer and service provider
• It defines measurable performance targets and expectations
• It sets out how performance is monitored, reported, and enforced
• It includes remedies or penalties in case of failure
• It also establishes the conditions under which the SLA may not apply

When someone asks “what is an SLA?” or “what is a service level agreement?”, the answer isn’t just a dictionary definition – it is a critical risk management instrument in B2B sourcing.

Leased Line SLA examples

A leased line SLA is particularly important because businesses depend on dedicated connectivity for critical operations, cloud access, and communications. Unlike broadband, which is often “best effort,” a leased line SLA guarantees specific performance levels – such as near-constant uptime, symmetrical upload and download speeds, and rapid fault resolution. These agreements often include stringent repair time commitments (e.g. a four-hour fix), proactive monitoring, and service credits if targets aren’t met. For many organisations, the leased line SLA is what differentiates a premium business-grade service from cheaper but less reliable alternatives, ensuring continuity and resilience in day-to-day operations.

Let’s illustrate with a hypothetical example of a leased line SLA:

The service level agreement would also specify:

• When the SLA doesn’t apply (e.g., acts of God)
• How the customer raises a fault
• Escalation path (e.g. Level 1, Level 2 support)
• How performance data is shared

By having an SLA for your leased line or connectivity service, you protect your business from unacceptable downtime and ensure the provider remains accountable.

Get in touch

If you want to improve your internet, or you aren’t sure which service would be right for you, get in touch online today so our team can help find the best solution for you and your business.

Go online to compare different leased line deals.