What Is SLO In Relation To Service Level Agreements?

Updated 25 September 2022

When companies make agreements with other parties, such as service providers, they often create formal agreements called service level agreements (SLA). One element of these agreements may be the overall objective, or the service level objective (SLO). Learning more about the meaning of a service level objective can help you develop more effective agreements. In this article, we answer the question 'What is SLO?', discuss the definitions of and differences between SLA, SLO and SLI and provide tips on how you can create each effectively.

What Is SLO?

The simple answer to "What is SLO?" is that it is a service level objective used within an SLA. SLOs are the goals and objectives that businesses use to fulfil an agreement with a customer. While they make up the specific agreements within a contract, providers may use SLOs solely for internal purposes. IT companies may share these objectives with clients in broad terms. SLOs include a specific data point, like the response time the company is promising once the client shares a problem.

What Is An SLA?

An SLA is a contract made between a company and a client or product user. These documents govern the client's overall service expectations from a provider. An SLA includes measures used to evaluate the successful application of the contract. These contracts can include penalties for not meeting certain terms of the agreement and usually are created by legal professionals working for the company or external legal contractors.

What Is An SLI?

An SLI is a service level indicator. SLIs signify the data that indicates a company's performance. Businesses use these indicators in combination with an SLO to measure how well they meet the terms within an agreement. IT providers use SLIs to meet or exceed the terms of the agreement as described within an SLO. Some companies use multiple service level indicators to assess objectives.

SLA Vs. SLO Vs. SLI

Here are some of the main similarities and differences between each of these components:

Structure

A service level agreement is the main document outlining terms of service between a client and a provider. Service level objectives and indicators are the parts of an SLA that define the nuances of a contract. Providers typically create SLOs independent of an SLA for internal use. SLOs define what IT businesses offer for users or provide details for staff members' work expectations. SLIs exist to evaluate SLOs and cannot function independently.

Uses

Companies use SLOs to determine if they are meeting their SLAs. SLOs are often quantifiable to prove if the company is capable of fulfilling the requirements. SLOs create company guidelines and service performance indicators, which show a company's success over time. The secondary objective of an SLA is to ensure that all parties have an understanding of what the contract entails and what the goals are for both parties involved.

An IT provider might use SLIs and check them periodically, in addition to an ongoing service level agreement with a client. An SLI also can assist within a competitive market area, like a networking provider market, as a way for business to evaluate themselves against others and compare themselves to other areas within their industry.

Pros and cons

There are plenty of benefits when companies use an SLA. One of the biggest advantages is the way it clarifies a business' agreement with a customer. SLOs can help customers and businesses clarify the expectations and arrangement of service terms. Using effective SLIs gives you the metrics to prove your performance to a client.

Some challenges of using an SLA and its components typically come with the specifics of the terms. An SLA may not have enough details to accurately measure certain parts of the contract in a way that makes terms clear to a consumer. When SLOs are vague, clients may ask questions and wonder if the terms of the contract are being fulfilled. With SLIs, choosing the right data to measure objectives can become a challenge.

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Tips For Creating SLAs, SLOs And SLIs

Here are some tips to help you create service level agreements and their components:

Consider your promises, objectives and data points

These three items make up a client contract and all link to each other to clarify terms and measure performance. The SLA outlines the promises made to create an arrangement with a client. SLOs present the goals used to govern the work necessary to meet customer needs. SLIs give specific metrics that allow team members to evaluate their work internally to determine if they are meeting service level objectives.

Create your SLA based on what your customer expects

Consumers may want to be able to clearly understand what they can get when they purchase products or use a service. Before you write your SLOs, take time to develop them based on what you know your customers want. When you create SLOs, avoid imposing your own ideas onto other parties involved in the contract. Include specific details and keep company guidelines as simple as possible.

Develop systems that measure performance within SLAs

When creating an SLA for a client, it may be difficult to determine objective and performance indicators that are measurable through speed, failover availability and cost savings of business operations. To create an effective SLO, be sure to include data points specific to the market area in which the company operates. For example, a network provider may want to measure its service levels on the availability of each segment of the network or how many users are in specific access areas at any one time.

Review SLAs and SLOs regularly

You may review your SLAs, SLOs and SLIs regularly to ensure they reflect current business needs. The more competitive a market area becomes and the more changes that occur in industry standards, the more essential it becomes to evaluate and update your agreements, objectives and data points. For example, if a company uses a specific provider for its POS services, you may want to reevaluate whether that provider is still meeting your needs in terms of service level objectives.

Anticipate challenges and account for them in your SLA

When creating a client contract, you can anticipate difficulties. For example, it is important to consider problems related to network failure, such as data loss and outages. A company can consider new technologies that can provide more flexibility in their service offerings and use SLOs to govern the type of service they provide.

Ensure that all parties involved can understand the objectives

When working with any documents like SLAs, SLOs and SLIs, it is crucial that all involved parties have an understanding of the contract's terms. For example, if a company does not agree with the terms of an SLO for its accounting department, it may be time for a meeting to discuss the terms in your agreement. Consider the level of feedback your team is willing to receive and how often you are willing to make changes to specific items within the SLA.

Plan incident responses

You may develop an incident response plan (IRP) to define your response and recovery procedures for an outage or security incidents. This is a critical step in maintaining the health of an IT infrastructure or network.

For example, if a service outage occurs on a primary provider, you may have an SLA in place with a secondary provider. That secondary provider may contain the information it needs to provide services to clients that the outage has affected and explain how it plans to fix any damage related to the outage. The terms of an IRP can change over time, so it is important that employees who implement them understand them.

Carefully choose your data points

There are specific data points that are considered measures of service delivery. These include the presence of end-user devices, application performance and error rates, quality and other important metrics related to the confidence level in which customers perceive your service.

For example, in a healthcare industry where patient data is at risk and it is a regulatory requirement to report any instance of data loss or security breach, it may be important for you to develop SLOs that outline your service-level agreements in terms of restoring notes from patient charts after data loss or maintaining the confidentiality of patient records when there has been a security breach.

Simplify your word choice in an SLA

When creating SLAs and SLOs, word choice matters. Make sure the client understands the specific language used in an agreement. For example, if you use the phrase, the provider will work to restore access to data, you may define what you mean by working to restore access to data.