In a client-based ALS, the client and service provider enter into an agreement on the services to be provided. For example, a company may negotiate with the IT service provider that manages its billing system to define its relationship and specific expectations in detail. The third and final type of service level agreement is multi-level ALS. In multi-level ALS, aspects of ALS are defined by the client`s organization with a kind of heredition with global definitions relevant to all lower levels. This ALS focuses on the client`s organization. All services and their relationships with subordinate services are used in defining the agree structure for multi-level service levels. The clear definition of the levels of service expected by the provider helps both parties to eliminate the shadows that are often related to service delivery. THE ALS defines the expected level of service. As part of a service level agreement, financial incentives can be introduced in the event of exceeding targets and penalties for non-compliance with a specified level of service. As a general rule, telecommunications services are subject to penalties for the provider when they are outside the agreed ALS metrics. There are three types of service level agreements that can be documented. Before defining ITIL service level requirements and agreeing service levels via ALS, the most appropriate SLA structure must be designed. Depending on the services available to a customer or business, an SLA structure corresponding to the objective is designed.
Service level agreements are usually signed during the ITIL service design phase of ITIL`s lifecycle. Management elements should include definitions of standards and methods of measurement, reporting processes, content and frequency, a dispute resolution procedure, a compensation clause to protect the client from third-party disputes arising from breaches of service (which should already be included in the contract) and a mechanism to update the agreement if necessary. In addition to defining performance metrics, an ALS may include a downtime and documentation management plan, as the service provider compensates clients for violations. Service credits are a typical remedy. For example, service providers may provide credits commensurated with the period during which they exceeded the ALS performance guarantee. A service provider may limit performance penalties to a maximum dollar amount to limit the risk. A service level contract is a formal and structured agreement between two parties to offer one or more services at the agreed level. One of the parties is always the customer of the services.
The other part is the provider that provides the services. A provider may be part of the same organization as the debitor (service provider) or in another (external) organization. ALS can be a physical or electronic document. Authorized persons from both parties should sign the document.