Service Level Agreements (SLAs) define expectations among two or more parties regarding service quality, priorities, and responsibilities. While SLAs have traditionally been a contract between a Service Provider and an Enterprise customer, the expanding value chain for new-generation services has made SLAs important for a myriad of partnerships, including:

      •    Service Provider to End User;
      •    Service Provider to Vendor;
      •    Service Provider to Enterprise (e.g., a large business or an MVNO);
      •    Enterprise to End User;
      •    Service Provider to Enterprise (i.e., an MVNO);
      •    Network Provider to  Service Provider (e.g., i.e., a network access provider)
      •    Vendor to Network Provider, Service Provider, or Enterprise;
      •    Content Provider to Content Aggregator or Advertiser. To compete successfully, companies must proactively manage the quality of their services. Since provisioning of those services is dependent on multiple partners, management of partner services SLAs become  critical for success. SLAs are used to define and manage expectations among partners for performance, customer care, billing, service provisioning, and other critical business areas.

SLA Management can also be used to assess predefined penalties when SLA parameters, such as failure to meet performance, timeline, or cost requirements, are not met. For example, if network downtime exceeds one hour, the penalty is a 10 percent rebate of service fees.

Business Benefits
Improve and differentiate services by defining performance and its measures
Strengthen compliance to ITIL®, Sarbanes-Oxley, Six Sigma, and COBIT
Build actionable performance tracking and controls   
Produce a common language for characterizing network and operational parameters

SLAs are also defined at different levels such as:

    * Customer Based SLA: An Agreement with an individual customer group, covering all the services they use. e.g. An SLA between a supplier (IT Service Provider) and Finance Dept. of a large organization for the services such as finance system, payroll system, billing system, procurement/ purchase system etc.

    * Service Based SLA: An agreement for all the customer using the services being delivered by the service provider e.g.:
          o (Non IT Example) A car service station offers a routine service to all the customers and offers certain maintenance as a part of offer with the universal charging.
          o (IT Example) an email system for the entire organization. There are chances of difficulties arising in this type of SLA as level of the services being offered may vary for different customers (e.g. Head office staff may use highspeed LAN connections while local offices may have to use a lower speed leased line)

    * Multilevel SLA: The SLA is split into the different levels, each addressing different set of customers for the same services, in the same SLA.

    * Corporate Level SLA: Covering all the generic service level management (Often abbreviated as SLM) issues appropriate to every customer throughout the organization. These issues are likely to be less volatile and so updates (SLA reviews) are less frequently required.

    * Customer Level SLA: covering all SLM issues relevant to the particular customer group, regardless of the services being used.

    * Service Level SLA: covering all SLM issue relevant to the specific services, in relation to this specific Customer group.

Source: TM Forum/Wikipedia