Written by
Ashlee Tilford
Published on
April 29, 2022
August 4, 2022
A service-level agreement (SLA) is a contract between two parties that defines the deliverables, obligations, and expectations of each party. SLAs are essential in SaaS buying.
Understanding how to write a solid service-level agreement will help a business establish accountability with service providers and set realistic expectations with stakeholders while also enhancing risk mitigation.
This post covers the details of how to write a service-level agreement and provides an SLA template for businesses to use.
An SLA serves several critical purposes. It is a contractual document that acts as an ongoing reference point for service and reliability expectations, like uptime guarantees, response times for issues, and resolutions for downtime. It covers important details like length of contract, price, renewability, and scope. An SLA also outlines customer responsibilities to ensure the service is used within the standards set by the service provider.
Related: Service-level agreement (SLA) basics to improve your SaaS buying process
Depending on the business, there are different types of service-level agreements that may come into play.
A customer service-level agreement is needed when there is an agreement with a supplier to provide service to a customer. For example, a SaaS supplier will need to create a customer SLA and SaaS license agreement if it is going to provide SaaS access to a customer.
Some businesses create internal service-level agreements to ensure alignment between in-house stakeholders, like IT, sales, and marketing. It is common for businesses that have customer service-level agreements to also have corresponding internal service-level agreements.
If the business has entered into a customer service-level agreement to provide its SaaS solution to a customer, it may also do an internal service-level agreement with IT for help desk or support services for that customer SLA.
A multilevel service-level agreement is used when there is more than one service level that needs to be addressed. The multilevel SLA may combine the customer SLA and internal SLA, depending on the situation. This type of agreement helps businesses avoid overlapping or incongruent SLAs.
Before moving into the details of a service-level agreement template and how to create one, it’s just as important to be able to quickly identify if an SLA contains all of the elements it needs.
Regardless of the type of SLA, it should begin by addressing the parties to whom the agreement pertains. It may also reference a master service agreement (MSA) if there is one already in place.
Terms can have different meanings to different people, depending on their experience and their industry. Defining terms at the beginning of the agreement is essential to ensuring the parties entering into the agreement are aligned. Once defined, the terms should be used consistently throughout the agreement, avoiding synonyms or industry slang.
Identifying the exact services being supplied under the service-level agreement eliminates any ambiguity about what the supplier is providing for the stated cost or discrepancies between customer expectations, service provided, and quality of service. This may also be called a scope of work.
An SLA should include all costs associated with the services being provided under the agreement. There should never be surprise costs that pertain to the scope of work. Itemized pricing for all aspects of service must be listed, including responsibility for any applicable taxes or other fees. It should also state that any services added that are beyond the scope of work in the SLA will be quoted separately.
Regardless of which party created the SLA, it must include a section of the detailed responsibilities (also called warranties or representations) of each party involved in the agreement. If any party in the agreement does not uphold its responsibilities, it is considered a breach.
For SaaS agreements, this section may include items such as the terms of delivering the services, guaranteed uptime, outage management, support guarantees, performance levels, data security, compliance, use of subcontracts, proprietary rights, rules around assigning the agreement to a third party, and governing law.
An SLA should include an explanation of how the agreement will be managed on an ongoing basis. It will address items like renewals and whether they will be automatic or issued a stated number of days before the end of the agreement period. The agreement should detail terms surrounding cancellation.
For example, perhaps the SLA must be canceled 60 days before the end of the term. A termination clause addresses what happens if either party breaches the contract. The SLA will also address how all parties should handle price increases.
An SLA includes a section, often called indemnification or hold harmless, that describes an agreement of limitation of liability and indemnification for either party. For example, if a supplier’s SaaS solution hosts confidential customer data and that data is breached resulting in a third-party lawsuit, this section addresses liability, time limits, maximum compensation, and so on.
If the SLA references any other agreements or addendums, the SLA should include them as exhibits at the end of the agreement. This could include a master services agreement, additional related SLAs, or changes that have been made to the SLA. For example, a customer might want to include their own SaaS rider that includes some internal SaaS governance as an addendum to the SLA.
The following easy-to-use SLA agreement template is intended to assist businesses to create their own. Here are the elements of an SLA and what should be included in each.
Outsourcing SaaS management to Vendr, a third-party SaaS vendor management supplier, is one of the most effective ways to reduce the knowledge needed and time spent on service-level agreements. While businesses are still included and invested in SLAs, Vendr’s platform uses extensive SaaS industry knowledge to navigate and manage them so procurement and senior leadership time can be spent on more strategic initiatives.
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Danielle Aihini
Another year of SaaS savings means another report looking back on what we've learned, and what trends we think are coming in 2023, in this year's SaaS buying trend report.
The full 2022 SaaS buying trend report, out now!
Get a recap of spending and deal flow in 2022, highlights of the changing SaaS buying landscape, and predictions for 2023.
Get the full report here.
To say 2021 and 2022 have been a wild ride for software buying is an understatement. The first half of 2021 saw companies inching out of the active pandemic phase, eager to make up for lost time. By Q3, hesitancy gave way to optimism: Businesses started spending big on innovative software to fuel post-pandemic growth.
But the first weeks of 2022 became a preview of change on the horizon. Businesses began to turn the taps off as 40-year record inflation, the housing market, and bond yields painted the picture of an impending recession. While gasoline prices are easing, the economic outlook at mid-year continues to signal a downturn.
Now companies are preparing to tighten their belt and ride out an uncertain second half of the year. While no one has a crystal ball, our buyers are using insights from over 13,000 transactions to help companies build lean, resilient tech stacks for what comes next.
So far this year, we’ve helped customers keep pace with the changing landscape of SaaS buying, helping them save over $240m in savings along the way.
We’re excited to share some key highlights from the past 12 months and offer insights from our expert buying team.
As recession indicators become more pronounced, companies are preparing to weather the economic changes.
Changes in corporate roadmaps, hiring freezes, and budget reviews have risen across multiple sectors. Layoffs have become more common in major market segments such as technology, automakers, and B2C services.
Software budget allocations will likely continue to tighten, focusing on the must-have tools that drive value creation and ensure operational efficiency in any scenario. Core products geared toward serving wide-scale needs are in demand, with fringe tools and use cases taking a temporary back seat.
Takeaway: Find ways to reduce costs and free up cash flow. Focus on using software tools that add value or improve cost savings.
“I’m seeing customers in industries that provide a ‘nice to have’ service cutting back on their contracts more than others, as they are likely anticipating a downturn.” - Aubrey Zimmerman, Senior Executive Buyer.
As we predicted in our 2021 report, improvements in approval processes and stakeholder education are leading to better deal outcomes.
Where stakeholders had traditionally taken a passive role in selecting tools, the shift to remote work and a scrappy approach to the pandemic brought a greater awareness of how and why we make software decisions.
We see this trend continuing in 2022 and beyond. The team approach will prevail, with well-educated stakeholders increasingly kicking off the evaluation process and leading conversations about the best choices for a leaner software stack.
Takeaway: Keep renewal dates in view. Increasing your lead time by just two weeks can improve savings by 50%.
“As software options have increased, so has the complexity associated with buying it. Stakeholders are learning the importance of having Finance, Procurement, IT, Legal, Security, etc. on their side, and are tapping them in earlier in the process.” - Michael Murray, Enterprise Account Executive.
Companies eager to preserve cash flow are beginning to streamline spending in key areas, including marketing and software.
This trend toward a leaner marketing and SaaS budget is typical for times of economic uncertainty. The slowed pace of software spending also follows other cash-preserving tactics like hiring changes and downsizing mentioned above.
While “budget freezes” are not yet widespread, the once-loosened budget constraints for SaaS buying seen in mid-to-late 2021 are over. Businesses are carefully scrutinizing renewals and net new purchases of software, hoping to align the software portfolio with their expected headcount and hiring cadence.
"Businesses are beginning “realignment of what’s important to them versus initiating a ‘budget freeze." - John Merklinger, Manager, Executive Buying
Takeaway: SaaS isn’t going away, but it is getting more scrutiny. An iron-clad business case for new tools is vital for securing budget approval.
SaaS may be transforming to fit the economic outlook, but software buying as a whole isn’t going anywhere.
The “calm after the chaos” will lead to a more thoughtful buying approach, with better decision-making as the end result.
Tempering the enthusiasm of late 2021 software buying with a renewed commitment to selecting best-fit tools, businesses will be able to do more with what they have and emerge stronger once the recession recedes.
Get the full report.
Lizzy Brophy
At Vendr, we've built our platform to help companies save time, save money, and improve their operations. We give Finance, Procurement, and IT leaders more visibility across the entire SaaS stack (even the shadow spend) to help multiply negotiating power and procure SaaS faster.
Picture this:
Your organization spent the last few years snapping up SaaS tools and now you’re tasked with reducing waste and making your budget stretch further.
But it’s not easy. To achieve this, you need to save money on new purchases while also cutting overspend throughout your software stack. And on top of that, your team still wants their purchase requests without a ton of red tape.
Vendr is here to help. We’ve built our platform to help companies save time, save money and improve their operations by buying SaaS more efficiently. We’ll give you visibility across your entire stack (even the shadow spend) and multiply your negotiating power.
And we do this all without adding extra time to the procurement process. In fact, we help companies close their deals up to 75% faster. Intrigued? Keep reading to learn more.
Overspend and information sprawl is one of the biggest challenges for teams managing large software stacks.
Tracking down information manually is a huge time suck while still leaving potential gaps in your spend control. Without full visibility into your stack, your ability to identify duplicative spend and tamp down on unapproved purchases will always be limited.
That’s why Vendr now integrates with your key business systems to automatically (and continuously) port data into one connected system of record.
With a connected source of truth, you will finally understand everything your organization is buying, not just the contracts going through the standard procurement process.
When you need to consolidate and cut costs, you’ll be well-equipped to make informed decisions about which applications should be retained and which can be consolidated.
Getting organized also brings immense benefits when you come to the negotiation table with your software suppliers.
No one likes leaving a pricing discussion wondering how much money they left on the table.
But it’s hard to negotiate confidently when you’re playing defense, with incomplete information and surprise renewal dates. In order to arrive at the best negotiation outcomes, you need a way to surface renewals with plenty of advanced notice and equip your team with all the right details.
We built Vendr 2.0 with robust spend management features that’ll keep you more organized and informed than ever. With the contract information in the Vendr platform, you will always get a heads-up into what’s coming — right in your central dashboard.
Get a jumpstart on negotiations with previous purchase information and a secure storage spot for all documentation, including contracts, legal and security review documents, invoices, and more. When you are ready to start the conversation with the software supplier, you can request negotiation support from Vendr’s Executive Buying team. The platform will then track in one place the progress of each deal and help you keep all stakeholders informed.
We’re not done yet! Soon, you’ll be able to store and manage contracts within Vendr, and see the history for any supplier in your stack. Contracts can be laid out in many different ways and it can often be difficult to spot the key information you need. Vendr will soon introduce new capabilities to pull out and standardize the most important information so you feel empowered in every negotiation.
With contract and spend centralization, buying and renewing software just got a whole lot easier. But Vendr’s value doesn’t end at negotiations. We are here to help you build a better procurement process inside-and-out.
Procurement doesn't come in one-size-fits-all. Every business has unique processes they need to follow, and different types of actions require different steps and stakeholders.
What if you could formalize and standardize elements of this often complex process, increasing compliance and reducing unnecessary (re)work, while maintaining flexibility?
Enter: Workflows.
The Workflows feature, currently in limited access, will give you the ability to create custom intake forms and step-by-step automated workflows for every procurement need. Buying new software? Need to sunset something in your stack? We got you.
Get a visual builder to map out each step, assign tasks to individuals or functional teams, and capture the necessary information along the way. And, since this is all happening within Vendr, all information will be automatically stored back in your system of record, your reliable single source of truth on procurement data: reference it anytime to understand tradeoffs and review the decision-making process behind any of the previous SaaS purchases.
It’s a win-win for everyone. Your stakeholders get their software faster with visibility into every step along the way. You get peace of mind knowing that every part of the SaaS buying experience is tracked and every required step is followed.
We are excited to get Vendr 2.0 in your hands. To see how we can help you reduce costs, save time, and improve your operations, request an analysis of your stack.
Ariel Diaz
Today’s business software is centered around email, the original killer productivity app, which has become a 2-horse race: G Suite vs. Office 365. The good news is that both products are good and getting better quickly as competition continues to heat up.
We’ll review the benefits and challenges of each of the platforms, and offer our recommendation. Before getting started, we do not recommend hosting your own email, using a non-major email provider, or maintaining any on-premise servers for something as mission critical as email and core productivity software. Today’s cloud offerings have long surpassed the reliability, quality, and scalability of non-cloud products.
Though Microsoft long ruled the business productivity world with Office and Exchange, it was slow to evolve to the cloud world, which opened up a window for Google. Over the past few years though, under Satya Nadella’s leadership, Microsoft has made a concerted effort to close this gap and focus on cloud and mobile. Office 365 is the result of this focus, and given its importance, we’ll likely continue to see rapid improvements on this front.
There are several misconceptions about what exactly Office 365 is, which is mainly Microsoft’s own fault in its confusing pricing and packaging.
Many people think it’s ONLY an online version of Office, like G Suite, which turns some people off, but it’s actually the unified brand name for all of its Office productivity offerings, including email, downloadable software, online productivity apps and more. There is a version that offers only online versions of Office a la G Suite (Business Essentials), but there’s also a license that enables users to download FULL desktop versions of Office applications. And most (but confusingly not all) licenses include generous 50GB of email. (We’ll get to pricing details later).
Basically Office 365 in its various flavors is a full productivity suite designed to compete fully with Google for Work.
G Suite is Google’s alternative to the Microsoft hegemony. G Suite has matured significantly since its humble beginnings of Gmail and Google Docs, bringing a powerful platform of email, productivity software, file sharing, and more to businesses for a simple low price.
Google now has over 2 million businesses paying to use Google for Work, so you can be confident in the performance and rapid improvement of the platform.
We’ve deliberately not included other alternatives because they’re simply not complete enough for most business usage. The iWork Suite from Apple has some unique benefits (e.g. Keynote is best in class beautiful slide deck preparation), but lack of email offering and robust collaboration tools make it ill suited for the full workload.
In this article we’re going to dive deeper to compare the benefits of each platform, however in keeping with our philosophy, we want to make opinionated and justified recommendations to make your life easier. So for those of you who like the conclusion up front, here’s our recommendations.
For MOST companies, especially new companies, we’d recommend to go with G Suite for Work. The pricing is simpler and more fair, the collaboration tools are better, the platform is improving very very quickly, it has tons of extensibility to make your experience even better, and it’s the choice of most technology startups these days. G Suite is also easier to set up and manage without the help of an IT department or sales rep.
If you’re already deep into the Microsoft ecosystem and/or you’re migrating from existing on premise Exchange servers, then we’d recommend moving to Office 365.
Now let’s take a look at the individual components of these productivity bundles and compare G Suite vs. Office 365 more closely.
Microsoft Office 365Google AppsVerdictEmailOutlook
50GB email included with most plans (not basic Business or ProPlus)Gmail
Leading consumer email provider, 30GB or Unlimited depending on planBoth very mature email clients, many younger workers used to Gmail interface.File SharingSkyDrive
1TB file sharing with most packages.Google Drive
30GB with basic and unlimited storage with Unlimited packageAbout the same these days, Dropbox still better on usability, but both of these are good enough.Word ProcessingWord
Full downloadable version in all but Essentials and Enterprise E1.Docs
Online version comes with both plans, great collaboration, opens and exports Word files.Docs wins on collaboration, Word for power features.SpreadsheetExcel
Full downloadable version in all but Essentials and Enterprise E1.Sheets
Online version comes with both plans, great collaboration, opens and exports Excel files.Excel for most power jobs, Sheets for integration with other servicesPresentationPowerpoint
Full downloadable version in all but Essentials and Enterprise E1.Slides
Online version comes with both plans, great collaboration, opens and exports PowerPoint files.PowerPoint is standard, though Apple's Keynote makes easier/prettier slides.Team Chat and ConferencingSkype for Business
Solid support for Windows, improving for smartphone and Mac. Comes with all versions that include email (not included in Business and ProPlus)Hangouts
Ok browser support. Legacy UX and technical issues slowly improving.Both ok, have UX idiosyncrasies, Slack probably a better option for team chat.
Summary of product features in the Microsoft and Google productivity suites.
Microsoft has a legacy of confusing price points and configurations, and Office 365 is no different. Microsoft offers at least 7 different pricing configurations for Office365. To summarize, there are really 3 main offerings:
Google for Work (pricing details)
Verdict: Google – Google offers much simpler and fairer pricing and easier signup and deployment. If a few users need Excel or Outlook, you can still use the stand alone licenses for Office 365 apps.
G Suite offers email powered by Google’s Gmail infrastructure, the leading email provider. It comes with standard web access, which is likely to be familiar to most employees given how common gmail is for personal use. In addition to the powerful web view, it supports IMAP email clients like Apple’s Mail, 3rd party apps like Airmail and Spark, and even Microsoft Outlook (Windows Outlook support for Gmail is much better than the Mac Outlook).
Office 365 offers 50GB of email (for the plans that include email), available online through Outlook’s web portal, and if you have the plan with downloadable apps, also via Outlook’s app. If you’re an Outlook power user you’ll probably prefer this (though Google offers full Outlook integration for Windows and limited integration for Mac).
Verdict: Tied – both offer powerful back ends, tons of storage, and flexible usage options.
Office is the standard bearer for productivity software suites, with Word, Excel and PowerPoint essentially defining their categories. If you are a power user on any of those products, you’ll likely want the downloadable versions of those applications, which is available on all but the Essentials Office 365 plan (which offers online versions only).
Google offers online versions of its productivity apps: Google Docs (like Word), Google Sheets (like Excel), and Google Slides (like PowerPoint). These versions offer basic functionality, but excel in real time collaboration because they’re mainly online only (all have limited offline support). Google has built out great collaboration tools so you can seamlessly work on documents with colleagues, add comments, and get notifications.
Verdict: Office 365 for apps (downloaded versions are much more powerful, especially if you’re doing a lot of Excel), G Suite for real time collaboration.
G Suite offers Google Drive, and Office 365 comes with Microsoft OneDrive (most plans). Both products are very similar with core functionality of desktop syncing, sharing management, and online access. Google Drive’s default file sharing metaphor is a mess if you don’t set it up right, and OneDrive is still a bit rougher around the edges, but both get the job done.
Verdict: Tied – file sharing these days is table stakes, and while OneDrive and Google Drive are still not quite as elegant as Dropbox, they both have plenty of storage, desktop sync, and control.
Both suites offer a rich array of apps for Android and iOS, and are all browser accessible from any computer. Office365 goes beyond with rich apps for Windows and Mac (for most plans).
Verdict: Tie – The platform wars of the 90s and early 2000s are largely behind us as the battle moves to the software layer. As a result, whether you prefer Android or iOS, Mac or Windows you’re covered. Google and Microsoft are actively supporting all platforms, with near functional parity across all of them.
G Suite offers many more integrations with third party applications, and has an entire G Suite Marketplace which lists great third party software that you can easily install to augment your experience. Additionally, many products support Google authentication, creating an easy way to manage user onboarding for your employees and third party applications. (As a side note, this is a huge wasted opportunity for Microsoft especially given how much they dominated with Active Directory, but that’s a topic for another post).
Verdict: Google
Skype for Business is a catch all for chat, voice and video tools from Microsoft, which is included in most Office365 plans. The product works, and will soon be at feature parity between Mac and Windows after a long period of neglecting the Mac platform.
Google Hangouts has always offered more potential than it’s delivered, with a clunky UI and no native apps for Mac or Windows. The product is improving rapidly, but isn’t ready for prime time as your primary communications platform.
Alternatives: If you have more than basic collaboration needs, you’ll likely want to augment G Suite or Office 365 with dedicated tools. RingCentral for voice (and now meetings) is a powerful platform with much more control and flexibility. If you want dedicated video conferencing hardware, Highfive has you covered. And for team wide chat, Slack is probably your best bet.
Verdict: Skype for Business is far more mature than Google Hangouts if you’re going to rely on the built in communications options, but this point is moot if you go with one of a number of high quality third party communication options for phone or video conferencing.
Picking one of the two standard business productivity suites is a big choice that impacts a lot of your core communication, collaboration and workflow. If you’re not on either of these platforms, you really should be. And if you’re picking between them, our recommendation for MOST companies is G Suite unless you’re deep in the Microsoft ecosystem.
The pricing is simpler and more fair, the collaboration tools are better, the platform is improving very very quickly, it has tons of extensibility to make your experience even better, and it’s the choice of most technology startups these days. G Suite is also easier to set up and manage without the help of an IT department or sales rep.
If you’re already deep into the Microsoft ecosystem and/or you’re migrating from existing on premise Exchange servers, then we’d recommend moving to Office 365.
But best of all both platforms are powerful and improving quickly.
