SLA Breaches without penalties? : LUSENET : Service Level Management : One Thread


I'm interested to hear back from as many of you about how you defined your SLA violation penalties.

What percentage of companies do you think have NO PENALTY at all? Is there any white paper on this I can download?

We have a consultant telling us that MOST companies don't implement ANY penalty for INTERNAL services, i.e. WITHIN our company.

So if IT don't provide an Internet Service as agreed in the SLA to the Sales Department, we have no penalty.

Please advise me if he's correct (any URLs, White Papers would be helpful).

Thanks very much,


-- Bob Duncan (, March 28, 2004


Bob, hi

Please note that the main purpose of any whitepapers you may find regarding SLA's are simply to serve as guidelines. I do not believe there are two companies with the same SLA's although they maybe in the same business, or that you can make one SLA applicable to another or all other businesses. Even in your company, you should have different SLA's with every client you provide a service addressing each unique requirements.

First of all, an SLA is an agreement between two parties, one providing the service and the other requiring the services or client. In the negotiation process of the SLA, you should ensure that client set no unrealistic expectations that may result in ongoing penalties. SLA's should be realistic, achievable and be able to be maintained. That is why one should always be aware of the capabilities of your resources when negotiating an SLA and before the finalizing thereof. E.g., under no circumstances should you guarantee 100% uptime on a network if you know that it is impossible due to 3rd party decencies.

Secondly, SLA's are measured over a fixed period, normally monthly and penalties are imposed accordingly. Penalties are normally in the form of payment for the service minus the percentage of the services that failed or did not meet the SLA. The percentage of the penalties negotiated should also be realistic to prevent you not getting paid at all due to penalties incurred during the month.

Let me know if it is clear to you now.


-- Alex (, April 26, 2004.


Yes thanks. We have a consultant working with us saying that companies RARELY EVER implement penalties for internal service non-delivery.

e.g. between the IT and Sales Dept.

He said that penalties are mostly with External Service Providers, e.g. an ISP.

I was hoping to find some evidence to corroborate his statement.



-- Bob Duncan (, April 27, 2004.


with due respects the consultant is out there to keep himself in a job.we have implemented software in over 100 compnaies now who have a mininmum of 500++ desktops and each organisation is looking at SLA from a bussiness perspective. right now the Bussiness Process Outsourcing (BPO )companies in countries like India are growing at such a rapid rate that companies like IBM are buying them out for over US$ 60Mil!!! and you think that companies like Citibank, AMEX, Fosters etc dont have SLA between departments??? be rest assured they have. rememember a consultant withot any mangement tool is just using a stop watch to set a so called SLA, and would not know even where to start to find the problem. Brian Peck

-- Brian Peck (, April 27, 2004.

I appreciate your reply, but if I'm to challenge him even amongst my colleagues I have to bring some proof with references.

Can anyone point me to where I can get this kind of information from?

Thanks very much,


-- Bob Duncan (, April 27, 2004.

sure please visit

-- Brian Peck (, April 27, 2004.


I've been through the site: as you mentioned but couldn't find a link to any related article.

Please can you give me the exact URL?



-- Bob Duncan (, May 01, 2004.

hi bob

I have sent you an attachment by is about 1mb. hope you can receive this size of document regards Brian

-- Brian Peck (, May 02, 2004.

Moderation questions? read the FAQ