August 11, 2015
Defining and incentivizing high-quality performance is often key to the structure of complex service or technology-oriented agreements. In this class of agreements, merely having a performance warranty that answers a yes or no question – in breach or not in breach − just doesn’t do the job. To augment those performance warranties, a common approach is to use a “service level agreement” (SLA). The SLA is a familiar and essential feature in information technology-oriented agreements, such as outsourcing, cloud computing, software-as-a-service and the like. When properly structured and negotiated, SLAs can be an effective tool for more nuanced vendor management than a performance warranty alone could afford. This article will catalog some of the best practices for structuring a service level agreement, and discuss elements enterprise corporate counsel can put to use in the IT and service contracts that come across their desk.
McGuireWoods’ technology and outsourcing practice team supports a wide range of business transactions driven by technology. In addition to counseling companies on developing and negotiating SLA arrangements for service transactions, the team assists in all phases of documenting, negotiating and handling disputes in connection with IT procurements, outsourcings, cloud computing, ERP implementation and data security. Our clients include Fortune 1000 corporations and emerging business enterprises spanning the industry spectrum. The practice team is chaired by Steve Gold in McGuireWoods’ Chicago office.