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Updated by Charles Bystock on 09/28/2023
7 Questions To Consider While Negotiating SLAs and XLAs

Service-level agreements (SLAs) and experience-level agreements (XLAs) both play a crucial role in helping businesses get the outcomes they need from IT vendors.

SLAs define the terms and conditions of service delivery; XLAs define the expected outcomes and metrics for success. Together, they help businesses manage their IT infrastructure effectively, reduce costs, and improve the quality of services provided to customers.

Due to their importance, negotiating SLAs and XLAs with IT vendors can be a complex process requiring careful consideration and planning. To form a partnership, it is important that negotiating the SLA/XLAs be both transparent and collaborative, producing a win-win scenario. Once signed, the SLA is a pact both parties can refer to any time questions arise, reinforced by the defined XLA. Getting it right is important.

7 key considerations for approaching SLAs and XLAs

As you negotiate with your potential vendor, there are several key considerations to keep in mind. Here are seven questions you’ll want to ask, along with their importance to the task of defining SLA and XLA terms:

  1. What is the vendor's experience in delivering the services? It’s important to know the vendor's track record and experience in delivering similar services to other clients. Above all, you need to make sure they’re capable of handling your needs, even as they evolve.
  2. What are the performance benchmarks for the services? Establishing clear performance benchmarks within an XLA is essential to ensure the partnership meets your requirements and expectations.
  3. How will the vendor monitor and report on service performance? Clear communication and automated reporting mechanisms are vital to track performance and make any necessary adjustments to the SLA over time.
  4. What are the consequences for not meeting or exceeding SLA requirements? Clearly defined consequences, both risk and reward, help to ensure vendors take their SLA commitments seriously. Be certain to discuss consequences within the scope of a well-defined XLA.
  5. What is the process for renegotiating or terminating the SLA? Establishing clear guidelines for renegotiation or termination of the SLA will help you manage the relationship effectively. Again, XLA terms are vital here.
  6. What is the historical performance over the last 6-12 months? Reviewing past performance data can help you identify any potential areas you need specific help with, which can inform SLA terms and conditions.
  7. How can you involve your business users? Involving business users in the negotiation and management of SLAs can help to ensure the services meet their specific needs and requirements across the organization. Match the SLA/XLAs to true business satisfaction. Avoid the watermelon effect where the SLAs are all green, but the business is unhappy.

These critical questions ultimately form the foundation of productive conversation between you and the potential IT vendor you’re vetting. More importantly, the outcomes of these conversations will distill down into SLA and XLA terms benefiting both parties.

Other critical factors to consider

Other critical factors to consider

While the seven questions listed above are foundational, there are still other critical factors to consider when you’re coordinating SLA or XLA terms. Here are a few bonus questions and considerations to keep in mind:

  • Identify business needs and goals. Before entering into any agreement, thoroughly identify your business's specific needs and goals for services — and their alignment with top-level company values.
  • Understand the vendor's offerings. Make sure you have a clear understanding of the vendor's offerings and capabilities so you know exactly what services you're signing up for and, importantly, what they don’t do.
  • Identify key performance indicators (KPIs). Defining KPIs ensures you’re getting the most out of the services and the vendor is meeting your specific needs and requirements set forth by the SLA or XLA.
  • Define service availability and response time. Establishing clear guidelines for service availability and response time sets the expectation for what the vendor can deliver when there’s an emergency or concern. Focus on business impact. A server impact with today’s technology is rarely an impact to the users, whereas a service impact means the users can’t do their jobs. The SLA/XLAs should focus on service impact.
  • Define service escalation procedures. Escalation procedures may be a worst-case consideration, but they’re nonetheless important to establish. How do they prioritize service issues or problems to ensure they’re resolved quickly and efficiently?

Often, the best way to address these considerations is to have an open and honest discussion with your potential service provider. These answers will typically emerge during a thorough SOW discussion.

Best practices for negotiating with vendors

There will always be give and take when it comes to settling on agreeable terms. Negotiation is common, but it needs to come from a place of authenticity for both parties to sign an agreement. Here’s what to keep in mind:

  • Collaborate with the vendor to develop mutually beneficial SLAs and XLAs.
  • Make sure everything within the scope is clear, specific, measurable, and meaningful.
  • Identify potential risks and develop contingency plans for problems.
  • Establish ongoing communication and review processes with the vendor.
  • Ensure the SLA and XLA align with the overall business strategy and direction.

Negotiating effective SLAs and XLAs with vendors is an important part of managing IT infrastructure effectively, reducing costs, and improving business operations. By asking the right questions and following best practices for negotiating and developing terms, businesses can ensure they receive the services needed to drive success. Moreover, a good tandem of SLA and XLA can build a strong relationship with an IT services provider that helps both sides grow on the terms of a mutually beneficial agreement.

Learn more about SLA and XLA best practices at