Focus on the IT services contract, a short analysis of one of its core elements: the SLA

The Service Level Agreements (SLA) in IT services correspond to the response time defined by the parties. The provider must restore the operative continuity of the systems interrupted by incidents or failures. The contractually agreed SLAs suppose a recognition of the possibility that there will be operational interruptions and that they require a margin of time to be solved. If the latter is exceeded, the provider will then be fined. In this way, the client tolerates operational interruptions that, if repeated, may generate the early termination of the contract.

In other words, IT services are provided with technological tools — manufactured by third parties and owned by the provider or client — that are subject to failure. The provider can be held responsible for not solving operational problems but not for the interruption itself. The foregoing rules out any attempt to objectify the provider’s responsibility since non-compliance with the SLA may have its origin in a series of circumstances that are not within its control, which is why the root cause of the failure must be found, which may be in the client or its suppliers.

Accepting SLAs that are difficult to meet and very high fines to win a contract exposes the provider to increased operational and financial risk; it is not only the contract’s price that is the element to be considered. An IT company must consider these elements in its operational risk matrix and ensure that the distribution of risk in the contract is balanced. The contract is an agreement for the correct distribution of risk between parties and not a mechanism for transferring liabilities to the distributors.