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Observability / Operations

SLO vs SLA: What’s the Difference and How Does SLI Relate?

SLAs and SLOs are critical to clearly outline your service’s ability and levels and to keep your customers happy.
Nov 29th, 2022 10:12am by
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You’ve probably heard of service-level agreements (SLAs) and service-level objectives (SLOs) as their use within businesses that provide or consume services is prevalent. Most people think that SLAs and SLOs are the same, but they’re not.

This post will cover what an SLO is, what an SLA is, how they differ from each other, what the benefits of each are, and some related terms.

What Is a Service-Level Agreement (SLA)?

A service-level agreement (SLA) is a contract between a service provider and a customer that specifies measurable metrics for the level of service the customer can expect. For example, an SLA might cover response times, uptime, resolution times, expectations for error reporting and more.

An SLA typically includes the following:

  • The type of services provided
  • The level of services provided
  • The timeframes for service delivery
  • Service credits
  • Uptime expectations
  • Responsibilities
  • Responsiveness
  • The metrics used to measure service levels
  • The financial penalties for not meeting the specified service availability levels

An SLA contains many service-level objectives, which specify the details of meeting these goals for the client.

Both internal and external customers use SLAs.

Service-level objectives specify the quality of service for a given business process or system.

What Is a Service-Level Objective (SLO)?

Service-level objectives specify the quality of service for a given business process or system. It’s a measurable goal to ensure that the system meets or exceeds the required standards. SLOs are specific points within an SLA. For example, one SLO within your SLA might be having an average response time for an API of less than one second over any given one-minute period.

An SLO typically includes the following:

  • The specific service or system to which it applies, such as the trade API.
  • The quantifiable goal to meet — API transaction averages are less than one millisecond.
  • The goal attainment timeframe over any given one-minute time period within the trading day.
  • How often you measure the goal and over what periods, such as every second during trading hours.

Both internal and external customers use SLOs.

What Is a Service-Level Indicator (SLI)?

Service-level indicators (SLIs) are another metric you might hear about when discussing SLOs and SLAs. An SLI is used to measure a system’s performance. For example, SLIs can track an organization’s progress toward its goals and internal objectives. In addition, organizations can use them to identify areas where the quality of service needs to be improved. An SLI is the actual measurement of the system, not a goal. For example, if your SLO is a response of less than one second, your SLI is the actual response time — it could be 0.5 seconds or 0.99 seconds. Either way, you are meeting your SLO in those cases.

Another term used for SLI is “key performance indicator” (KPI). Most people use these two terms interchangeably.

An SLI document typically includes the following:

  • The monitoring system
  • The system being monitored
  • The monitoring metrics or KPIs used to measure performance
  • The values obtained
  • How often the metric was measured and reported on

In general, only internal teams use SLIs.

An SLI is the actual measurement of the system, not a goal.

SLO vs. SLA: What’s the Difference?

Now that we’ve gone over what an SLO and an SLA are, let’s discuss how they’re different.

The most significant difference between an SLO and an SLA is that a SLO is a goal set by the organization to ensure that its system meets or exceeds the required standards. An SLA is a contract between a service provider and a customer that specifies the level of service that the customer can expect to receive.

Another difference is that an SLO is completed before services are delivered. Typically, SLAs are completed after services are active and problems have arisen.

An SLO can help you define your business goals and objectives, while an SLA can help you track progress toward those goals.

It’s important to remember that organizations should use both; the two create a complete picture of your company’s service levels.

The most significant benefit of having an SLO is ensuring that the system meets or exceeds the required standards.

Benefits of an SLA

The most significant benefit of having an SLA is that it guarantees the level of service that customers can expect to receive. A guaranteed level of service helps build trust between the customer and the service provider, leading to more business for the company. Additionally, an SLA can help track progress toward defined goals and objectives, which can help improve the quality of the service provided. For example, if you have an SLA with a customer that specifies a response time of 24 hours, you can use this metric to track how well you’re meeting your goals.

If the organization cannot meet a criterion within an SLA, the company knows that it needs to make changes to improve the quality of service.

Benefits of an SLO

The most significant benefit of having an SLO is ensuring that the system meets or exceeds the required standards. Mutually agreed-upon standards help improve the quality of service for customers.

An SLO can help define business goals and objectives by setting a target quality of service for a given process or system. It can also help track progress toward those goals. For example, if you have an e-commerce website, your SLO might ensure 99 percent processing of orders within 24 hours.

Benefits of an SLI

The most significant benefit of having an SLI is that it helps measure performance. The technical teams can then use this information to improve the quality of service. SLOs are built on SLIs so they are a key component of a successful standards measurement and attainment process.

Who Defines the SLA?

Typically, the service provider defines the SLA. It is a contract between the service provider and the customer that specifies the level of service that the customer can expect to receive.

Who Defines the SLO?

In most cases, the service provider defines the SLO, but in some instances, SLOs are driven by the consuming organization. Either way, the SLO is mutually agreed upon. It’s a goal to ensure that the system meets or exceeds the required standards.

Similarities Between SLO, SLA and SLIs

Now that we’ve discussed the differences between an SLO, SLA and SLI, let’s look at some similarities. First, you can present them to potential customers as a service guarantee. Second, they can help define business goals and objectives. Third, these metrics help track progress toward those goals and objectives. Finally, they can all be used to improve the quality of service.

When Should I Use an SLA?

It would be best if you used an SLA when you want to provide a guarantee to customers regarding the level of service they can expect to receive.

When Should I Use an SLO?

In general, the best practice is to use an SLO when you want to set a goal for the system to ensure that it meets or exceeds the required standards.

When Should I Use an SLI?

Typically, you use an SLI when you want to measure a system’s performance to improve the quality of service.

Which One Should You Use?

The answer to this question depends on your specific needs. For example, if you want to ensure that a system meets or exceeds the required standards, an SLO may be all you need. However, an SLA is required if you want to build trust with your customers and track progress toward defined goals.

A living knowledge map of your organization’s software development activities, like the universal catalog configure8.io, can help you drive awareness and visibility of your organization’s SLAs, SLOs and SLIs and help your engineering teams prioritize your service agreements and find systems to improve. It also helps when incidents arise by enabling teams to respond more quickly.

Once again, it’s important to remember that SLOs are either standalone or contained within SLAs. SLAs always have SLOs within them. Both are critical to clearly outline your company service’s ability and levels and to keep your customers happy.

Managing and Monitoring SLOs

Managing and monitoring SLOs is a complex task. It’s hard for everyone on the support team to know who owns or who is responsible for a single service. While an engineering manager usually sets up the SLOs and alerts and knows this information, they aren’t always available, and sometimes all the information isn’t communicated to the on-call engineer or isn’t in an easy-to-access place.

This is where modern internal developer portals (IDPs) come into play. They treat SLOs, services and their owners as first-class citizens and support embedding these critical metrics out of the box.

With an IDP, engineers have the information about an SLA, SLO and SLI, such as the services it corresponds to and what team or engineer is responsible for it. In addition, you can retrieve information about the underlying services quickly to see if there’s a wider issue beyond a single service.

With modern IDPs putting SLOs at the forefront of the engineer’s minds, they can better educate themselves on the health of their services. Engineers are able to self-service and view their quality metrics without the help of a site reliability engineer (SRE), and they won’t only learn of an issue when something has gone catastrophically wrong. IDPs help an organization create a culture of shared responsibility and avoid having tribal knowledge.

Wrapping up

SLAs and SLOs are both crucial elements that help set customer expectations. Make sure you have clearly defined them to prevent misunderstandings. If you’re not sure when you need to use either, talk to a professional who can help you determine the best course of action for your business.

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TNS owner Insight Partners is an investor in: Pragma.
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