SLA is an acronym for Service Level Agreement, which refers to a formal written documented agreement created between two parties – with an individual and another; an individual and organization; or two organizations.
 
However, SLA is firmly entrenched as a formidable concept within the I-tech service and related businesses. That is, between the IT service provider and the client or recipient and clearly states the fundamentals upon which the two parties will do business together, and defined expectations.
 
In some cases, because of the importance attached to this document, It does turn out somewhat complex – almost like a binding contract paper. But content of SLA document could be created to point to two factors, thus: 1) The kind of business in focus on one hand, and 2) The service provider and clients on the other. However certain principles (or clauses) are generally used in drawing it.
 
General principle of SLA

Some generally acceptable clauses in a normal SLA document that define service agreement should spell out every specific area of service that would be rendered; penalty when service is derailed, not provided or poorly finished; options for support and incentive when service provision is over delivered.
 
It should also include performance, customer duties and/or responsibilities, resolution of disputes, either corporately or legally, termination of ongoing services being rendered, among others. But it’s expected that the agreement will be based on the integrity of service provider, and prior ability to showcase quality-management, which is precursor to quality service.
 
Uptime and SLA of the hosting industry

As said earlier, Service Level Guarantee is extremely popular in IT delivery, but it is more so in Internet service, and web hosting industry in particular. Hosting companies has a number of guarantees they offer clients, principally to convince and woe them to become paying clients. The most often used is the “ money back guarantee ” while the second is UPTIME GUARANTEE!
 
Uptime guarantee is basically wide ethos of promises made upfront, as marketing slogans by hosting providers, such as: “Network: 99.999% Uptime guarantee. SLA.” In this case, the provider is promising to ensure at least 99% (almost 100%) network and server uptime service to clients websites. In other words, clients will enjoy 99% fast and reliable links – but there are also some exceptions.
 
The uptime percentage is calculated on a monthly basis by the provider, either on their own systems, or by outsider appointed by the provider. Whenever service fall below the 99.999% guarantee, then clients can ask for commensurate credits and get it. But sometimes, the issue of credit payout do cause lots disagreement between clients and providers.
 
Why problems occur?

Most times it does appear guarantee for uptime is nothing but paper tiger promises, as cases of clientele disappointments and even outright ‘divorcement’ from provider’s service is an open secret. For example, many hosting companies don’t clearly spell out what type of compensation is due their clients, thereby creating the impression that it’s nothing but a marketing gimmickry meant to hoodwink unsuspecting clients to their sides – though most responsible companies do avoid this scathing mark.
 
Even stipulated compensation are prone to disproval. Sometime, clients are merely compensated based on the amount money paid for hosting, instead on percentage, and again, until they press to be credited most hosting companies will keep mute without offering apology.
 
One can safely conclude that for a successfully run website, uptime guarantee may still spell doom for them, even though 100% uptime is technologically futile, as minimal and manageable errors may be allowed.

Taken from: http://www.hostingtech.com/?m=show&id=1393
Submitted by Ahmad Permessur