SLA vs SLO vs SLI - What's the difference

The world is more competitive than ever, and customer satisfaction is the north star driving this competition. Businesses use various approaches to gain competitive advantages and meet customers' expectations.

Implementing Service Level Agreements (SLA), Service Level Objectives (SLO), and Service Level Indicators (SLI) is one such approach.

Businesses rely on complex systems to support their operations, but ensuring that these systems meet users' needs is a challenge that SLAs, SLOs, and SLIs seek to address.

But before we go further, here's a one-liner on what each of these terms means in a simplified, easy-to-understand nugget:

• SLA: Service Level Agreement - A contract between provider and customer
• SLO: Service Level Objective - Specific, measurable targets within an SLA
• SLI: Service Level Indicator - Metrics used to measure SLO performance

What are SLA, SLO, and SLI?

What is an SLA (Service Level Agreement)?

An SLA is a contract between service providers and their customers outlining the expected service level and consequences for not meeting it.

What is an SLO (Service Level Objective)?

An SLO is a specific, measurable target set to achieve the service level promised in the SLA.

What is an SLI (Service Level Indicator)?

An SLI is a metric used to track service performance and determine if the target set in the SLO is met.

SLA vs SLO vs SLI Comparison

What is a Service Level Agreement (SLA)?

SLA is an agreement between a service provider and a customer that spells out the level of service that will be provided and the consequences if the agreed-upon level of service is not met.

The consequences could be in the form of credits or a money-back policy.

An SLA defines metrics such as uptime, response, latency, and resolution times.

SLAs are legally binding and are used to establish the expectations and obligations of both parties. An SLA contains a statement of objectives, the scope of services, service provider responsibilities, customer responsibilities, performance metrics, exclusion clause, and penalties for contract breach.

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What is a Service Level Objective (SLO)?

SLOs are specific goals and measurable targets that a service provider aspires to. SLOs are mostly more granular than SLAs and can be defined for specific service components.

SLOs are guiding stars that help ensure that the service provider ratifies the pre-agreed level of service defined in the SLA.

To define the SLO, you must determine whether the target should be based on successful requests or time-based on latency. For some services, timing is vital, while some services are interested in getting every request well-responded to, even if it takes longer than two seconds.

What is a Service Level Indicator (SLI)?

SLIs are metrics used to gauge performance. They are more technical than SLOs but are used to ratify that the stipulations of the SLO are realistic and measurable. Examples of SLIs include response time, error rate, latency, uptime, and throughput.

Monitoring SLIs enables service providers to identify areas of improvement to ratify the agreements in SLOs and SLAs. SLIs are measured in real-time using monitoring tools. The tools trigger alerts or notifications if performance falls below a certain threshold or the error budget is breached.

SLA vs SLO

Service Level Agreements (SLAs) and Service Level Objectives (SLOs) serve distinct functions. An SLA is a legally binding contract between a service provider and a user, outlining expected service standards and including penalties for non-compliance.

In contrast, an SLO is an internal objective within the SLA that defines measurable performance metrics like reliability and system availability. While SLOs focus on technical performance goals, SLAs provide the legal framework that encompasses these objectives, ensuring both accountability and service quality.

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Who uses SLAs, SLOs, and SLIs?

While it's commonly thought that network service providers are the main users of Service Level Agreements (SLAs), Service Level Objectives (SLOs), and Service Level Indicators (SLIs), the landscape has changed.

Today, a wide range of IT industries and their engineering teams utilize these metrics, including:

• Data centers
• Cloud providers
• Software as a Service (SaaS) providers
• Internet Service Providers (ISPs)
• Managed IT Services
• Telecommunications Services

Usage in SaaS

For instance, consider a SaaS provider that offers an SLA guaranteeing specific software performance levels, complete with defined penalties for breaches. The corresponding SLO might require maintaining an average response time of less than 2 seconds.

To measure this, the SLI would track the median response time for user requests. The SaaS provider continuously monitors this SLI and intervenes if the response time exceeds the set SLO.

Usage in Data Centers

Similarly, a data center might have an SLA that guarantees a certain level of network uptime, along with penalties if service levels drop below that threshold. Here, the SLO could aim for 100% uptime, with the SLI measuring the percentage of successful network connections.

If the SLI indicates that the performance has fallen below the SLO, the data center will receive an alert, prompting immediate action to resolve any network issues.

Creating, Implementing & Maintaining SLA, SLO, and SLI

Establishing, executing, and maintaining Service Level Agreements (SLAs), Service Level Objectives (SLOs), and Service Level Indicators (SLIs) can be a complex and challenging endeavor. Here are some key considerations and challenges organizations often face:

1. Legal Expertise for SLAs: Developing a detailed, structured, and enforceable SLA may require the involvement of legal professionals or a team of attorneys. Their expertise ensures that the agreements are sound and actionable.
2. Role of Site Reliability Engineers (SREs): To accurately measure and maintain SLOs and SLIs, organizations rely on Site Reliability Engineers and their teams. These professionals play a crucial role in monitoring and improving service performance.
3. Challenges in Creating and Maintaining Service Levels:
   • Defining Measurable Metrics: Identifying the right metrics and thresholds demands careful observation, ongoing effort, and in-depth knowledge of expected customer experiences. Crafting metrics that genuinely reflect service quality can be particularly challenging.
   • Aligning with Business Goals: It's essential for SLAs, SLOs, and SLIs to align with overall business objectives. This alignment can be difficult, especially when multiple teams or departments are involved. SREs must understand the appropriate type of SLO—whether request-based or window-based—that fits the specific business or service.
   • Balancing Customer Expectations and Business Capabilities: Meeting customer expectations while staying within the organization’s capabilities requires careful consideration. Setting unrealistic expectations can lead to customer dissatisfaction, while overly conservative targets may hinder growth opportunities.
   • Managing Exceptions and Escalations: Despite best efforts, exceptions and escalations can arise. Having transparent processes for handling these situations—such as clear escalation paths and resolution plans—is vital.
   • Measuring and Reporting: Accurately measuring and reporting SLAs, SLOs, and SLIs can be challenging, particularly in complex systems or when managing a suite of services. Organizations need the right tools and resources to compute service availability and track SLA violations effectively.

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SLA, SLO, and SLI Best Practices

Follow these best practices when creating and implementing SLAs, SLOs, and SLIs:

• Define Clear and Measurable SLIs
  SLI metrics should be tailored to your specific services. For example, the SLIs for a payment gateway vendor will differ from those of a batch-processing system or a customer-facing application.

Ensure your SLIs are specific, measurable, and relevant to your service while aligning with your overall business goals. Additionally, some SLIs can be transformed into Key Performance Indicators (KPIs) from the customer experience perspective.

• Set Realistic Targets and Thresholds
  Targets and thresholds should be achievable and balanced between customer needs and business capabilities.

For example, aiming for a 100% success rate may not be realistic. Collaborate with your Site Reliability Engineers (SREs) to choose the right indicators and understand the data to aggregate. Consider setting internal SLOs that are tracked by IT teams but are not customer-facing.

• Involve All Stakeholders
  Engage all stakeholders—customers, end users, internal teams, and third-party service providers—during the implementation process.

Regular communication ensures that everyone understands the expectations, goals, and requirements of the agreements. This collaborative approach fosters a shared commitment to achieving the SLIs.

• Regularly Review and Update Agreements
  Maintaining SLAs, SLOs, and SLIs requires ongoing effort and resources. Regularly review and update these agreements to ensure they remain relevant and effective.

Gather feedback from stakeholders, external customers, and end users to identify areas for improvement and update metrics and targets as needed.

• Monitor Performance
  Consistently monitor performance against the defined metrics to ensure that your services meet the agreed-upon expectations.

Implement a robust monitoring system, along with an incident response workflow and incident management processes, to track outages and maintain service reliability.

• Ensure Compliance
  Compliance with SLAs, SLOs, and SLIs is essential for maintaining service standards. Conduct regular audits, reporting, and open communication with stakeholders to ensure compliance.

Make sure all teams understand their responsibilities and have the necessary resources to meet their obligations.

How Last9 help in meeting SLOs and SLIs

DevOps teams require an intelligence-based reliability tool that provides end-to-end visibility into SLO targets and SLI metrics. Last9’s reliability tools automate the visibility of service health and the quality of systems and applications.

The insights provided by Last9 enable organizations to establish and measure their SLOs effectively, fostering accountability and prompting a reevaluation of microservice reliability and management strategies within cloud-native environments.

Once SLIs are created, monitoring these metrics is essential, and that’s where a reliability tool comes into play. Last9 offers a reliability tool designed specifically for this purpose.