Operational Level Agreement: Different Types and Examples
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Operational level agreements (OLAs) are essential to service level management. The relationship involves working collaboratively with others to set realistic expectations about services and associated logistics. An OLA can help you manage the relationships with those you serve internally.
This article describes what IT providers need to know:
What is an Operational Level Agreement?
Operational level agreements (OLAs) are internal documents that outline how information technology (IT) companies and service providers plan to provide a service and track performance indicators to an internal customer. An OLA aims to define the scope and depth of responsibilities and duties by company departments.
These contracts are different from service level agreements (SLAs) , which address external customer needs. SLAs are agreements between a service provider and an external customer, while OLAs are agreements between internal providers and internal customers.
Examples of Operational Level Agreements
OLAs require you to make critical promises to internal customers. Their ability to generate revenue depends upon your ability to deliver on service and hardware. For instance, every OLA must guarantee that the customer experiences no more than a certain amount of downtime.
Let’s look at a hypothetical example of OLAs between an IT vendor and an internet service provider (ISP) to make this point more clear:
- An IT vendor supports a database for Company A, an ISP
- Company A provides Internet SLAs to external customers
- Company A signs an OLA with the IT database vendor
- The IT vendor OLA states that they must provide 23 hours of daily uptime
- Company A can claim financial damages for excessive downtime
- Conversely, IT vendors meeting standards will retain customers
As you can see, the SLA dramatically depends upon the promises and limitations outlined in the OLA. Due to their complexity, you should draft, negotiate, and finalize your OLAs thoroughly and include some critical terms that protect your company’s fiduciary interests.
Common Terms in OLAs
Like any contract, an OLA contains some necessary provisions that establish the terms and conditions of the relationship, such as roles, responsibilities, and limitations. While the OLA includes many of the same components found in a standard contract, some clauses make them unique.
Common terms in OLAs include the following:
- General Overview: This section of an OLA sets the stage for the relationship, identifies parties, and establishes the relationship’s objectives. You should include references to accountability, roles, and responsibilities. The general overview also delineates a contract’s start and end date.
- Service Scope: This section offers the technical description of the service provided. It should also account for updates and upgrades, and tasks that go beyond the scope of the OLA.
- Service Dependencies: In this provision, list the supporting services dependent upon the vendor’s deliverables. This section may also weigh heavy on the technical aspects of this agreement.
- Responsible Parties: If an issue arises, the internal customer needs to know how to contact the responsible parties. In this section, vendors should include the names, hours, telephone numbers, and emails of individuals they can reach.
- Roles and responsibilities: This section addresses how all involved parties play a role in service delivery. Describe training measures, meeting times, and change notification measures. You should also include the activities in which the vendor must participate.
- Incident Management: Transparency must exist between vendors and service providers. This section of your OLA should list standard expected and ad-hock requests and how they agree to process them. It is vital to segment the process by normal and major incidents.
- Problem Management: If an incident arises, the internal customer also needs reasonable reassurance that you can handle them. A problem management section allows the IT vendor to list ‘what-if” scenarios and communicate the contingencies and actions to resolve discovered issues.
- Service Exceptions: This provision is vital since it also limits the scope and depth of your relationship in terms of incident and problem management. It is unfair that a vendor address problems outside of its control. Outline the exceptions in this section.
- Metrics and Goals: Key performance indicators (KPIs) are a significant component of the OLA relationship. The company should request that the vendor monitors specific metrics and make them available to key team members.
Your OLA may need to address issues that are specialized for your industry. Technology lawyers can review your situation and system and produce a thorough, valid, and enforceable document.
This article also contains information about common terms in OLAs.
Types of Operational Level Agreements
Operational level agreements often work in tandem with a few other contracts. This strategy gives SLA provider reassurance to external customers, making reviewing and negotiating the OLA beforehand even more critical. Both arrangements also protect every party’s rights during the relationship.
There are three types of contracts generally involved in operational level agreements:
- Type 1. Service Level Agreements (SLAs): SLAs are contracts between a service provider and an external customer. They specify the scope and quality of the services covered. An SLA establishes the timelines by which tickets must be accepted and resolved before escalation.
- Type 2. Operation Level Agreements (OLAs): OLAs are agreements between an internal service provider and an internal customer. They specify the scope and quality of the services covered by the contract, including ticket response time and server availability.
- Type 3. Underpinning Contracts (UCs): UCs are an agreement between an external provider and an internal customer. They define the scope and range of the services covered. A UC aims to ensure reliable service from the external provider and hold companies accountable.
You should consider your relationship with each stakeholder in the process. You may need a combination of two agreements, whereas some companies may need to create more. The contract you put in place depends upon your company’s specific situation and dynamics.
Image via Pexels by Manuel Geissinger
Difference Between OLAs and SLAs
It is common for service providers to negotiate SLAs with clients before discussing and negotiating OLAs with internal teams. However, this approach is not necessarily the most practical. An OLA helps teams identify any cost differentials, constraints, and other dynamics while SLAs make promises to customers directly.
Here are four other differences between OLAs and SLAs:
- Difference 1. SLAs exist between a service provider and an external customer. OLAs exist between the internal support departments of an organization that agreed to the SLA.
- Difference 2. SLAs concentrate on the service aspect of the agreement, such as availability and performance. In contrast, OLAs represent commitments to maintain the service.
- Difference 3. SLAs apply to the overall resolution of tickets, whereas OLAs are specific to the support teams to which tickets are assigned.
- Difference 4. OLAs involve more technical terms, measurements, and language than SLAs.
From the list outlined above, you can see that SLAs and OLAs are distinctly different documents that should work in accordance to produce the best result. Mistakes in the OLA drafting and negotiation process can result in unintended legal and financial consequences. As such, you should always get legal help from an experienced lawyer when working with OLAs.
For more information about how SLAs work, check out this blog article.
Get Help with OLAs
The terms of a contract must generally meet your business requirements to serve business needs. Technology lawyers can review the proposed agreement with you before negotiating it while simultaneously identifying potential issues. During the contract drafting process, your lawyer ensures that you receive a fair OLA while understanding its legal implications.
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Daehoon P.
Daehoon P.
Corporate, M&A & Securities Lawyer | Managing Attorney, DP Counsel PLLC Practice Areas: Business Formation | Commercial Contracts | Contract Drafting & Review | Mergers & Acquisitions | Venture Capital | Securities Offerings | Franchise Law | Employment & Equity Compensation | Intellectual Property | Cross-Border Transactions About/Bio: I represent companies, investors, and fund sponsors in corporate transactions, commercial contracting, and private securities matters, from entity formation and early-stage financings to acquisitions, exits, and ongoing strategic counsel. As Managing Attorney of DP Counsel PLLC, I help clients structure transactions clearly, allocate risk thoughtfully, and move deals forward with documentation that is practical, enforceable, and aligned with business objectives. My practice includes both day-to-day commercial matters and more complex transactional work, including venture financings, private offerings, M&A deals, fund-related documents, and cross-border structuring. What I Do: Corporate & Commercial • Entity formation and structuring for corporations, LLCs, and limited partnerships • Operating agreements, shareholder agreements, and governance documents • Commercial contract drafting, review, and negotiation • Vendor, distribution, manufacturing, SaaS, and licensing agreements • Employment, consulting, confidentiality, and equity compensation agreements • Outside general counsel support for growing companies Securities & Private Capital • Private offerings under Regulation D and Regulation S • Private placement memoranda, subscription agreements, and investor documents • SAFE, convertible note, and priced equity financings • Venture capital and private fund formation matters • Fund governing documents and offering document packages • Securities law analysis for private capital raising transactions Mergers & Acquisitions • Letters of intent and term sheets • Stock purchase, asset purchase, and merger agreements • Due diligence coordination and transaction support • Disclosure schedules, closing documents, and post-closing matters • Earnouts, rollover equity, indemnity structures, and related deal terms • HSR, CFIUS, and related regulatory issue spotting for qualifying transactions Digital Assets & Emerging Technologies • Federal-law digital asset and token securities analysis • Entity structuring for blockchain and Web3 ventures • Digital asset fund and operating structures • AML/KYC documentation support and regulatory issue spotting Franchising • Franchise Disclosure Documents (FDDs) • Franchise agreements • Master franchise and area development agreements • Franchise structuring and registration coordination Real Estate Transactions • Commercial real estate acquisitions and dispositions • Real estate joint ventures and syndications • Commercial lease drafting and negotiation • Real estate investment structures and related offering documents Cross-Border & International • U.S. market entry and entity structuring for international clients • Delaware and multi-entity holding structures • Cross-border transaction planning and documentation • Coordination with foreign counsel and tax advisors on cross-border matters Why Clients Hire Me: • Big-law-level drafting with boutique responsiveness • Practical, business-focused advice grounded in execution reality • Clear scoping and transparent fee arrangements • Experience across financings, acquisitions, fund formations, and cross-border transactions Typical Projects: • Contract drafting and negotiation • Entity formation and governance packages • Private offering document suites • Venture financing documentation • M&A transactions from LOI through closing • Fractional or outside general counsel support Industries Technology | SaaS | FinTech | Digital Assets | E-commerce | Healthcare | Real Estate | Food & Beverage | Professional Services
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My name is Ryenne Shaw and I help business owners build businesses that operate as assets instead of liabilities, increase in value over time and build wealth. My areas of expertise include corporate formation and business structure, contract law, employment/labor law, business risk and compliance and intellectual property. I also serve as outside general counsel to several businesses across various industries nationally. I spent most of my early legal career assisting C.E.O.s, General Counsel, and in-house legal counsel of both large and smaller corporations in minimizing liability, protecting business assets and maximizing profits. While working with many of these entities, I realized that smaller entities are often underserved. I saw that smaller business owners weren’t receiving the same level of legal support larger corporations relied upon to grow and sustain. I knew this was a major contributor to the ceiling that most small businesses hit before they’ve even scratched the surface of their potential. And I knew at that moment that all of this lack of knowledge and support was creating a huge wealth gap. After over ten years of legal experience, I started my law firm to provide the legal support small to mid-sized business owners and entrepreneurs need to grow and protect their brands, businesses, and assets. I have a passion for helping small to mid-sized businesses and startups grow into wealth-building assets by leveraging the same legal strategies large corporations have used for years to create real wealth. I enjoy connecting with my clients, learning about their visions and identifying ways to protect and maximize the reach, value and impact of their businesses. I am a strong legal writer with extensive litigation experience, including both federal and state (and administratively), which brings another element to every contract I prepare and the overall counsel and value I provide. Some of my recent projects include: - Negotiating & Drafting Commercial Lease Agreements - Drafting Trademark Licensing Agreements - Drafting Ambassador and Influencer Agreements - Drafting Collaboration Agreements - Drafting Service Agreements for service-providers, coaches and consultants - Drafting Master Service Agreements and SOWs - Drafting Terms of Service and Privacy Policies - Preparing policies and procedures for businesses in highly regulated industries - Drafting Employee Handbooks, Standard Operations and Procedures (SOPs) manuals, employment agreements - Creating Employer-employee infrastructure to ensure business compliance with employment and labor laws - Drafting Independent Contractor Agreements and Non-Disclosure/Non-Competition/Non-Solicitation Agreements - Conducting Federal Trademark Searches and filing trademark applications - Preparing Trademark Opinion Letters after conducting appropriate legal research - Drafting Letters of Opinion for Small Business Loans - Drafting and Responding to Cease and Desist Letters I service clients throughout the United States across a broad range of industries.
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Anand A.
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Michael P.
I have been licensed since 2006 and have extensive experience in family law, personal injury, criminal law, and general litigation. I have a solo practice and I am seeking new opportunities.
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