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SLA and KPI are elements of business process management, which is abbreviated as BPM. SLA stands for service level agreement. KPI stands for key performance indicator. They both pertain to monitoring specific measurements of the performance of your business. The difference between them is when they’re most useful.

Service Level Agreements

You might have a service level agreement to set expectations with a vendor providing supplies or services to your business. Or you might have a service level agreement to document the expectations for your contribution to your clients or business partners. Your SLA could set the standards for timelines, quality levels or the amount of service you expect a business deal to include.

Key Performance Indicators

Which key performance indicators will serve you best can vary by the size of your business and the type of market you’re in. Your KPIs might include some combination of web traffic, social media engagement and net profit on the products or services you offer. The performance measurements for a restaurant will likely be very different from the KPIs for a computer repair shop or an online retailer.

Using SLA and KPI

Service level agreements and key performance indicators are closely related, but clearly different. An SLA is forward-looking, while KPIs focus on past performance. Your SLA will set benchmarks ahead of time for you to measure performance in the near future. The KPIs you choose will measure the performance of your business against those benchmarks as time passes. Your SLA could even specify which performance indicators will be used.

Making Adjustments

Using an SLA and performance indicators together allows you to monitor your business as you progress through a business agreement. Trends will develop and you can find opportunities to recalibrate your role in the partnership. If you’re under-performing against the expectations set in the SLA, performance measurements will show how much improvement is needed. If you identify an ability to perform beyond the parameters of the service agreement, you’ll see an opportunity improve your timelines or increase the volume of your business.

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