Jul 16, 2016 by Tom Arnold

“I recently negotiated a software contract with an extensive Service Level Agreement (SLA). It reminded me that a contractual mechanism that is so common in software and IT isn’t widely used in real estate. At first blush, using a SLA for a lease may seem like a stretch, but as leasing and facilities operations modernize and become more data-driven, an opportunity may emerge to differentiate and monetize space based on how it is run.

First, the basics. SLAs are frequently used to help buyers of software assure themselves that the software they are buying will live up to certain business objectives, such as uptime, response time or cure time for critical bugs. Organizations typically buy software to smooth workflow, and especially as more software is delivered over the web, it’s just as crucial how that software performs as what features are made available. SLAs typically administer benchmarks for key aspects of the software and enforce penalties on the vendor for software that doesn’t reach the SLA.”

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