To deliver superior business performance, your company's business units must see eye to eye with the information technology (IT) department. One effective way of fostering cooperation between departments is to set up service level agreements (SLAs).

Typically, an SLA is a set of expectations that a company publishes to help customers understand how and when to expect help. Adapting these agreements to your business simply means drafting a document that outlines, for example, the specific services, hours of availability, response times and other levels of service the IT department will provide to each company department. These types of agreements can help significantly improve financial performance.

Here are five steps that can help your company create and put into effect workable SLAs:

1. Identify application hierarchy. IT must first identify all of the applications that it supports or manages for each business unit. Together with each unit, list the applications in order of priority, based on overall importance. Consider ranking each application according to how long the business could function without it and try to estimate the financial effect of that downtime. If applicable, document the downstream effect of an application's outage on your company's remaining systems.

2. Start the development process. Once you've set the priorities, the hard work begins. As you develop the SLAs, it is crucial that each business unit readily understand the expectations documented within each agreement. The terminology IT professionals use often doesn't resonate with other employees. The agreements should avoid jargon and express the details of the accord in common English and business terms. Time-bound SLAs are far easier to develop and manage than those that deal with high technology concepts such as load balancing and packet transfers. If the metrics in the SLAs sound real to staff members, they will be more likely to embrace them.

3. Track and report. Depending on the overall culture of your organization, it may make sense to provide proactive updates on application performance. You could share a monthly report with the heads of each business unit. Waiting until an SLA has been violated does not facilitate effective relationships. It's much more effective to highlight the fact that, in the vast majority of cases, IT delivers superior application performance within the parameters of the agreement.

4. Choose a penalty system. What if an SLA is breached? There are a number of choices when it comes to imposing penalties. Some companies penalize the IT staff using a system of charge backs. Others choose to deduct funds directly from the bonus pool allocated to IT personnel. A combination of a carrot and stick may provide the best approach: Penalize serious lapses in application performance while rewarding IT with incentives when the department consistently meets or exceeds the terms of SLAs.

5. Recognize that not every application is SLA friendly. As companies continue to gravitate toward cloud computing -- using software applications installed on external servers -- the IT department will start to lose direct control over application outages. For example, if your company uses a cloud-based customer relationship management solution, infrequent outages will inevitably occur. SLAs associated with cloud-based applications should focus on aspects within the control of your company's IT, such as Internet connectivity, browser configurations and new user access management. In addition, since your IT function will probably be responsible for the relationship with the cloud computing company, it may be appropriate to include an SLA that specifies how long your organization's technology department has to communicate the status of an external outage.

Everyone in the company is in this together. SLAs can conceivably drive a wedge between business units and IT. At all stages while developing, applying and managing the agreements, staff members should understand that the effort is being made to create solid partnerships and improve business performance. SLAs are not tools for assigning blame.

Over time, businesses become more dependent on technology, not less. As that happens, developing a robust approach to SLAs becomes increasingly important.

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