![[FREE EBOOK] Strategic Vietnam IT Outsourcing: Optimizing Cost and Workforce Efficiency](https://vti.com.vn/wp-content/uploads/2023/08/cover-mockup_ebook-it-outsourcing-20230331111004-ynxdn-1.png)
What is an OLA?
An Operational Level Agreement (OLA) represents a formalized internal agreement that governs how different departments or teams within an organization collaborate to deliver IT services effectively. This, in practice, differs fundamentally from external service contracts, as it focuses on internal coordination rather than customer-facing commitments. Unlike Service Level Agreements (SLAs), which establish contractual obligations between IT service providers and external customers, an OLA defines the specific responsibilities, performance metrics, and collaborative frameworks among internal groups.
The primary purpose of operational level agreement implementation centers on ensuring each internal team meets designated performance targets that collectively support overall service delivery to end users. This internal alignment becomes increasingly important as organizations seek to maintain service quality while managing complex, multi-departmental IT operations. Through structured internal agreements, organizations can better coordinate processes and communication channels, ultimately enabling service providers to fulfill their external commitments more reliably.
Background and Historical Development
The concept of operational level agreements emerged from the evolution of IT Infrastructure Library (ITIL) framework practices, which have shaped modern IT Service Management (ITSM) approaches since the late 1980s. Initially, coordination between internal IT teams relied on informal arrangements and ad hoc communication, a practice that proved increasingly inadequate as IT environments grew in complexity and business dependency.
The formalization of what is an OLA structure gained momentum during the 1990s and early 2000s, coinciding with several significant market shifts. The rise of IT outsourcing created demand for more sophisticated internal governance mechanisms, as organizations needed to maintain service quality while working with external providers. Meanwhile, the increasing complexity of IT infrastructure—driven by network proliferation, enterprise software adoption, and emerging digital business models—necessitated clearer internal accountability structures.
This evolution reflects broader trends in organizational management, where the need for measurable internal service delivery has become a standard business practice. The structured approach to internal agreements has proven particularly valuable in large enterprises and outsourcing environments, where multiple teams must coordinate efforts to meet comprehensive SLA commitments to customers.
Key Characteristics and Structure
Operational-level agreements are distinguished by their internal focus and performance-driven structure. These agreements typically establish specific metrics and performance targets, including response times, resolution timeframes, and quality standards that each participating department commits to achieving. The documentation process for an OLA involves formal governance mechanisms to ensure accountability and provide clear traceability of responsibilities.
OLA implementation reveals several critical structural elements. The agreements directly support SLA fulfillment by ensuring internal teams understand and commit to their respective roles in the broader service delivery chain. A comprehensive OLA clarifies not only individual team responsibilities but also establishes escalation procedures, communication protocols, and performance measurement frameworks.
The formal documentation aspect has become increasingly important as organizations recognize the need for measurable internal service commitments. This structured approach helps prevent service delivery disruptions that could cascade into customer-facing issues, while also providing a foundation for continuous improvement in internal processes.
Comparison with Related Agreement Types
Understanding what is operational level agreement requires distinguishing it from similar governance instruments used in IT service management.
The fundamental difference between OLAs and SLAs lies in their scope and audience: while SLAs establish external contracts between service providers and customers, defining expected service levels, OLAs govern internal team relationships that support those external commitments.
Underpinning Contracts (UCs) represent another category of service-related agreements, focusing on formal contracts with third-party suppliers or vendors who support service provision. Unlike OLAs, which address internal coordination, UCs involve external parties and concentrate on procurement and vendor management aspects. The distinction becomes particularly important in complex service delivery environments where multiple agreement types must work together.
Agreement Type Comparison
| Agreement Type | Parties Involved | Primary Purpose | Strategic Focus |
|---|---|---|---|
| Service Level Agreement (SLA) | IT Provider & External Customer | Define service expectations and commitments | External service delivery and customer satisfaction |
| Operational Level Agreement (OLA) | Internal IT Teams/Departments | Establish internal responsibilities supporting SLAs | Internal service coordination and team accountability |
| Underpinning Contract (UC) | IT Organization & External Vendors | Formalize procurement and supplier commitments | External supplier management and resource security |
This framework illustrates how OLAs function as internal bridges, ensuring the organizational alignment necessary to meet broader external SLA commitments while UCs secure the external resource commitments required for comprehensive service delivery.
Business Significance and Market Impact
The importance of operational level agreement implementation has grown substantially as organizations increasingly recognize the connection between internal service quality and customer experience outcomes. By establishing clear departmental responsibilities and performance targets, OLAs improve coordination mechanisms, reduce operational misunderstandings, and help maintain service continuity across complex IT environments.
This internal clarity has become particularly critical for IT outsourcing relationships and vendor management strategies. As the use of external resources continues expanding across various industries, organizations require sophisticated internal governance mechanisms to monitor and manage team performance effectively. For instance, when a company outsources its IT help desk operations, an OLA between the help desk team and network operations group establishes specific response times and task allocations needed to resolve issues, enabling the service provider to meet SLA commitments to clients.
The broader business impact of operational level agreements can be seen in their contribution to organizational efficiency and risk management. Companies implementing structured internal agreements often report improved service delivery consistency, enhanced team cooperation, and better alignment between IT operations and business objectives. However, the effectiveness of these agreements depends significantly on organizational commitment to formal governance processes and continuous performance monitoring.
Furthermore, OLA reflects evolving expectations for internal accountability in modern business environments. As digital transformation initiatives place greater demands on IT service delivery capabilities, the structured coordination provided by OLAs becomes increasingly valuable for maintaining competitive service standards while managing operational complexity.
