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A Service Level Agreement (SLA) is a written contract that outlines the minimum service standards required from a service provider. SLAs include mechanisms to measure the provider's performance, which distinguishes them from Key Performance Indicators (KPIs) that assess performance against specific targets. SLAs specify the minimum levels of service expected and establish a course of action if these standards are not met, often involving financial penalties to compensate clients for losses due to underperformance. Regular monitoring of SLAs ensures ongoing performance tracking and enables corrective actions when necessary.
