Service Level Agreement is a commitment between vendor and a client.
As per SLA vendor has to provide the services to customer as agreed upon on the contract.
e.g. Let's says customer is facing an issue and he raised an incident in ServiceNow which is of Priority 1, then there is an agreed contract between the vendor (Who resolve the incident) and the customers that P1 incident will be resolved on first priority with in the agreed timeline (for e.g. 3 hours). If the vendor did not resolve the incident within agreed timeline, which means customer has a loss in any terms of business, then there will be agreed fine which vendor has to pay to customer.
SLA's are of three types:
SLA – Service level agreement
OLA-Operational level agreement
UC- Underpinning Contract