Differences Among SLA, KPI & OPI

by Jake Wayne

Business process management techniques can feel like an alphabet soup of arbitrary acronyms, but don't let it intimidate you. Each process is easy to understand on its own. In the case of SLA (service level agreement), KPI (key performance indicators) and OPI (operational performance indicators) you use the technique to define how you measure specific aspects of your business.


Service level agreement is a contract between your business and a vendor that specifically defines the terms of the work that vendor does for you -- for example, a set delivery time for a good or service. A complete contract for goods and services may contain multiple service level agreements, one for each specific task or item, and different agreements for different aspects such as quality, quantity and schedule. In addition, you can set up an SLA between different departments within your company, such as defining how shipping gets goods from a warehouse to a retail outlet.


Key performance indicators identify and measure the key metrics for your business. KPIs for a restaurant would include tables filled, income per night, food costs, labor costs and advertising budget. KPIs for an online store would include income per category and costs for bandwidth, advertising, goods sold and shipping. KPIs help your business succeed by keeping you up-do-date on the "vital signs" of the company.


Operational performance indicators are similar to KPIs in that both refer to the vital metrics of an aspect of your business. But while a KPI looks at broad categories, an OPI measures a specific function or operation -- typically one at a "bottleneck" for your business. An OPI for a shipping company would look at the process for loading trucks, while an OPI for a fast-food restaurant would measure the make process for meals.

Multiple Iterations

Setting up systems for your business doesn't mean choosing among SLA, KPI and OPI for your metrics. A strong business plan will apply all three metrics at appropriate points. OPIs will measure the performance of key points of your operation, while KPIs will rate how well your business interacts with the market. You'll use SLAs to make sure the businesses you depend on keep delivering what you need on the schedule and in the quality you require.

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