Based on the services in the Service Catalog and on (customer) requirements (gathered through an open dialog and feedback process) service level agreements (SLAs) will be defined.

The proposed service level targets will be aligned to the requirements as well as the service delivery capabilities and plans (availability, capacity, performance, for instance). Service delivery can be in-house or external, or a combination. An understanding of the relationship of cost components to the proposed targets must also be established.

The documentation of the SLAs includes a description of the services and the respective quality levels (as defined in the Service Catalog or with variations for a defined set of customer contexts and scope of requirements), as well as defined key targets.
The SLAs will then be negotiated with the customers so that the content can be finalized, and finally the service level agreement can be set up between the service provider and the customer.

If modifications, additions, or improvements are necessary, the SLAs have to be updated and maintained.

Where appropriate and necessary to ensure service delivery that meets SLAs, operational level agreements (OLAs) are established with both internal service providers and with external service providers. For the latter, the OLA terms will often be formalized via the Supplier Management process in a contract (known in ITIL® as an 'Underpinning Contract') with the external service provider.