5 Steps to Define SLOs for Internal Systems

Want reliable internal systems? Start with well-defined Service Level Objectives (SLOs). SLOs set measurable performance targets, ensuring systems meet user and business needs. Here’s how to create them:
- Step 1: Connect SLOs to Business Goals
Identify critical systems, measure their business impact, and align objectives with organizational priorities. - Step 2: Choose Key Metrics
Focus on user-centric metrics like availability, latency, and error rates to track performance. - Step 3: Set Thresholds and Error Budgets
Define realistic targets and acceptable failure limits (error budgets) to balance reliability and innovation. - Step 4: Implement Alerts and Automation
Use alerts for key issues and automate responses to reduce downtime and operational stress. - Step 5: Review and Update Regularly
Continuously analyze performance trends and adjust SLOs to stay aligned with evolving business needs.
How to get started with SLI/SLO with Steve McGhee
Step 1: Connect SLOs with Business Goals
To create effective Service Level Objectives (SLOs), it’s essential to tie them directly to your business goals. Without this alignment, you might end up improving systems that don’t contribute meaningfully to your organization’s success.
Identify Critical Internal Systems
The first step is to distinguish between your core systems and supporting ones. A helpful way to do this is by creating a strategy map that links your organizational goals to each system. This visual representation highlights the cause-and-effect relationships across various business functions.
Start by defining your organization’s mission, vision, and core values. Then, conduct an internal audit of key functions – such as product delivery, customer service, regulatory compliance, and innovation – to categorize your systems accurately.
Here’s an example: A large U.S. bank aligned its SLOs with its goal of improving service reliability. They focused on 3–5 critical SLOs, ensuring they had stakeholder buy-in.
The distinction between critical and supporting systems becomes clearer when you recognize that internal processes form the backbone of your company. Improving these processes can significantly boost employee efficiency and productivity.
Once you’ve identified your critical systems, the next step is to measure their impact on your business. This helps you zero in on where to focus your improvement efforts.
Measure Business Impact
After pinpointing your critical systems, it’s time to quantify their impact. This involves assessing the operational and financial consequences of system underperformance.
Start by analyzing financial metrics like profitability, liquidity, and efficiency to understand the broader business implications. Then, establish a risk framework that includes four key dimensions: time-to-detect (TTD), time-to-repair (TTR), time-between-failures (TBF), and user impact. This data-driven approach enables you to prioritize risks based on their potential consequences.
Take Honeycomb as an example. They align SLO targets with system roles: their ingest API has a 99.99% uptime target, while their UI homepage targets 99.5%. This demonstrates how reliability goals can be tailored to specific business needs.
To make this process actionable, collaborate with customer-facing teams. Validate your analysis and prioritize reliability improvements based on customer impact. For instance, a financial services startup used an SLO platform to combine performance indicators with business value and system reliability goals. This ensured their system performance aligned with their overall business objectives.
The ultimate aim is to establish clear agreements with stakeholders about critical paths and investments. When starting out, it’s wise to dedicate a few quarters to gathering data and understanding how both planned and unplanned operations affect your error budgets.
Step 2: Choose Key Metrics for Internal Systems
After aligning your Service Level Objectives (SLOs) with business goals, the next step is selecting Service Level Indicators (SLIs) to measure system performance effectively. These metrics are the backbone of understanding how well your systems are meeting user and business needs.
Select the Right SLIs
To build meaningful SLOs, you need SLIs that capture what matters most to users and the business. The focus should be on metrics that directly reflect user experience, such as availability, latency, or throughput, depending on whether your service operates synchronously or asynchronously. Instead of monitoring every internal component, concentrate on the critical interaction points users rely on.
For example, New Relic evaluates the performance of its authentication API by tracking HTTP POST requests that return 200 OK responses. This approach ensures they measure what truly impacts users.
When choosing SLIs, make sure they meet these five criteria: measurable, actionable, relevant, understandable, and sensitive enough to reveal performance changes. If you can’t measure or act on a metric, it’s not worth your time. Once you’ve identified the right SLIs, establish baselines and monitor them consistently to track system performance.
Track Metrics for Internal Systems
Start by defining a baseline for your SLIs. This baseline serves as your benchmark for identifying normal system behavior and spotting performance issues when they arise.
Understanding user journeys is key to determining which metrics matter most. By mapping out how users interact with your services, you can pinpoint the metrics that are critical at each touchpoint. For internal systems, this might involve tracking employee workflows, monitoring data pipelines, or measuring how different business units integrate with one another.
Focus on user-centric metrics like traffic, errors, and latency. These provide a clear picture of the customer experience. As one expert puts it:
"The key question to ask is: what is the customer’s experience like? Everything should be driven from this."
Keep in mind that infrastructure constraints can influence how you monitor internal systems. Unlike public cloud environments, internal data centers often face resource limitations. Many services run on dedicated virtual machines, and provisioning new physical servers can take days or even weeks.
Consistency is also crucial. Avoid redefining metrics too often, as maintaining a historical perspective allows you to track long-term trends and assess the impact of changes over time.
Ultimately, the metrics you choose should drive action. As reliability experts emphasize, "These quantitative metrics should be chosen for their ability to drive actionable improvements. There’s no point tracking the rate of occurrence of failure if you don’t have a means to fix the problem". Always tie your measurement strategy back to improving system performance and enhancing the user experience.
Step 3: Set SLO Thresholds and Error Budgets
Once you’ve identified your key metrics, the next step is to establish realistic performance targets and error budgets. These will act as your guideposts for making engineering decisions. By turning your measurements into actionable benchmarks, you create a framework that ensures your systems align with both customer expectations and operational goals. After defining these thresholds and budgets, the next move is to implement alerting and automation to handle any deviations effectively.
Set Performance Thresholds
When setting performance thresholds, it’s all about striking a balance between keeping customers happy and working within your resource limits. Aiming for 100% reliability might sound ideal, but it’s not practical.
"If your SLO is aligned with customer satisfaction, 100% is not a reasonable goal." – Steven Thurgood and David Ferguson
Start by evaluating your current system performance to establish a baseline. Use this as a reference point, but don’t let it limit your aspirations. Historical data, especially when analyzed over a four-week rolling window, can help you smooth out short-term fluctuations and set achievable goals. For instance, if your authentication system currently operates at 98.5% availability, targeting 99.0% may encourage progress without overextending your resources.
Focus on defining primary SLOs for the bulk of your requests and secondary SLOs for less common scenarios. Remember, your SLIs (service level indicators) should range from 0% (total failure) to 100% (flawless performance). Treat your initial SLI and SLO settings as a starting point – you can refine them as you gather more data and feedback over time.
Before finalizing thresholds, ensure all stakeholders are on the same page. This alignment is crucial, especially since internal systems often serve multiple teams with different priorities. Consensus helps avoid conflicts when trade-offs are necessary and ensures that your targets support the broader business goals outlined in Step 1.
Create Error Budgets
Error budgets take your SLOs and turn them into actionable tools by quantifying how much unreliability is acceptable.
"An error budget is a way of measuring how your service level indicator (SLI) has performed against your service level objective (SLO) over a period of time. It defines how unreliable your service is permitted to be within that period and serves as a signal of when you need to take corrective action." – Nobl9
To calculate an error budget, subtract your SLO target from 100%. For example, if your internal API has a 99.5% availability goal, the error budget allows for 0.5% of requests to fail. This gives you a measurable limit for unreliability.
Track all types of errors, whether they’re due to planned maintenance or unexpected outages. Take Acme Interfaces, Inc., for instance. In February 2021, their CTO Bill Palmer faced an HTTP request error rate of 15% – well above their 10% budget. After identifying that 8.5% of the errors stemmed from load balancer issues, they addressed the problem by training their NOC team and upgrading infrastructure. Within two months, the error rate dropped below 10%.
Establish clear policies for what happens when the error budget is consumed. If there’s plenty of budget left, teams can prioritize new features. But once it’s used up, the focus should shift to improving reliability. Use burn rate calculations to keep track of how quickly the budget is being consumed. A burn rate above 1.0 means you’re depleting your budget faster than planned, while a rate below 1.0 indicates room for calculated risks. Real-time tracking tools can help you monitor this, enabling proactive adjustments instead of last-minute fixes.
Finally, document your error budget policies and get buy-in from all stakeholders. When teams understand that exceeding the error budget means halting new feature development, they’ll be more motivated to prioritize reliability improvements before problems spiral out of control.
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Step 4: Set Up Alerting and Automation
Once you’ve established your SLO thresholds and error budgets, the next step is to ensure your systems actively monitor performance and respond effectively when issues arise. This is where alerting and automation come into play. These tools turn your SLOs into dynamic monitors that help maintain system reliability. Without well-thought-out alerts, critical breaches might slip through unnoticed. Here’s how to set up an efficient alerting and automation strategy.
Design Alerting Protocols
A strong alerting system starts by identifying which events truly demand immediate attention. For instance, system outages can cost businesses an average of $5,600 per minute. To create actionable alerts, focus on the "three W’s": what happened, why it matters, and who should act. Instead of sending vague messages like "API latency high", aim for clarity. A better alert might read:
"Authentication API latency exceeded the 500 ms threshold (currently 750 ms). This impacts the user login experience. Escalating to the Platform Team."
To avoid overwhelming your team with unnecessary notifications, use a tiered approach to categorize alerts by severity. Here’s an example:
Severity Level | Notification Channel |
---|---|
Warning threshold | Monitoring dashboard |
Minor alert threshold | Team channel during business hours |
Major alert threshold | Pages to on-call engineers |
This structure ensures that only the most critical issues disrupt your team’s workflow. Each alert should include sufficient context – such as error messages, logs, metrics, recent changes, and possible fixes – so your team can quickly diagnose and resolve problems.
Treat alert configurations as code. Use version control and peer reviews to maintain consistency and reliability. Regularly simulate failures to test escalation paths and identify any weaknesses in your alerting process. Once your alerts are well-defined, focus on automating responses to reduce downtime.
Automate Responses to SLO Breaches
Alerts notify your team of issues, but automation can often fix problems before they escalate. Automated systems can detect and resolve vulnerabilities, misconfigurations, or other weaknesses without requiring human intervention.
Take SleepScore Labs as an example. By integrating automated SLO management with Squadcast, they improved service reliability, reduced downtime, and sped up incident resolution.
Start by analyzing the common causes of SLO breaches in your systems. For instance, if capacity issues frequently trigger alerts, consider implementing auto-scaling to allocate additional resources when usage exceeds predefined limits. Automation can also handle tasks like restarting failed services, rolling back faulty deployments, or redirecting traffic to operational servers. By integrating SLO management into your CI/CD pipelines, you can prevent problematic code from reaching production and depleting your error budget.
A phased approach to automation works best. Begin with enriched notifications, move to automatic service restarts, and eventually implement multi-step workflows for more complex recovery scenarios. Automated systems can monitor metrics like latency, error rates, and availability while calculating burn rates to predict when error budgets might run out.
Clearly document your automation policies, specifying when to rely on automated responses and when to involve human expertise. The goal isn’t to automate everything but to handle routine, predictable issues automatically while leaving complex situations to your team.
For businesses looking to align SLOs with broader objectives, TECHVZERO provides tools to streamline operations, enhance monitoring, and automate incident recovery – keeping systems reliable and resilient.
Step 5: Review and Update SLOs Over Time
Once you’ve set up alerts and automation, the next step is to keep your system running smoothly by regularly revisiting your Service Level Objectives (SLOs). SLOs aren’t something you set and forget – they need consistent attention. As your business grows, user expectations shift, and systems evolve, your SLOs should evolve too. Think of them as living commitments that need to stay in sync with the changing needs of your team and customers. Without regular updates, even well-thought-out SLOs can become outdated and lose their effectiveness in guiding reliability decisions.
To keep your SLOs relevant, establish a regular review schedule. Whether you choose to review them monthly, quarterly, or semi-annually depends on how complex your system is and how quickly things change. This ensures your objectives stay aligned with the reality of your operations.
Analyze Performance Trends
Looking at historical metrics is key to identifying trends that can guide necessary adjustments to your SLOs. Dive into performance data from the past 6–12 months to spot recurring patterns, gradual shifts, or anomalies.
Ask yourself these critical questions during the review process: Does this SLO still meet user needs? Are the targets realistic based on past performance? Have there been changes in user behavior, traffic, or error patterns that require updates?. These questions help you decide when and how to adjust your SLOs.
For example, a SaaS platform initially set its latency SLO as: "API latency for all regions is 500 ms for 95% of requests over a rolling 30-day window." However, after expanding into the Asia market, they noticed higher latency due to the distance from their data center. To address this, they updated their SLO to include region-specific targets: Asia: API latency below 700 ms for 95% of requests over a rolling 30-day window, and Other regions: API latency below 500 ms for 95% of requests over the same period.
Use real-time monitoring tools to continuously track how your system performs against your SLOs. This ongoing analysis helps you catch trends early – before they turn into bigger issues. Keep an eye on error budget consumption, seasonal traffic spikes, and shifts in user behavior that might signal the need for updates.
Improve SLOs Over Time
Armed with insights from your reviews, work on refining your SLOs to tackle emerging challenges. Collaborate with product, engineering, and support teams to ensure your objectives remain practical and effective.
Set aside time each month to review SLO performance with key stakeholders. Use these sessions to analyze compliance reports, identify areas for optimization, and discuss any business priority changes that could affect reliability requirements. Customer feedback can also play a big role – adjust thresholds based on what users are saying about their experiences.
When breaches occur, treat them as learning opportunities. Post-incident reviews are invaluable for understanding what went wrong and how to prevent similar issues in the future. Document the reasoning behind each SLO change to maintain consistency across teams and provide context for future decisions. Include details like what triggered the change, what alternatives were considered, and the expected outcomes.
It’s worth noting that customers are 1.5 times more likely to stay loyal to brands that deliver consistent service performance. By regularly reviewing and refining your SLOs based on user feedback and shifting business priorities, you ensure your services stay aligned with customer expectations and continue to improve.
For organizations looking to simplify this process, TECHVZERO offers specialized monitoring and optimization services. Their expertise in automation and performance management can help you keep your SLOs in line with both technical capabilities and business goals, all while reducing operational workload.
Conclusion: Build Reliable Systems with Well-Defined SLOs
By sticking to these five steps – from aligning SLOs with business goals to automating alerts and conducting regular reviews – you can create internal systems that are both dependable and efficient. Well-defined SLOs lay the groundwork for operations that are both scalable and aligned with business success.
"SLOs create clear reliability guidelines that balance the tradeoffs between cloud costs, speed of change, and external risks." – 97 Things Every Cloud Engineer Should Know
When SLOs are tied to business objectives, they act as a bridge between engineering and business teams, ensuring that every decision about reliability supports overall organizational goals. This alignment encourages data-driven decision-making by offering DevOps and infrastructure teams actionable insights. Instead of wasting time guessing where to focus, SLOs highlight the most pressing issues, making it easier for development and operations teams to collaborate effectively.
SLOs aren’t static promises – they’re dynamic goals that evolve with your service. Start with conservative, realistic targets based on your system’s current capabilities, then refine them using real-world performance data and user feedback. Leveraging automation allows teams to detect and resolve potential problems before they impact customers.
To support this approach, TECHVZERO offers tools that simplify automation, optimize performance, and enhance monitoring processes.
The principle behind SLOs is straightforward: reliable services lead to happier users, which translates into greater business opportunities. By committing to continuous improvement, you’re positioning your organization for long-term success and a competitive edge in the market.
FAQs
How can I identify which internal systems are most critical to achieving business goals when setting SLOs?
To pinpoint the most important internal systems for aligning with business goals when setting Service Level Objectives (SLOs), start by zeroing in on systems that have a direct influence on critical outcomes. For instance, focus on systems that handle revenue-driving activities, like payment gateways or checkout processes in e-commerce, or those that play a key role in keeping customers happy.
Work closely with teams across departments – like Product, Engineering, and Sales – to identify which systems are crucial for both smooth operations and meeting customer expectations. This kind of collaboration helps ensure your SLOs are not only technically solid but also aligned with the company’s bigger-picture goals. By concentrating on these high-impact areas, you can establish SLOs that deliver tangible, measurable results.
What are the best practices for choosing Service Level Indicators (SLIs) that reflect user experience and business goals?
To identify Service Level Indicators (SLIs) that truly reflect user experience and align with your business goals, consider these key approaches:
- Focus on user-centric metrics: Opt for SLIs that directly capture the user’s experience. Metrics like response time, availability, and error rates are far more relevant than internal metrics such as CPU usage or disk latency, which don’t necessarily mirror what users face.
- Link SLIs to business objectives: Your SLIs should directly relate to essential user-facing features or behaviors that influence your organization’s success. For instance, if service uptime is crucial, availability should be a top priority as an SLI.
- Ensure SLIs are actionable: Choose metrics that provide clear, actionable insights. These should help your team make informed decisions to improve performance and reliability, ultimately boosting user satisfaction and operational efficiency.
By adhering to these principles, you can develop SLIs that not only assess your service quality but also contribute to meaningful enhancements for both your users and your business.
What are error budgets, and how can they help balance system reliability with innovation?
Error budgets offer a smart way to strike a balance between keeping systems reliable and pushing forward with innovation and new features. Essentially, they set a threshold for how much unreliability a system can tolerate, giving teams a clear measure of how much risk they can afford to take without hurting performance.
When teams operate within their error budget, they have the green light to introduce new features or make major updates. But if they go over that limit, it’s a clear signal to hit pause on new projects and shift focus toward stabilizing the system. This method ensures that progress doesn’t come at the expense of the reliability users count on.