Cisco IP SLA (Service Level Agreement) is very similar to concept of Frame-relay – Like Committed information rate. That is your Service Provider ISP, will tell you that you are guaranteed to get particular BW from them , with Min value of something ; but can go to higher value. Same Concept apply to Ip SLA

A IP SLA setup consist of source and Responder.

It is like Agreement between source and responder, we will do a lab on it but we will use the concept of ping , as we see when I put ? , I will see choice of ftp , Http and so on.

Now I will do small Lab:

R1 will be SLA source =200.1.1.1
R2 will be SLA responder =200.1.1.2

R1#config t
Enter configuration commands, one per line. End with CNTL/Z.
R1(config)#ip sl
R1(config)#ip sla ?
Entry Number
enable Enable Event Notifications
ethernet-monitor IP SLAs Auto Ethernet configuration
group Group Configuration or Group Scheduling
key-chain Use MD5 authentication for IP SLAs Control Messages
logging Enable Syslog
low-memory Configure Low Water Memory Mark
reaction-configuration IP SLAs Reaction-Configuration
reaction-trigger IP SLAs Trigger Assignment
reset IP SLAs Reset
responder Enable IP SLAs Responder
restart Restart An Active Entry
schedule IP SLAs Entry Scheduling

R1(config)#ip sla 1
R1(config-ip-sla)#?
IP SLAs entry configuration commands:
dhcp DHCP Operation
dns DNS Query Operation
ethernet Ethernet Operations
exit Exit Operation Configuration
frame-relay Frame-relay Operation
ftp FTP Operation
http HTTP Operation
icmp-echo ICMP Echo Operation
icmp-jitter ICMP Jitter Operation
path-echo Path Discovered ICMP Echo Operation
path-jitter Path Discovered ICMP Jitter Operation
tcp-connect TCP Connect Operation
udp-echo UDP Echo Operation
udp-jitter UDP Jitter Operation
voip Voice Over IP Operation
As we see we can do a lots of stuff but we will do simple Ping ( and test it with icmp-echo)

Now we will use 200.1.1.2 as target of test

Also in here I can use the source address , but i press enter ( sicne it will be 200.1.1.1)
R1(config-ip-sla)#
R1(config-ip-sla)#icmp-echo ?
Hostname or A.B.C.D Destination IP address or hostname, broadcast disallowed

R1(config-ip-sla)#icmp-echo 200.1.1.2 ?
source-interface Source Interface (ingress icmp packet interface)
source-ip Source Address

R1(config-ip-sla)#icmp-echo 200.1.1.2
R1(config-ip-sla-echo)#
Step 2) Now set the frequency test between R1 and R2 , Default value=60 sec,