Why Service Level Agreements?

Why do you care if your Software as a Service or Application Service Provider has a Service Level Agreement (SLA)? It would be in their best interest to keep the application up and running at all times, right?

What happens if the service does go down? Do you get a refund? Would it make a difference if you did get a refund? Probably not. Does it mean that the service will never go down? No. It means that your provider has committed to keeping the service available and is willing to put the commitment on paper and even refund some of your money if something were to happen to disrupt your use without prior notification. If there is downtime, there is a strong economic incentive for the vendor to return the service to normal since they would be paying penalties to a large number of companies. That gets management's attention quickly.

So why have an SLA?
It is a contract between you and your service provider stating that they will do everything in their power to ensure that the service is available, and if they don't, there are penalties. The reason to have an SLA is for your vendor to show their commitment to you and to set the groundwork for when they don't meet that commitment. They are committing to guaranteed up-time. They commit to specific maintenance windows so that you can plan for them. It is human nature to pay more attention to meeting commitments that are described in legal documents than ones that are verbal.

Be wary of where your applications reside. There are large companies out there offering to host your data and applications without an SLA. What will they tell you? "We are the largest e-commerce website and we use the same data facility for your data as ours." Tell them "That's nice but why won't you commit to providing a Service Level Agreement for my data?"
Also beware of the vendors that will only provide a SLA on the data storage and not the application. You need both.

You might start to think that you shouldn't use hosted applications. But, how many companies have an IT shop that provide service level and uptime commitments to its staff? Very few, because many companies either cannot afford or choose not to put the infrastructure in place that is required. Redundant hardware, software, networks, people, it all adds up to big $$.

SaaS vendors can provide the critical infrastructure because the cost is shared across many customers so the cost to each individual customer is actually very low.

Ultimately the SLA lets you take advantage of hosted applications, 99.9% uptime, upgrades and 24-hour support without incurring the costs. You get a committed partner instead of a supplier. SaaS vendors must earn your business each and every month. Very different from the suppliers you purchase software licenses from.

November 9, 2007 | Comments (0)
Posted by Dave

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April 20, 2007 | Comments (0)
Posted by DocuVantage