Project Management

Focus on four issues when negotiating a service level agreement

What should you look for when negotiating a service level agreement? Representatives from two Web hosting services suggest that you consider four major issues to get the most out of your SLA.


Negotiating a service level agreement (SLA) with a Web hosting company is more complicated now than ever before. Representatives from two Web hosting companies—Intira of Pleasanton, CA, and NaviSite of Andover, MA—offer this advice on four key areas to consider when negotiating an SLA:
  1. Compare like features with like features when you analyze Web hosts and their SLAs because agreements can vary widely.
  2. Negotiate for the highest Web site application availability you can afford.
  3. Look for SLAs that offer realistic functions that are measurable and verifiable to track response times and set notification guidelines.
  4. Determine how downtime credit will be calculated and paid.

1. Comparing Web hosts and SLAs
SLAs are as varied as the many Web hosting designs and Web hosting companies that offer them.

Advertisement
IBM Corporation is the exclusive sponsor of TechRepublic's special series on Web Hosting. IBM's e-business Hosting gives you the freedom to customize an array of services into a solution that is shaped by your business, not ours. For more information, check out TechRepublic's Web Hosting Center, or visit IBM's e-business Hosting site

IBM Corporation is the exclusive sponsor of TechRepublic's special series on Web Hosting. IBM's e-business Hosting gives you the freedom to customize an array of services into a solution that is shaped by your business, not ours. For more information, check out TechRepublic's Web Hosting Center, or visit IBM's e-business Hosting site

That variety can be confusing, said Intira’s Andre Bartels. “One of the biggest problems when you look at SLA comparisons is that it isn’t apples to apples. There is no standard SLA, and every provider can come up with their own SLA.”

Gartner analyst Ted Chamberlin said the difficulty making comparisons is a common complaint among IT managers. The wide variety of contract options makes it hard to determine which Web hosting plan is the best.

“I feel for my clients. They’ll send me a contract, and you’ll just see a laundry list of services, and they ask for help,” Chamberlin said. As a start, you should compare like features and focus on key issues such as uptime, problem notification, and credit for outages.

2. Negotiate availability
Customers may want their Web applications available 24/7 without any outages. But that is an unrealistic expectation, according to Bartels.

“Every customer comes in and says they want 100 percent availability,” Bartels said. “As a provider, we say wait a minute, 100 percent is impossible.”

The negotiation goes from that point to 99.999 percent, and then to 99.99 percent, which is possible but very expensive to achieve, Bartels said.

“Typically the customer comes in with expectations, and we as a provider come in with what we can or cannot do,” Bartels said. “This is where you have to set expectations, and you have to do this right up front.”

Chamberlin recommends 99.97 percent as a realistic goal for uptime.

“That is kind of the best of breed. That translates into about 14 minutes of downtime a month. That’s what we really tell our clients to negotiate for, and it’s definitely attainable,” he said.

3. Response time and notification issues
The time it takes a Web host to respond to problems and customer notification are two other metrics that should be covered in the ideal SLA, according to NaviSite’s George Khater. Both NaviSite and Intira, which offer complete e-commerce infrastructures to support an organization’s Web applications, specialize in services for small and medium-size enterprises and boast of their control centers and how they notify customers of problems.

“We will not put an SLA on the table unless we can support it, measure it, and report on it,” Khater said. “That’s really the critical piece of an SLA, the measuring and reporting.”

Customers are notified automatically when a problem occurs through a program NaviSite uses to track support issues. An SLA metrics team then compiles reports from this database that are available to customers to verify compliance with the SLA.
TechRepublic is featuring a series of articles on this topic in every Republic this month. If you’d like to see what your IT colleagues are doing with Web hosting, check out TechRepublic's Web Hosting Center.
Intira has a service management center that monitors and manages customer servers. Along with monthly summary reports, Intira provides a choice of more than 40 different reports that cover more than 400 critical data points in its networks.

“These measurements and guarantees have to be based on realistic and measurable criteria,” Bartels said.

4. Study plan to receive credit for downtime
“If I guarantee 100 percent uptime, that’s not realistic,” Bartels said. A 100 percent guarantee means that host expects to pay on occasion—and those payments must be limited if a Web host wants to remain in business.

Intira’s credit for downtime is one day for every 15 minutes beyond the SLA agreement, so six hours equals a month’s worth of fees for most contracts.

“We call it the shared pain, because it’s a pain for the customer if his site goes down, and I think the customer wants us to feel that as well,” Bartels said. Intira claims it has never lost a month’s fees from a customer due to downtime.

Khater warns that some hosting companies apply their credits for downtime in a reactive manner, where the customer has to notify the host when their site goes down. This is an older model that many telecos and ISPs still use, he said. The customer notifies the host, who then has to identify and fix the problem and then calculate the length of the outage.

“That means the provider is not monitoring the compliance of the SLA metric,” Khater said.

“The way you measure your business relationship is if no credits were paid. That’s a successful relationship,” he said. “This means outages were minimal, the application is up, and your bottom line has not been impacted.”
Some people think that a service level agreement is meaningless, because if you need it, you’ve already lost customers during a downtime. Do you think there is any value in SLAs? Start a discussion below or send us a note.

Editor's Picks

Free Newsletters, In your Inbox