Watch Your SLA: 10 Essential Components to Check in Your New SLA

When entering a Service Level Agreement (SLA) with a service provider, it’s not just about the uptime guarantees they offer. In most instances, preparing for downtime can save more than chasing compensation, which often falls short of the actual business cost incurred. Here are ten crucial elements to look out for in your new SLA.

1. Refunds and Compensation

While some companies promise 100% refunds for downtime, this is often only a percentage of the time lost. For instance, a service advertising 99.999% uptime might sound flawless, but if the uptime falls to 90%, you’ll only get a 9.999% refund. Assess if the refund will truly cover your business losses. Some SLAs might even offer 100x refunds, but these are exceptional cases.

2. Scope of SLAs

Ensure the SLA applies to their tenant’s overall availability. Some agreements only cover significant outages affecting a large portion of their customers, leaving minor yet impactful downtimes out of their purview.

3. Performance Guarantees

Downtime isn’t the only enemy; slow performance can be equally disastrous. Check if the SLA includes performance guarantees such as page load times and response speeds, not just uptime percentages.

4. Exclusions and Scheduled Maintenance

Unplanned downtime might be outside the SLA’s compensation scope, and scheduled maintenance is often exempted. Additionally, “force majeure” events like natural disasters are typically excluded. However, measures like Microsoft’s cross-region replication can mitigate these risks. Furthermore, some providers even class cyber security incidents such as DDoS attacks as force majeure. Always clarify what the provider classes as force majeure and downtime and what affects the SLA.

5. Refund Caps and Types

Be aware of any caps on refunds and whether they are issued as credits or cash. Refunds in credits may not be as beneficial as cash, depending on your financial needs and continuity plans, and possible desire to migrate to another provider after the poor availability incident.

6. Termination Clauses

A strong SLA should allow you to terminate the agreement if service levels aren’t met consistently. This indicates the service provider’s confidence and commitment to their uptime promises.

7. Third-Party Dependencies

SLAs often exclude outages caused by third-party vendors. Ensure that downtime due to third-party failures isn’t unjustly excluded from the SLA to safeguard continuity.

8. Conditional Refunds

Some SLAs only provide compensation after exceeding a downtime threshold that may not align with the 99.9% figure quoted. This policy can lead to disagreements and strains valuable resources. Make sure downtime compensation is fair and transparent.

9. Automatic Rebates

A competent service provider should automatically issue rebates for downtime without requiring you to chase them. Manual claim processes can waste time and disrupt your operations.

10. Limitations of Liability

Understand the limitations of liability within your SLA. Most SLAs won’t cover actual damages caused by downtime, emphasizing the need for redundant solutions or transferring risks via insurance providers.

Conclusion

Relying solely on SLA agreements without preparing for possible downtime can be detrimental to your business. By scrutinizing these ten elements, you can ensure that your SLA offers realistic, fair, and comprehensive coverage, safeguarding your business operations effectively. Always be proactive in managing risks to minimize downtime impacts.

Why Preparation Trumps Compensation

Ultimately, while understanding and negotiating SLAs is crucial, being prepared for downtime with redundant systems and robust backup plans is often more cost-effective than seeking compensation. The proactive approach will save your business time, money, and reputation in the long run.

Ensure your SLA covers all bases and protects your business interests by addressing these ten critical components. Stay informed and secure with a well-rounded, proactive approach to service level agreements.