How to Read Service-Level Agreements
What are the basic terms that your SLA should cover with you service provider? How can you determine server uptime and downtime?
Your business's success depends, at least partly, on your data center and network infrastructure. If you rely on other partners for technology and data needs, a service-level agreement (SLA) will be critical in providing you with the service quality that you desire and that your company needs. An SLA defines your expectations of what a supplier will provide for you.
Key Components of an SLA
There are two key areas in which SLAs should focus.
Service
One of the top priorities of your SLA will be the projected uptime and downtime of your server or website. But what do uptime and downtime mean? Their meanings are just what you think — uptime means your system/server/website is operating and functional. Downtime means that it is not operational, and your users and/or customers cannot access the information that they need, whether due to an outage or service provider error.
One of the most common standards for uptime is "five 9s," meaning that your network is operational 99.999% of the time. It is easy to calculate uptime and downtime. For example, say your network was monitored for one day (24 hours = 86,400 seconds) and experienced 5 minutes of downtime (300 seconds). First, divide 300 by 86,400, which is .003472, or 0.3472%. So, the uptime percentage for your network would be 100% minus 0.3472%, or 99.6528%. If your SLA states that you require 99.999% working uptime, your service provider is not meeting your needs.
Other service elements that your SLA should focus on include provided service specifics, conditions of service availability, responsibilities of both you and the supplier, escalation procedures should a large problem occur and more.
To ensure that all your needs are met, outline level of service definitions for each area. Everything should be specific and measurable to allow for benchmarking, and, if necessary, rewards or penalties according to the agreement. Depending on your needs, specific metrics to monitor may include:
Service availability (uptime and downtime)
If you run an e-commerce site, you will typically have an aggressive SLA at all times, such as 99.999% uptime. However, for other businesses, you may define 99.95% uptime during business hours (8 a.m. until 6 p.m.) and less availability outside those core hours.
Defect rates
This will define counts or percentages of errors in major deliverables such as incomplete backups and restores, missed deadlines, etc.
Technical quality
In the same line with defect rates, this could cover coding defects and other measures of technical quality.
Security
In today's world of security breaches, it is important to outline what you expect for security measures, such as anti-virus updates and other preventative measures.
Management
Uptime and downtime are also management elements of an SLA. You and your provider need to agree on measurement standards and methods, such as monitoring time frames and uptime and downtime calculations. You should outline a reporting process in the SLA, including the contents of reports and how frequently you want to receive them.
An indemnification clause is an important aspect of an SLA. Indemnification means that your supplier will have to pay you for any third-party litigation costs resulting from its breach of the SLA guarantees. This protects you from litigation that is a direct result of service level breaches by the supplier. The SLA should also address consequences for the supplier not meeting service obligations and escape clauses or constraints.
Other management elements include processes for disputes as well as a mechanism for updating the SLA if necessary. This is an important point as service requirements and supplier capabilities change frequently to meet business needs, so you need to keep the SLA up-to-date. An SLA should be viewed more as a fluid document and include a clearly defined framework for modification during the term of the contract, specifically if business needs have changed, the technical environment has changed, measurement tools have improved, etc.
Finalizing your SLA
In all the service metrics defined in your SLA, it is important that you choose measurements that motivate the proper behavior on both your side and your supplier's side — you will both want to optimize your performance in order to meet the objectives. You will want the metrics to reflect factors within your, and the service provider’s, control. Instead of pre-specified delivery dates, a schedule should be two-sided and focused on mutually dependent actions. If you deliver information a week late to the supplier, they should have an extra week to make the necessary changes instead of sticking to a specific delivery date that didn't take the late information into account.
Only you know what exactly you need in an SLA, but the main focus should be in the volume and quality of work, speed, responsiveness and efficiency. The SLA should establish a mutual understanding between you and the supplier of the services, priority areas, responsibilities, guarantees and warranties provided by the supplier.