When it comes to negotiating with cloud providers, it’s my humble opinion that the most difficult part of the process is Service Level Agreements (SLA). It is almost amusing what the vendor initially posts as their standard SLA terms. As Morgan Hunter stated in a reply to my Feb 25th blog, the vendor usually gives you a line such as “Every other customer has been fine with our SLAs”. We all know that is a big red flag, or as Shakespeare stated “Let every eye negotiate for itself and trust no agent.” (I bet you didn’t expect to see Shakespeare quoted in an IT article did you?)

So, knowing you have to negotiate your SLA terms, where should you start? As usual, you have to start with defining your own requirements for what you need, not want, in an SLA. Items such as: When will you be using the service? What are your non-production times? How long can your business operate without the cloud service? What is your company business continuity plans in case of a cloud service outage?

How much notification do you need of scheduled vs emergency maintenance? How do you want to be notified and kept informed of issues and outages? Once you’ve answered these kinds of questions, then, and only then, are you ready to start the SLA negotiation process. It is important to have realistic goals for negotiating SLAs. Asking for 99.999% 24x7x365 uptime when you only use the service for 12 hours out of every 24 hour day isn’t realistic.

But, asking for 99.999% uptime for just those 12 hours every day might be. Also, I’ve met many an IT professional that knows they don’t provide better than 98% uptime on their current internal on-premise app, but somehow when they look at moving it to the cloud they require 99.999% uptime. Gaining better SLAs in the cloud is a laudable and realistic goal, but asking for a Diamond SLA when you just need a Copper SLA will only result in un-met expectations and a poor relationship with your vendor. So, here are my tips for negotiating SLAs. I hope others will post their tips so we can all collectively learn and educate ourselves.

Service Level Agreements (SLA) in Cloud Computing

• • Ensure the vendor scheduled maintenance windows match up with your maintenance window, or at least low or non-usage periods.
  • Validate that the vendor has a NOC equivalent that is open and staffed during the hours of operation that you are open and staffed – if they aren’t open during your business hours, no SLA will help because you won’t have anyone to call or escalate to!
  • For minor problems or partial impairments, negotiate longer SLAs for the vendor to remediate, but require regular status updates and a dedicated vendor contact to be point person for addressing issue.
  • Clearly define all escalation steps from your company to the vendor for any issues, including things like names/roles, phone numbers, time period between escalation levels, definition of tiers of issues, definition of how/when escalation occurs, etc.
  • Remediation periods should be spelled out for how quickly the vendor has to address issues that prevent meeting SLA targets.
  • Pre-negotiate any vendor provided remedies for missing SLAs, including the nuclear option – the ability to exit the contract early with no penalty on remaining contract fees or timeframe.
  • Define and agree on the formula for calculating uptime and average response time, and include how often it will be calculated. Include definitions for what is uptime and average response time.
  • Latency is often a big problem with cloud providers, so negotiate a way to measure average latency for the cloud provider using a 3rd party service to measure from multiple points around the country (or world).
  • If you can, negotiate the ability to use services like KeyNote or AlertSite to monitory your cloud provider and provide independent report on SLA achievement.  This will cost you money, but it’s no different than the money you’d spend to monitor your own on-premise software so…keep them honest!  If the vendor claims they already use services like this to monitor themselves, then negotiate the ability to see those reports monthly or quarterly.
  • Ensure you have at least quarterly reviews of vendor’s adherence to SLA metrics. A senior executive from the vendor (someone higher than your account rep) should always be in attendance or available to participate if there has been a problem.
  • Try and incorporate business process metrics based on what business process efficiency or improvement you expect to gain from using the cloud service. These kinds of SLA terms are the ones you should be reporting to your internal customers anyway to prove the value of the IT service.
  • Be willing to incorporate SLA terms that indicate how your company will perform. I have often found that a true business process SLA can only be measured by having an SLA for the vendor and one for you the customer so that you can measure end-to-end process SLA metrics.
  • Each vendor will have “exceptions” to their SLAs.  Scrutinize these to ensure their exceptions are not your regular occurrences.

The bad news about cloud SLA negotiation is it is very painful, and the cloud vendors are not mature themselves with SLA management to their customers. The good news is careful negotiation can gain you better, more well defined, SLAs than you probably had with your internal on premise software.  Best of luck!

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  • Part 2: So, you need to negotiate a contract with a Cloud provider?
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