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5 Hidden Problems with Cloud SLAs

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The Service-Level Agreement or SLA is often the last thing that a purchaser of cloud services will review.  However, since problems are inevitable with the only variables being time and frequency, it’s important that you have a firm understanding of what the SLA guarantees. Additionally, for large buyers of cloud, certain points of the SLA may be negotiable depending on the service provider and how much they want your business. Let’s take a few minutes and review some common misunderstandings with SLAs.

  1. SLAs Do Not Guarantee Uptime – Even if it’s called an “uptime guarantee”, downtime is likely to occur at some point.  The SLA is simply a financial contract which provides you some remuneration in the case of downtime.
  2. You Have Some Work To Do – Most SLA’s require you to ask for a credit.  Having been on the other side of the table (as a cloud service provider), I can tell you that very few of the customers who are entitled to an SLA actually request the credit.
  3. You Don’t Get Much – SLAs typically provide a credit on a future bill for the amount of time you are down, this payment is based on the amount the cloud provider bills you each month, not how much revenue your site produces.  As such the amount you will receive as payment will not come close to covering your actual losses from downtime.
  4. Most SLAs are Capped – Typically, providers will cap the credit at 100% of the monthly bill, however some of the caps are much lower.  Take Amazon’s EC2 for example, their credit is capped at 30% of you monthly bill and doesn’t pay anything for the first 21 minutes of downtime each month and further limits the first 7 hours of downtime to a total credit of 10%.
  5. Different Services Have Different SLAs – Most customers consume a number of cloud services from their provider and each of those services typically has a different SLA tied to it.  For example Microsoft Azure has different SLAs for VMs, Storage, DNS, Service Bus, SQL Services, Authentication and Backup. Going back to point #3, since the credit is tied only to the amount you pay for the service that failed, the amount of the credit will likely be a very small percentage of your total bill.

Ultimately, SLAs are an important factor when selecting a new cloud service provider.  But what’s more important is that cloud customers take responsibility for understanding them and select a provider whose SLAs give them confidence in the business relationship moving forward.  Ultimately, it’s the customer’s responsibility to ensure that their cloud environments are properly configured to ensure maximum up-time, the SLA is simply there in case things don’t go as planned.

About the Author

Stacy Griggs is the President and CEO of El Toro Internet Marketing www.eltoro.com. Mr. Griggs leads day-to-day operations at El Toro and is also one of the creators of El Toro’s patent for IP Targeting. Stacy has led three different organizations that were recognized by Inc. Magazine on the Inc. 500 list as the fastest growing privately-held companies in the United States. Prior to joining El Toro, Stacy was President and CEO for Align Cloud, a cloud consulting company. Previously, Mr. Griggs was an executive for Cbeyond, a publically traded cloud communications company (Nasdaq: CBEY). He joined Cbeyond in 2010 as part of the acquisition of MaximumASP where he was Vice President of Sales and Marketing. Prior to MaximumASP, Stacy held a series of positions at Hosting.com, including Chief Sales Officer, Chief Service Officer and General Manager for their flagship Delaware datacenter. Mr. Griggs has led several information technology services companies earlier in his career. He was a Managing Director for KForce, a $1 billion publicly traded professional services firm. At KForce he managed a number of business units that collectively generated $18 million in revenue and comprised 140 employees. Prior to KForce, he served as a Vice President and co-owner of Diamond Technologies, an 80-employee custom software development firm. Additionally, he held management positions at TMP Worldwide and the University of Pennsylvania at the beginning of his career. Stacy has also served in various positions on a number of nonprofit boards including Vice Chairman for the New Castle County (Delaware) Chamber of Commerce, Co-Chairman of the United Way of Delaware’s Young de Tocqueville Society, and as a Director for the Caesar Rodney Rotary, the Sunday Breakfast Mission, and Junior Achievement of Kentucky. Additionally, Mr. Griggs currently serves as a volunteer firefighter with the Simpsonville Rural Fire District in Shelby County, KY Named to the 30 under 30 by Philly Tech Magazine, he was also appointed by Delaware Governor Ruth Ann Miner to a term on the Delaware Workforce Investment Board. Through his theWHIR blog, Stacy will touch upon sales and service in the Web hosting space, web hosting events, cloud computing and industry trends.

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