Service Level Agreements (SLAs) have been available in one iteration or another since mainframe timesharing ruled the world in the 1960s. But consultant Bernard Golden believes the traditional SLA has outlived its usefulness. Golden’s points are a bit hyperbolic but do illustrate that IT needs to clarify what’s most important in the contract with their cloud supplier.
Typically, an SLA sets service expectation levels between customers and suppliers. SLAs outline items such as system availability expectations and include possible paybacks if the terms are not met. “The entire concept of an SLA is offloading risk, transferring responsibility to another party,” Golden says. “In the new world of applications, unfortunately, that’s not feasible.”
For one thing, the wording in the SLA never promises 100% availability because suppliers know that problems may arise out of their control. Outages occasionally happen, and cloud providers respond as quickly as possible. Even though a company may feel the need to spend time examining the contract and making changes to it, Golden thinks that’s ultimately not time well spent. Vendors know they cannot fully guarantee system availability, and that language will be included in the final contract.
Another issue with SLAs is that they address a technical problem (infrastructure failure) with the wrong solution: a legal remedy. Lawyers think they are helping the company solve a problem, but they are really only keeping themselves busy. If IT spends time seeking a legal solution, but the company is more concerned about business value.
When measuring and tracking the effectiveness of a cloud system, an SLA needs to emphasize specific corporate outcomes, such as operational health and business value. Can new services be delivered faster? The need for speed is present in all businesses. Does the system respond to market changes? Nowadays, for example, websites can experience traffic spikes during lunch when an influencer sends out a tweet; so the system has to be able to add the capacity quickly or opportunities are lost.
In addition, does the IT system add business value? Can the firm respond to new opportunities faster than competitors? Will IT resources cost less and can those savings be passed onto consumers, so the firm expands its market? Will the corporation be viewed as a leader in its market segment?
The traditional SLA was designed mainly as a technical tool and focused on elements, like system availability and scalability. To be successful in the current environment, SLAs need to evolve and emphasize key business outcomes.