How a comprehensive Service Level Agreement (SLA) can save you money

With about 3.4 billion people (or almost half of the world’s population) accessing the Internet worldwide at any given time, and an estimated 228 million Google searches being conducted every hour, the stakes are higher than ever for companies that do much of their business online.

In our always-on and always-connected world, consumers expect top-notch performance and availability from the sites they visit most often. According to a study of the “digital desertion” habits of 2,250 Internet users across the U.S., U.K. and Sweden, poor website performance weakens brand loyalty: 60% of respondents were likely to become less loyal to a particular brand if they encountered poor website or app performance, while 54% wouldn’t wait more than an hour before abandoning a favourite site that was experiencing downtime (even if it was due to updates being made on the backend).

What’s the cost of your network being down for even one hour?

If you’re a mega-brand like Amazon, an outage like the one in March, 2017—which led to a three-hour disruption on a swath of sites and apps (including iCloud, Slack, Trello, Venmo and Quora, as well as 54 of the Internet’s top 100 retailers)—will set you back an estimated $150 million.

Conversely, an average-sized company can expect a single hour of downtime to cost upwards of $100,000 in revenue alone, according to Information Technology Intelligence Consulting (ITIC), whose researchers have been studying this phenomenon since 2008. (Note: The cost of downtime is highly dependent on several interconnected factors, such as an organization’s revenue levels; the industry in which it does business; the duration of the outage; the number of people affected; and the time of day that the outage took place. Thus, any outage costs are estimates only.) And depending on the seriousness of the outage and types of clients affected by it, the actual monetary costs are amplified by the risk and exposure to litigation that can follow downtime, not to mention the resulting damage to a brand’s reputation. So, if your business is dependent on the availability of your wireless and wired networking services that connect you to the Internet and between your branches, warehouses, Data Centres and HQ, or if you’re an eCommerce retailer with no brick-and-mortar locations, the reliability of your Internet systems can have significant consequences on your bottom line.

Whether outages are caused by technical glitches (like the problems that continue to hamper airlines around the world, including the systems failure that brought down 125 different carriers on September 28, 2017), human error (like the Amazon example above) or more nefarious reasons (such as cyberattacks), it’s incumbent on every company to protect its technological infrastructure.

If online or IT is an important part of your company’s operations, then you’ll want to be sure that you choose system and solution partners whose Service Level Agreements (SLAs) meet your organization’s minimum requirements for reliability and availability.

SLAs—your safeguard against risks to business-as-usual

The SLA offered by service providers (both internal and external) helps to define the working terms of your partnership. And like in any good relationship, an SLA works to build trust and mutual confidence by defining the guaranteed level of service you can expect to receive from your IT systems and infrastructure.

When vetting vendor SLAs, look for the following measures of reliability and service-level parameters:

• Availability (sometimes referred to as “uptime”) applies to important equipment, software or services, including servers, cloud services (like business apps, email and web hosting), as well as other IT systems that are vital to a company conducting any sort of business online.
• Performance metrics matter more than availability in the context of an application because it has to be delivering the performance that the end user expects.
• Planned downtime are periods when a company can expect their systems to be purposefully shut down, such as when updates or upgrades need to be made, and especially in cases where breaches or hacks may have infiltrated cloud-based services or platforms.
• Response time is how long it takes the supplier to respond when you contact support. A good provider will confirm and communicate the status of the situation at ongoing intervals using email, chat, phone calls, automated messages, etc.
• Resolution time is different from response time. Most vendors will not guarantee resolution times because more severe infrastructural problems (e.g., hardware failures) can take more time to diagnose than simple, quick-fix server issues or bug fixes.
• Exclusions primarily cover issues that are out of everyone’s control, such as natural disasters, or failures that are not reasonably expected, such as human error by the user. A good SLA will clearly identify any major exclusions.
• Procedure for reporting issues outlines the methods for contacting support, who can submit a ticket or make the support call, the escalation procedure for business-critical issues, and what other steps should be taken to resolve problems as quickly and efficiently as possible.
• Monitoring and reporting responsibilities outlines who will monitor performance, what data will be collected and how often, as well as the level of access a company has to their site’s performance statistics. Some providers offer this type of information on self-serve dashboards, which makes it easy for different stakeholders to access and monitor it on the fly.
• Penalties determine the compensation offered by the vendor if service levels are not met, and they may vary based on different payment thresholds. Penalties usually take the form of financial restitution (i.e., refunds, credits, or other forms of compensation).
• A “get out” or cancellation clause allows the company to terminate the agreement with the supplier if the supplier repeatedly fails to meet the SLA parameters.

There’s no denying that businesses need a dependable technological foundation to get ahead of the competition. That’s why more forward-thinking organizations are pursuing relationships with providers who can guarantee an optimal level of service that safeguards their business, their reputation, and ultimately, their longevity in the marketplace.

If you’re investigating new partnerships, be sure to take the time to review and optimize the parameters of all SLAs for the good of your business.