July/August 2001

BY HAGAI SCHAFFER

As customers of service providers are becoming increasingly savvy, the issue of service level agreements (SLAs) is quickly becoming the major factor in selecting a service provider, and rightfully so. The SLA has essentially become the instrument defining the "product" of the service provider -- its service.

Several aspects of SLAs should be carefully considered by a customer before selecting a service provider. The first question to ask is what is covered in the SLA? Undoubtedly a service provider who offers a comprehensive SLA with guarantees on various aspects of the service beyond the service availability, like the performance level of the application, the responsiveness of the help desk or problem notification, will be regarded more highly than a service provider who guarantees only the availability of the service.

The guarantees on responsiveness of the service provider for handling service failures and other service related issues are overlooked in many cases, but they are key to the overall service quality. No matter how much was invested by the service provider in backup and redundant equipment and how well the service operation is managed, at some point it will fail, and then the questions become: How quickly will the service be restored? And, how will the service provider handle the overall situation to minimize the effect on the customer's business?

SCOPE OF THE SLA
A comprehensive SLA should cover various issues like: How quickly are phone calls to the help desk answered? How often should the customer be notified on the progress of handling cases with high severity? How long does it take to resolve calls of different severity levels? It should be noted that resolve time should be defined not only in severe cases, but also with other "lower priority" incidents. These issues may not necessarily critically impact the customer's business, but they tend to be ignored in many cases, leading to customer frustration. Another issue that should be covered in the SLA is the escalation policy regarding customer calls -- after how long and in which cases should the severity of a call be increased?

In today's business climate, in which the stability of many service providers is questionable, customers should try to build a protection policy into their SLAs in the event that their service provider goes out of business. In cases where the service provider stores and manages customer operational and business data, which is the case with most ASPs, the most imminent risk to the customer is how he can access the data and continue to run his business if the service provider suddenly goes belly up. Dealing with this issue is not simple, but it can be solved with frequent backups being kept at a location outside of the service provider's control. The frequency and policy for generating these backups should be defined in the SLA and the execution carefully observed by the customer.

The importance of reporting on the actual service levels delivered is obvious. Yet, many service providers fail to provide this essential deliverable, in many cases because they simply do not know the service levels they provide to each customer, and if they don't know, then how exactly can they guarantee it?

Customers are increasingly demanding their service providers include a commitment to reports in the SLA. This commitment should define the level of details in these reports, as well as the frequency and media on which the reports are delivered. Undoubtedly, a service provider who allows its customers SLA compliance data and performance level visibility, through an online Web-based interface, will gain a much higher level of confidence from its customers than a service provider who provides only monthly reports.

Service providers that are willing to back the SLA commitments with penalties, in situations where the objectives are not met, demonstrate a higher level of confidence in their ability to keep their promises. Still, the question remains: Who is responsible for pointing out SLA violations -- the customer or the service provider? Unquestionably, a service provider who notifies its customers about service lapses, and consequently credits them according to the SLA, will gain a higher level of confidence from its customers. Such a process reduces "finger pointing" and is highly appreciated by customers. Yet, only a service provider, who proactively manages his service operation using monitoring and service level management tools, can offer such a service to its customers.

Different customers demand different things from their service providers. Needs may relate to different hours of operation, different performance levels, help-desk responsiveness or other issues. It seems obvious that they would like their requirements to be reflected in the SLA. However, most service providers offer only one standard SLA, or several standard levels (for example gold, silver, bronze), and are unwilling or unable to customize the SLA to customer-specific requirements.

DELIVERING THE SERVICE
Service providers typically struggle with these SLA-related issues because they lack the tools to manage their service operation in an SLA-oriented fashion. Most service providers use monitoring tools to control their network, servers, and other service components. Yet, they are handling their SLAs manually or have tools to manage only specific aspects of SLAs. What makes it even tougher to manage is the fact that many service providers rely on a service supply chain from other service providers. Their ability to fulfill their commitment to their customers relies in part on the SLA they have with their suppliers. Hence, they have to manage both the commitments they receive from their suppliers and their guarantees to their customers.

SLA management solutions for service providers are beginning to emerge. These tools can leverage the information received from existing monitoring tools, correlating the delivered service levels with the objectives set in the SLAs for both the customers and suppliers. These tools allow the service provider to tailor the SLA to the specific needs of the customer and provide the customer with online reports, building higher levels of confidence. The fierce competition among service providers will be inflamed by these SLA-related issues.

Hagai Schaffer is chief technology officer for Oblicore, Inc. Oblicore has developed a service level management solution for service providers including application service providers (ASPs), network service providers (NSPs), and managed service providers (MSPs). The company's product offering provides a comprehensive service level agreement (SLA) solution for managing service level performance and commitments.

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