For ASP customers, quality of service can have a tremendous impact on employees and business performance — with a ripple effect that could extend to include that company’s customers, and so on. Given the different alternatives, customers should ask the ASP to outline its policy regarding SLA customization early in the sales cycle.
Will a single SLA cover all aspects of the service I receive from an ASP?
Ideally, a single end-to-end SLA covers all aspects of ASP customer service. This guarantees customers efficient access to applications when needed. Sometimes, a customer might work with several service providers and need as many as four SLAs to guarantee service: • Network SLA. This covers the network connection between the customer and the ASP. Here, a Network Service Provider agrees upon a suitable service level agreement for delivery of IP (Internet Protocol) Services to a business customer. • Hosting SLA. This covers the hosting services provided to the ASP. The ASP delivery model often mandates that hardware be hosted or co-located with a third party. • Application SLA. This addresses the measurement of application performance. The ASP delineates the domain of its responsibility, service classes to be offered, parameters of performance, and formulates the calculation of performance and penalties (if deemed necessary) to be imposed for failure to meet agreed upon service levels. • Customer care/Help desk SLAs. The terms “customer care” and “help desk” refer to a point of contact for customers who seek point-solution assistance. For an ASP, customer care is emerging as the means by which customers (and often their non-technical end-user employees) obtain answers to inquiries about service options and upgrades, and otherwise address the non-technical aspects of customer services. The traditional help desk provides technical support for end users.
A BUYER’S GUIDE TO
Service Level Agreements for Application Service Provisioning
Where can I learn more?
This document has been designed to provide a brief overview of SLAs. You can learn more about SLAs and other ASP-related issues by visiting the ASP Industry Consortium Web site at www.allaboutasp.org. It offers a variety of helpful resources about ASPs and the ASP industry, including: • Latest information on industry best practices • Articles related to SLA • ASP news • Documents and links to ASP-oriented materials • Industry events calendar • Market and investment research
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Understanding Service Level Agreements
An application service provider (ASP) deploys, hosts and manages software applications. The rise of ASP models, the evolution of e-business and the maturity of network infrastructure have raised the service expectations of end users. A service level agreement (SLA) defines the responsibilities of a service provider and the users of that service. It also identifies and defines the services provided as well as the supported products, measurement criteria, reporting criteria, and quality standards for the service. ASP service level agreements are complemented/ combined by outsourcing/partnering contracts that cover corrective actions, penalty clauses, nonperformance clauses, amount of deviation, modification procedure, reporting policies, termination criteria, intellectual property clauses, dispute resolution procedures, and others. This guide was developed by the ASP Industry Consortium, and is the result of extraordinary efforts from dedicated volunteers within the ASP community including industry leaders, end users, and other business professionals.
Why do I need an SLA?
A contract that clearly outlines the rights and obligations of the parties significantly reduces the scope for disagreement to arise in the course of the parties’ business relationship. The source of the largest number of disputes is likely to be the gap between the actual performance by an ASP and the performance expected by the end user based on the terms of the underlying SLA. Thus, clear, well-negotiated SLAs that are comprehensive and well drafted are fundamental to minimizing the risk of disputes.
What types of information should an SLA contain?
Generally speaking, an SLA that covers only the services over which the ASP has direct control will be much more cost effective than one that attempts to make the ASP responsible for every eventuality. ASP customers should seriously consider all points along the service chain and determine which may result in suspension or invalidation of the SLA. The SLA should include metrics and, whenever available and practical, industry ranges and calculation criteria. For an ASP, the three primary measures of success — revenue (sustained and growing), profitability and customer satisfaction — are the rationale for having SLAs that also address quality. The SLA should include: • Purpose of the SLA • Description of service • Duration of service • Start date of service • Installation timetable • Payment terms • Termination conditions • Legal issues such as warranties, indemnities, limitation of liability, etc
Will the addition of new users or applications affect the SLA?
Since the duration of the typical SLA is one to three years, it is likely that the scope of a customer’s service could change during the contract period through the addition of new applications, new users or both. To avoid misunderstandings, it is important that the SLA attempt to anticipate the service impact of such changes. For example, the SLA might state that specified service levels apply only for the applications and number of users outlined in the SLA. Alternatively, the SLA might state that the ASP will guarantee the service levels described in the SLA even if the customer adds a specified number of new applications or new users. In still other cases, the SLA might compel the ASP and the customer to discuss any changes to the initial configuration and modify the SLA, if necessary. Any of these approaches represents an effective solution, as long as both the ASP and the customer clearly understand the conditions under which the current SLA applies.
Can an SLA be customized to my requirements?
The extent to which an SLA can be customized to fit an individual customer’s requirements varies according to the individual ASP. Increasingly, more providers are offering customized options for customers. Some ASPs offer only a standard SLA designed to fit all customers. A popular option is tiering of service levels — such as gold, silver or bronze — that allows customers to choose the level of support that best suits their business needs.
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