Service Levels for Cloud Application (SLA)

When a company offers a service—whether in the cloud or in a traditional data center—that company generally provides its customers with a service level agreement (SLA) that identifies key metrics (service levels) that the customer can reasonably expect from the service. The ability to understand and to fully trust the availability, reliability, and performance of the cloud is the key conceptual block for many technologists interested in moving into the cloud.

The most common component of an SLA is that the services should be provided to the customer as agreed upon in the contract. It is a critical component of any technology vendor contract. For example, Internet service providers will commonly include service level agreements within the terms of their contracts with customers to define the level of service being sold in plain language terms. Usually, SLAs are between companies and external suppliers, but they may also be between two departments within a company.

In this case, the SLA will typically have a technical definition in mean time between failures (MTBF), mean time to repair or mean time to recovery (MTTR), identifying which party is responsible for reporting faults or paying fees, responsibility for various data rates, throughput, jitter, or similar measurable details. The Service Level Agreement includes:

•     Detailed service overview
•     Speed of service delivery
•     Plan for performance monitoring
•     Description of the reporting procedure
•     List of penalties that will be applied in case of agreement violations
•     Constraints

Availability

Availability describes how often a service can be used over a defined period of time. For example, if a website is accessible to the general public for 710 hours out of a 720-hour month, we say it has a 98.6% availability rating for that month. 

How to estimate the availability of your system

Most service outages are the result of misbehaving equipment. These outages can be prolonged by misdiagnosis of the problem and other mistakes in responding to the outage in question. Determining expected availability thus involves two variables:

    The likelihood you will encounter a failure in the system during the measurement period.

    How much downtime you would expect in the event the system fails.

The mathematics formulation of the availability of a component is:

a = (p –(c×d))/p

where:

a = expected availability
c = the % of likelihood that you will encounter a server loss in a given period
d = expected downtime from the loss of the server
p = the measurement period

So, if your 486 has a 40% chance of failure and you will be down for 24 hours, your 486 uptime is (8760 − ( 40%×24))/8760, or just shy of 99.9%.

Types of SLA Penalties

A natural reply to any violation is a penalty. An SLA penalty depends on the industry and business. Here are the two most common SLA penalty types.

1. Financial penalty

This kind of penalty requires a vendor to pay the customer compensation of damages equal to the one written in the agreement. The amount will depend on the extent of a violation and damage and may not fully reimburse what a customer paid for the eCommerce service or eCommerce support.

License extension or support:It requires the vendor to extend the license term or offer additional customer support without charge. This could include development and maintenance.

2. Service credit

In this case, a service provider will have to provide a customer with complimentary services for a specific time. To avoid any confusion or misunderstanding between the two parties in SLA violation, such penalties must be clearly articulated in the agreement. Otherwise, they won't be legitimate.

Service availability:It includes factors such as network uptime, data center resources, and database availability. Penalties should be added as deterrents against service downtime, which could negatively affect the business.

Service quality:It involves performance guarantee, the number of errors allowed in a product or service, process gaps, and other issues that relate to quality.

These penalties must be specified in the language of the SLA, or they won't be enforceable. In addition, some customers may not think the service credit or license extension penalties are adequate compensation. They may question the value of continuing to receive a vendor's services that cannot meet its quality levels.

Consequently, it may be worth considering a combination of penalties and including an incentive, such as a monetary bonus, for more than satisfactory work.