The ABCs of SLAs

Service-level agreements (SLAs) are like insurance policies: Hidden under all the paperwork are loopholes and regulations that nobody has the time to go through. This point has been made clear in recent months by a string of outages by hosted CRM providers. Understanding SLAs is critical for customers thinking of doing business with an on-demand provider. Currently, there are no industry standards for SLAs and on-demand vendors are free to guarantee as much or as little of their offering as they desire. Still others, such as Salesforce.com, don't even offer their customers standard SLA agreements, "leaving it up to the buyer to fight for one," says Liz Herbert, an analyst at Forrester Research. Customers tend to focus on the uptime guarantee--the minimum amount of time the vendor will supply you with access to the solution over a given period. On average, that number ranges between 99 and 99.7 percent per month, but time periods can differ from weeks, to months, to years, making even half a percentage point a very large and expensive number. In addition, many vendors require their customers to perform their own due diligence to see if the vendor is meeting the guarantee. The guarantees receive the most attention, but there are other SLA requirements customers should keep in mind. Vendors allot scheduled downtime per year for maintenance and product upgrades, but that figure can vary by 200 to 300 hours depending upon the vendor. Another is the amount of advance notice a company gives customers before making repairs and upgrades. Entellium's SLA states five days; Salesnet gives 12 hours. Still others don't provide any notice at all. Last, SLAs vary in requirements and guarantees for disaster recovery. "As the market for on-demand continues to grow, SLAs will become an important differentiator between vendors for customers," says Natalee Roan, CMO at Entellium.