Businesswoman signing contract

Evaluate, Clarify, and Strengthen Your Customers’ Service Level Agreements

With the advent of cloud computing and managed services, contracts have become an increasingly important part of the discussion between channel solution providers, vendors and others involved in the delivery process.

As with any outsourcing arrangement, each of these parties must be in complete agreement on all performance expectations and understand their own individual roles. Thresholds, standards and other metrics need to be meticulously detailed and aligned among the various partners in the supply chain — with service-level agreements (SLAs) attached as an exhibit to the applicable service contracts.

That process starts with how solution providers evaluate the vendors they work with. Are the service levels and related remedies aligned with the VAR’s or MSP’s expectations, and do they meet the needs of their end customers? If not, and the solution provider cannot negotiate terms that would make the offering and the relationship more palatable, they should continue searching for vendors that can properly support key business requirements.

One tactic that usually won’t work is attempting to negotiate tailored cloud SLAs with a vendor. Remember, cloud is about repeatability. To improve efficiency and ensure quality standards, as well as limit their own risk and potential liability, vendors frequently establish service levels that are applied universally across the customer base. While that might make sense from the vendor’s business perspective, that inflexibility can be a problem when solution providers need to improve response times for specific customers or differentiate themselves when developing new business. While most vendors try to take compliance and industry mandates into account when they develop their SLAs (particularly when they target certain vertical markets), there may be terms or conditions that a client either will not or cannot, for whatever reason, agree to.

However, with that in mind, solution providers who drive a high volume of cloud services through a single vendor may get some additional flexibility. If requested changes are minimal, especially when they don’t affect the supplier’s costs or its ability to support the customer, you stand a better chance of negotiating an SLA.

Type of service and supplier also matter. While global application vendors can be quite inflexible when it comes to SLAs, providers typically gain more leverage when they control the offerings. When they use a supplier simply to help manage a private cloud, solution providers should be able to negotiate customized SLAs. In those situations, the vendor is not required to guarantee different service levels to various “tenants” of the same cloud. Control, and all the responsibility that goes with it, lies with the solution provider.

Ultimately, the outcome is based on a variety of variable circumstances. For most solution providers, however, the vendor-selection process remains the key component.

Align Terms, Responsibilities

When a solution provider relies on cloud vendors to perform various services, it is vital that the legal terms align across the entire supply chain, as well as with the customer. That step helps VARs and MSPs avoid an unreasonable level of risk.

The top priority is ensuring that the SLA details match the expectations and contractual requirements for each business customer. For example, an interruption of service that is not considered “downtime” until it hits a 5 percent user-error rate for a domain may fall considerably short of a solution provider’s uptime requirement. The same goes for a series of intermittent outages of less than 10 minutes. If a cloud solution is critical to the operations of, say, a hospital or emergency services agency, failure is simply unacceptable.

Solution providers and vendors that need help creating or deciphering the details of SLAs should always protect their interests (as well as those of their partners) by seeking legal counsel. An experienced business attorney can help align the supply-chain agreements and mitigate potential risks. The CompTIA Legal Services Program, administered by ITLA, is one option for IT service providers and vendors focused on cloud services delivery. No matter which firm you work with, ensure the team on your account has a deep understanding of SLAs and other IT service contracts, and is willing to address the concerns of a channel company. While getting solid legal advice is crucial, the most important thing a cloud provider can do is ensure these contracts make sense for all involved. Without that assurance, success will be harder to come by — and disaster could be just an outage away.

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Dan Liutikas

ITLA Manging Partner
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