SLA Management

George Khater
Director, Strategic Projects NaviSite Product Management

Networld + Interop 2001 May 7, 2001

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Agenda
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NaviSite Profile SLA Definition, Drivers, Hierarchy What to look for in an SLA SLA Management What to avoid in an SLA Types of SLAs being offered today SLA Evolution Lessons Learned/Summary

NaviSite Profile
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Managed Hosting Provider -- 5 years experience Streaming Media content management & delivery 4 Managed Services Data Centers in U.S., with International expansion underway Over 350 customers 3500 managed servers Q2 FY 2001 revenue: $27.7M Strategic Investors: CMGI, Microsoft, Dell

Customers: Enterprises, ASPs, ISVs and .coms

with mission critical Internet/Intranet applications
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What Is an SLA?

The service level agreement (SLA) is a legal contract between a service provider and a customer that specifies, in measurable terms, what service level guarantees the service provider will furnish, and it defines the consequences (penalties) if the service provider fails to deliver on these guarantees per the specified conditions

Whats all the fuss about SLAs?

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Site performance and availability has a direct effect on customer satisfaction and retention Online businesses want their service providers to have a measurable stake in their risk Companies expect their service providers to have expertise that exceed their own 80% of the outsourcing agreements in 2002 will include SLAs (Gartner)

Sage Research Recent Survey Findings

148 US enterprise organizations

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41% indicated that SLAs will be required the next time they choose a service provider 42% said that obtaining real-time, online SLA reports would be extremely valuable 42% said that receiving automatic service credits (proactive credit policy) for SLA non-compliance would be extremely valuable

Basic SLA Drivers

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Hosting boom increased outsourcing of mission-critical applications Service Providers the stronger the SLA, the stronger the Service Provider Customers Cost of downtime & security/assurance

Cost of Downtime
Lost Revenue Associated With Application Outages
Application ERP Supply chain mgmt Electronic commerce Internet banking Universal phone services Customer service center POS/EFT Messaging Cost Per Min $13,000 $11,000 $10,000 $7,000 $6,000 $3,700 $3,500 $1,000

Cost of downtime is the primary driver for SLAs

IDC 8

SLA Hierarchy
Network equipment vendor

SLA

Managed Hosting Provider

SLA

Systems vendor

SLA
Internet Backbone Providers

SLA ASP

SLA

Customer SLA

Customer

What to Look for in an SLA

Components, Terms, Management

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Components of an SLA

Commitment to Availability Commitment to Monitoring & Notification Commitment to Accountability

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Components of an SLA
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Commitment to Availability
Application must be available for a specified percentage of the business period

The 9s Game:
There are 2,592,000 seconds in an average month 99.00% availability means the customer is out of service for 25,920 seconds (7.2 hours) 99.90% availability means the customer is out of service for 2,592 seconds (43.2 minutes) 99.99% availability means the customer is out of service for 259.2 seconds (4.32 minutes) 99.999% availability means the customer is out of service for 25.92 seconds
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Components of an SLA
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Commitment to Monitoring & Notification

Customer must be notified when the application is not available This proves that the Service Provider is monitoring the application

Guidelines:
The Service Provider should be the first to know if the application is not available they control the resources -- or else the customer will lose confidence in the Service Providers ability to perform The Service Provider should commit in the SLA to notifying the customer of application outages

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Components of an SLA
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Commitment to Accountability
Customer must be able to receive compensation when the application is not available

Sharing the pain:

The Service Provider will be judged on their willingness to share the pain when the application is not available Not billing because the application was not available is also not sharing the pain Prorated credits is also not sharing the pain

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Terms of an SLA
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Deliverables
Identify and describe all the services supplied by the Service Provider Define clear roles & responsibilities; Service Providers & Customers

Level of Service
Defines the T&Cs which must be met by the Service Provider in the provisioning and delivery of these services Defines the Service Level Warranty on agreed-upon service metrics which must be measured & met by the Service Provider

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Terms of an SLA
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Credits
Defines the consequences if the organization fails to deliver the specified services under the specified conditions

Measurement & Reporting

Identify the measurement & reporting methodology to be used in tracking Service Level Warranty compliance (daily, monthly, annually,.)

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SLA Management
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Tracking SLA Compliance

Extensive Monitoring & Reporting Capabilities Round the clock web-based reports

Tracking Change/Modifications
Changes/Modifications to site architecture or application must be signed-off and tracked by the Service Provider as it may impact SLA metrics

Service Provider should be the Single Point of Accountability for SLA Management
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SLA Management Components

Service Level Compliance

Web-based Reports

SLA Management System

Service Level Administration
24x7 Help Desk

Change Management Problem Management Root Cause Analysis Billing

Network/Server/App

Monitoring SLA Metric Measurement

Service Level Monitoring

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SLAs Ensure True Partnership

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Shared Risk / Shared Pain Ensures Customer confidence Leads to additional revenue Ensures peace of mind for Customers, Investors and Stockholders

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What to Avoid in an SLA

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"SLA's are of little use unless the performance goals they document are achievable and the penalties for failing to meet the goals are enforced" IDC

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What Should you Avoid in an SLA

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Non-Proactive Credit Policy SLAs that are UN-achievable (beware of the 100% availability SLAs) Vague and UN-measurable SLAs (beware of the endto-end, and network latency/packet loss SLAs) SLA Penalties that do not kick-in at the precise moment of agreed upon SLA metric violation SLAs that do not hold service providers accountable for their outages (if a customers hurts, so should the service provider)

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Types of SLAs being offered Today

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Primary Types of SLAs Offered Today

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Performance SLAs (Network Latency & Packet Loss)

Primarily used for Marketing & PR Guarantee availability of network components within the Service Providers control only
Does not include last mile or other Service Providers network components

Help Desk SLAs (Outage Notification & Response Time)

Guarantee Customer Notification of server/application outages & Time to Respond to outages

Availability SLAs (Network, Facility, Server, Application)

Guarantee uptime within confines of data center
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SLA (examples)
Application Support: Mean time to repair:
one to two hours for priority 1 outages, four to six hours for priority 2 outages; and one to two days for priority 3 outages

Network Performance:
less then 1% packet loss, less than 70 ms domestic latency and less than 100 ms international latency.

SLA
Help Desk: Mean Time to Notify:
15 minutes, Mean time to Respond: 30 minutes

System Availability:
99.5% server availability, and 70% CPU utilization

Site Availability: 99.9% site

availability

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SLA Evolution
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Bigger Promises
More nines Tougher penalties

Greater breadth
End-to-end coverage User Experience metrics

More detail
Network complexity Customer responsibilities

Someday: Application-Performance Guarantees

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Summary/Lessons Learned
Service Level Agreements are no longer optional l Proper Monitoring & Management Infrastructure must be built-in to provide SLAs l SLAs protect both; the customer and the service provider l Both sides need to understand their obligations
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l Implicit terms need to become explicit l Penalties in SLAs are necessary evils! They drive proper

behavior Once you are ready to deliver SLAs you are in good shape to launch new offerings quickly!
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Questions & Answers

Please visit us at www.navisite.com

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