Service Level Agreements (SLAs)

SLAs have emerged as the critical go-to reference for support with your system. As more of the compute load has moved to the cloud, and more and more specialized application services have been developed, now customers/subscribers look to their SLA. In fact in many commercial modern SaaS Agreements the SLA has not only displaced the old-school separate Support Agreement, but it has gradually also made the traditional Warranty (+ remedy that could ultimately result in termination of the Order and refund if the product was not successfully remediated during the cure period). In many modern SaaS Agreement, the concept of Acceptance has been removed, because the SaaS is generally a standard product, so the vendors do not offer a custom acceptance test. So, the SaaS Service is considered delivered and accepted the first time the customer logs in (and the entire annual revenue stream is viewed as recognized revenue, or Annual Recurring Revenue (ARR) in multi-year deals).

Challenges with Service Level Agreements (SLAs)

The challenge therefore is you need to ensure that you fully understand the profound and far-reaching roll the SLA plays in your operation and ensure that it provides adequate remedies help ensure the Service deliverable remains viable for your operation over the entire subscription term. With that in mind a few of the items we need to consider with an SLA are:

• Ensure the vendor has a duty to provide a monthly SLA report showing all downtime.
• Ensure the scheduled down time is scheduled for off-peak hours, i.e., Saturday at 2PM-5PM so as not to disrupt your operation.
• Ensure that you are satisfied with the categorization of the service claim, i.e., Blocker, Critical, Important, Minor; then associate an appropriate response time and a target remediation time.
• Ensure that your service Credit remedy is calibrated to the duration of the defect/down-time but remember you do not want it so high that vendor loses interest in a quick cure (include a NTE type limit on the Service Credit).

As you consider SLAs remember the vendor’s entire support organization typically works off the same SLA, and its operationally not always possible to offer customers custom SLAs (no one from the vendor will remember the nuance and they will be ill equipped to monitor, report, and remediate smoothly). Remember in any service agreement, particularly a long term SLA too good a deal is not a good deal may not be a good deal at all; both parties must survive the contract for an SLA to be effective.

Service Level Agreements (SLAs) Attorney

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