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SLA ManagementSLA ManagementSLA Management

George Khater

Director, Strategic Projects

NaviSite Product Management

Networld + Interop 2001

May 7, 2001

George KhaterGeorge Khater

Director, Strategic ProjectsDirector, Strategic Projects

NaviSiteNaviSite Product Management Product Management

NetworldNetworld + + InteropInterop 2001 2001

May 7, 2001May 7, 2001

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AgendaAgenda

ll NaviSiteNaviSite Profile Profilell SLA Definition, Drivers, HierarchySLA Definition, Drivers, Hierarchyll What to look for in an SLAWhat to look for in an SLAll SLA ManagementSLA Managementll What to avoid in an SLAWhat to avoid in an SLAll Types of Types of SLAsSLAs being offered today being offered todayll SLA EvolutionSLA Evolutionll Lessons Learned/SummaryLessons Learned/Summary

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Customers: Enterprises, ASPs, ISVs and .comswith mission critical Internet/Intranet applications

NaviSiteNaviSite Profile Profile

ll Managed Hosting Provider -- 5 years experienceManaged Hosting Provider -- 5 years experience

ll Streaming Media content management & deliveryStreaming Media content management & delivery

ll 4 Managed Services Data Centers in U.S., with4 Managed Services Data Centers in U.S., withInternational expansion underwayInternational expansion underway

ll Over 350 customers … 3500 managed serversOver 350 customers … 3500 managed servers

ll Q2 FY 2001 revenue: $27.7MQ2 FY 2001 revenue: $27.7M

ll Strategic Investors: CMGI, Microsoft, DellStrategic Investors: CMGI, Microsoft, Dell

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What Is an SLA?What Is an SLA?

The service level agreement (SLA) is aThe service level agreement (SLA) is a legal legalcontract between a service provider and acontract between a service provider and a

customer that specifies, in measurable terms, whatcustomer that specifies, in measurable terms, whatservice level guarantees the service provider willservice level guarantees the service provider will

furnish, and it defines the consequencesfurnish, and it defines the consequences(penalties) if the service provider fails to deliver on(penalties) if the service provider fails to deliver on

these guarantees per the specified conditionsthese guarantees per the specified conditions

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What’s all the fuss about What’s all the fuss about SLA’sSLA’s??

ll Site performance and availability has a direct effectSite performance and availability has a direct effecton customer satisfaction and retentionon customer satisfaction and retention

ll Online businesses want their service providers toOnline businesses want their service providers tohave a measurable stake in their riskhave a measurable stake in their risk

ll Companies expect their service providers to haveCompanies expect their service providers to haveexpertise that exceed their ownexpertise that exceed their own

ll 80% of the outsourcing agreements in 2002 will80% of the outsourcing agreements in 2002 willinclude include SLA’s SLA’s ((GartnerGartner))

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Sage Research Recent Survey FindingsSage Research Recent Survey Findings

ll 41% indicated that 41% indicated that SLAs SLAs will be required the nextwill be required the nexttime they choose a service providertime they choose a service provider

ll 42% said that obtaining real-time, online SLA reports42% said that obtaining real-time, online SLA reportswould be extremely valuablewould be extremely valuable

ll 42% said that receiving automatic service credits42% said that receiving automatic service credits(proactive credit policy) for SLA non-compliance(proactive credit policy) for SLA non-compliancewould be extremely valuablewould be extremely valuable

148 US enterprise organizations

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Basic SLA DriversBasic SLA Drivers

ll Hosting boom — increased outsourcing ofHosting boom — increased outsourcing ofmission-critical applicationsmission-critical applications

ll Service Providers — the stronger the SLA, theService Providers — the stronger the SLA, thestronger the Service Providerstronger the Service Provider

ll Customers — Cost of downtime &Customers — Cost of downtime &security/assurancesecurity/assurance

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Cost of DowntimeCost of Downtime

Cost of downtime is theCost of downtime is the

primary driver for primary driver for SLAsSLAs

Lost Revenue Associated With Application Outages

Application

ERPSupply chain mgmtElectronic commerceInternet bankingUniversal phone servicesCustomer service centerPOS/EFTMessaging

Cost Per Min

$13,000$11,000$10,000$7,000$6,000$3,700$3,500$1,000

IDC

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SLA HierarchySLA Hierarchy

Network equipment

vendorSLA

Managed Hosting Provider

SLA

ASP

InternetBackboneProviders

SLA SLA

SLA

Customer

Systemsvendor

Customer

SLA

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What to Look for in an SLAWhat to Look for in an SLA

Components, Terms, ManagementComponents, Terms, Management

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Components of an SLAComponents of an SLA

ll Commitment to AvailabilityCommitment to Availability

ll Commitment to Monitoring & NotificationCommitment to Monitoring & Notification

ll Commitment to AccountabilityCommitment to Accountability

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Components of an SLAComponents of an SLA

ll Commitment to AvailabilityCommitment to Availability•• Application must be available for a specified percentage of theApplication must be available for a specified percentage of the

business periodbusiness period

The 9’s Game:The 9’s Game:There are 2,592,000 seconds in an average monthThere are 2,592,000 seconds in an average month•• 99.00% availability means the customer is out of service for99.00% availability means the customer is out of service for

25,920 seconds (7.2 hours)25,920 seconds (7.2 hours)•• 99.90% availability means the customer is out of service for99.90% availability means the customer is out of service for

2,592 seconds (43.2 minutes)2,592 seconds (43.2 minutes)•• 99.99% availability means the customer is out of service for99.99% availability means the customer is out of service for

259.2 seconds (4.32 minutes)259.2 seconds (4.32 minutes)•• 99.999% availability means the customer is out of service for99.999% availability means the customer is out of service for

25.92 seconds25.92 seconds

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Components of an SLAComponents of an SLA

ll Commitment to Monitoring & NotificationCommitment to Monitoring & Notification•• Customer must be notified when the application is not availableCustomer must be notified when the application is not available•• This proves that the Service Provider is monitoring theThis proves that the Service Provider is monitoring the

applicationapplication

Guidelines:Guidelines:•• The Service Provider should be the first to know if theThe Service Provider should be the first to know if the

application is not available – they control the resources -- orapplication is not available – they control the resources -- orelse the customer will lose confidence in the Service Provider’selse the customer will lose confidence in the Service Provider’sability to performability to perform

•• The Service Provider should commit in the SLA to notifying theThe Service Provider should commit in the SLA to notifying thecustomer of application outagescustomer of application outages

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Components of an SLAComponents of an SLA

ll Commitment to AccountabilityCommitment to Accountability•• Customer must be able to receive compensation when theCustomer must be able to receive compensation when the

application is not availableapplication is not available

Sharing the pain:Sharing the pain:•• The Service Provider will be judged on their willingness toThe Service Provider will be judged on their willingness to

“share the pain” when the application is not available“share the pain” when the application is not available

•• Not billing because the application was not available is alsoNot billing because the application was not available is alsonot sharing the painnot sharing the pain

•• Prorated credits is also not sharing the painProrated credits is also not sharing the pain

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Terms of an SLATerms of an SLA

ll DeliverablesDeliverables•• Identify and describe all the services supplied by the ServiceIdentify and describe all the services supplied by the Service

ProviderProvider

•• Define clear roles & responsibilities; Service Provider’s &Define clear roles & responsibilities; Service Provider’s &Customer’sCustomer’s

ll Level of ServiceLevel of Service•• Defines the T&Cs which must be met by the Service ProviderDefines the T&Cs which must be met by the Service Provider

in the provisioning and delivery of these servicesin the provisioning and delivery of these services

•• Defines the Service Level Warranty on agreed-upon serviceDefines the Service Level Warranty on agreed-upon servicemetrics which must be measured & met by the Servicemetrics which must be measured & met by the ServiceProviderProvider

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Terms of an SLATerms of an SLA

ll CreditsCredits•• Defines the consequences if the organization fails to deliverDefines the consequences if the organization fails to deliver

the specified services under the specified conditionsthe specified services under the specified conditions

ll Measurement & ReportingMeasurement & Reporting•• Identify the measurement & reporting methodology to beIdentify the measurement & reporting methodology to be

used in tracking Service Level Warranty compliance (daily,used in tracking Service Level Warranty compliance (daily,monthlymonthly, annually,.), annually,.)

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SLA ManagementSLA Management

ll Tracking SLA ComplianceTracking SLA Compliance•• Extensive Monitoring & Reporting CapabilitiesExtensive Monitoring & Reporting Capabilities

•• Round the clock web-based reportsRound the clock web-based reports

ll Tracking Change/ModificationsTracking Change/Modifications•• Changes/Modifications to site architecture or application mustChanges/Modifications to site architecture or application must

be signed-off and tracked by the Service Provider as it maybe signed-off and tracked by the Service Provider as it mayimpact SLA metricsimpact SLA metrics

ll Service Provider should be the Single Point ofService Provider should be the Single Point ofAccountability for SLA ManagementAccountability for SLA Management

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Service LevelCompliance

Service LevelAdministration

Service Level Monitoring

§ Web-based Reports

§ Network/Server/App Monitoring§ SLA Metric Measurement

§ 24x7 Help Desk§ Change Management § Problem Management§ Root Cause Analysis§ Billing

SLA Management

System

SLA Management ComponentsSLA Management Components

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SLAsSLAs Ensure True Partnership Ensure True Partnership

ll Shared Risk / Shared PainShared Risk / Shared Pain

ll Ensures Customer confidence – Leads to additionalEnsures Customer confidence – Leads to additionalrevenuerevenue

ll Ensures peace of mind for Customers, Investors andEnsures peace of mind for Customers, Investors andStockholdersStockholders

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What to Avoid in an SLAWhat to Avoid in an SLA

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"SLA's are of little use unless theperformance goals they document are

achievable and the penalties for failing tomeet the goals are enforced" IDC

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What Should you Avoid in an SLAWhat Should you Avoid in an SLA

ll Non-Proactive Credit PolicyNon-Proactive Credit Policy

ll SLAsSLAs that are UN-achievable (beware of the 100% that are UN-achievable (beware of the 100%availability availability SLAsSLAs))

ll Vague and UN-measurable Vague and UN-measurable SLAsSLAs (beware of the end- (beware of the end-to-end, and network latency/packet loss to-end, and network latency/packet loss SLAsSLAs))

ll SLA Penalties that do not kick-in at the precise momentSLA Penalties that do not kick-in at the precise momentof agreed upon SLA metric violationof agreed upon SLA metric violation

ll SLAsSLAs that do not hold service providers accountable for that do not hold service providers accountable fortheir outages (if a customers hurts, so should thetheir outages (if a customers hurts, so should theservice provider)service provider)

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Types of Types of SLAsSLAs being offered Today being offered Today

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Primary Types of Primary Types of SLAsSLAs Offered Today Offered Today

ll PerformancePerformance SLAsSLAs (Network Latency & Packet Loss) (Network Latency & Packet Loss)•• Primarily used for Marketing & PRPrimarily used for Marketing & PR

•• Guarantee availability of network components within theGuarantee availability of network components within theService Provider’s control Service Provider’s control onlyonly

–– Does not include last mile or other Service Provider’s networkDoes not include last mile or other Service Provider’s networkcomponentscomponents

ll Help DeskHelp Desk SLAsSLAs (Outage Notification & Response (Outage Notification & ResponseTime)Time)•• Guarantee “Customer Notification” of server/applicationGuarantee “Customer Notification” of server/application

outages & “Time to Respond” to outagesoutages & “Time to Respond” to outages

ll AvailabilityAvailability SLAsSLAs ( (Network, Facility, Server, Application)Network, Facility, Server, Application)

•• Guarantee uptime within confines of data centerGuarantee uptime within confines of data center

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Site Availability: 99.9% siteavailability

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

Application Support: Mean time to repair:one to two hours for priority 1 outages, four to sixhours for priority 2 outages; and one to two daysfor priority 3 outages

Network Performance:less then 1% packet loss, lessthan 70 ms domestic latencyand less than 100 msinternational latency.

SLA (examples)SLA (examples)

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

S L A

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SLA EvolutionSLA Evolution

ll Bigger PromisesBigger Promises•• More “nines”More “nines”•• Tougher penaltiesTougher penalties

ll Greater breadthGreater breadth•• End-to-end coverageEnd-to-end coverage•• User Experience metricsUser Experience metrics

ll More detailMore detail•• Network complexityNetwork complexity•• Customer responsibilitiesCustomer responsibilities

ll Someday: Application-Performance GuaranteesSomeday: Application-Performance Guarantees

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Summary/Lessons LearnedSummary/Lessons Learned

ll Service Level Agreements are no longer optionalService Level Agreements are no longer optional

ll Proper Monitoring & Management Infrastructure mustProper Monitoring & Management Infrastructure mustbe built-in to provide be built-in to provide SLAsSLAs

ll SLAsSLAs protect both; the customer and the service protect both; the customer and the serviceproviderprovider

ll Both sides need to understand their obligationsBoth sides need to understand their obligationsll Implicit terms need to become explicitImplicit terms need to become explicit

ll Penalties in Penalties in SLAsSLAs are necessary evils! They drive proper are necessary evils! They drive properbehaviorbehavior

Once you are ready to “deliver” Once you are ready to “deliver” SLAsSLAs you are in good shape to you are in good shape tolaunch new offerings quickly!launch new offerings quickly!

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Questions & AnswersQuestions & Answers

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