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Secrets of Managed Hosting Service Level Agreements

Posted by QuoteColo on February 05, 2015 - Updated on March 03, 2016

Secrets Of Managed Hosting Service Level Agreements

The service level agreement. Every worthy web hosting and managed hosting company worth their salt has one which you, as the customer, will have to sign off on. Yet, like most cell phone contracts or the seemingly monthly contract Apple makes you sign for use of iTunes, the SLA is a long document that hardly anyone reads.

For the consumer, the habit of not understanding a given managed hosting SLA is a bad practice. For the hosting company, the practice of a consumer not understanding what is in their SLA is mutually terrible.
For these reasons, here are five tips and secrets of managed hosting SLAs.

1. No SLA means No Business
If the managed hosting provider does not have a SLA, do not use that company for your IT needs. The SLA is the basic service agreement which companies must keep to ensure their clients receive the level of service they mandate. In more practical terms, would you hire a construction company to renovate your home without signing a contract describing their level of commitment? Would you hire a lawyer without a contract describing his commitment to your case?

No. If you did, you wouldn’t be smart. The same logic applies for SLA and managed hosting firms. As the service level agreement describes downtime issues, payment credits, bandwidth requirements, power agreements and a variety of other mission’s critical web hosting commitments, using a firm without a SLA is akin to shooting yourself in the foot.
When things go bad – and they will, at some point, go bad – you need an SLA as a consumer to protect yourself against litigation over breaking a contract or to understand how you will collect monetary reimbursement for accrued downtime.

SLA Tip: If your managed hosting company does not have an SLA, do not conduct business with them.

2. Downtime Credits and Payments
One of the most common reasons managed hosting companies provide a service level agreement is to describe how they will handle repaying consumers after extended downtime. As most managed hosting firms have a mission statement of “99% uptime” or some percentage close to mentioned, once that provider breaches the allowed figure, as a consumer you are entitled to monetary reimbursement.
The idea here is simple: for an online business, website downtime means lost business, lost consumer confidence and missed business opportunities. As such, managed hosting providers are on the line to compensate you for that downtime.

Every managed hosting provider must provide SLA content speaking to reimbursement for suffered downtime.

SLA Secret: The major secret here is most managed hosting platforms are not going to want to reimburse you for your downtime. Think about it: what company wants to pay the consumer? It’s money out of their pocket. As such, unless you contact your provider about being repaid for suffered downtime, most managed hosting solution firms are more than happy to let the issue slide.

Moreover, if your managed hosting company does reach out to provide SLA credits, some providers might try to pay back suffered downtime with free company products or applied credits towards future bills. While this might work well, if downtime causes you to leave a company, credits must be rendered as monetary value. Point in case: make sure SLA credits are paid in full by your managed hosting provider.

3. SLAs Can be Capped
The basic idea behind a SLA credit is to make sure your downtime is repaid in full. While most managed hosting providers provide 100% of your monthly bill when applied to downtime, there are a few providers on the market who cap their credit at a certain percentage.

This means, within certain managed hosting companies, downtime is only protected and paid back to a certain degree. Surprisingly, Amazon is notorious for this. Even though the Amazon EC2 platform is highly touted as one of the best on the market, the SLA they provide consumers with caps returns at 30% of an overall monthly statement. Moreover, it doesn’t include the first 21 minutes of downtime and maxes out at the first seven hours of downtime.

When put all together, the Amazon SLA only is capped at a rough total credit of 10%. This means if you have an estimated loss of $5,000 due to downtime, you are only getting back $500 from the provider who is in charge of keeping your solutions up and running.

SLA Secret and Tip: Some providers cap their SLA regarding downtime. Be careful of those providers.

4. Different Service Level Agreements May Apply
You’re interested in purchasing RackSpace managed hosting solutions. You check out the product you want, you agree with the price and the SLA seems legit. So you purchase. Two months down the line you decide to also purchase cloud servers with RackSpace yet as you have already signed onto the solution via managed hosting, you assume the SLA must be the same. This assumption is wrong.

RackSpace, like Microsoft Azure and a bevy of managed hosting companies provide different service level agreements for different products. As we mentioned RackSpace, here is the SLA for managed hosting products:
Here is the service level agreement for RackSpace cloud servers:
As you can see, both SLAs vary in many aspects.

SLA Secret and Tip: SLAs differ by product sets within hosting companies. Be sure to understand that your managed hosting SLA might not be the same as your cloud server SLA. Do your due diligence.

5. Most Service Level Agreements Do Not Measure Up to Marketing
One of the major marketing points of every web hosting, managed hosting and cloud hosting company is uptime. Mostly every hosting firm in the industry markets their 99% uptime as a certified guarantee. Yet, as the devil is normally in the details, there are a lot of providers who edit the SLA agreement to more accurately reflect uptime reality. In 2010, Google and Microsoft went after each other. As reported by Mimecast:

“In short Google claimed its Google Apps service had achieved 99.984% uptime in 2010 and, citing an independent report, went on to say this was 46 times more available than Microsoft’s Exchange Server. Microsoft retaliated by saying BPOS achieved 99.9% (or better) uptime in 2010 and this was in line with their SLA. Microsoft quite rightly protested at Google’s definitions of uptime and what should or should not be included.”

The truth is most providers do not reach the level of uptime stated in their SLA. Even a company with the stated uptime of 99.99% per year averages out to nearly 53 minutes of downtime per year. Add normal power outages, severe storms, heat waves and general employee errors and you rarely get a situation wherein the stated SLA uptime is met.

For example, shortly after Christmas 2012, Amazon experienced roughly 20 hours of downtime due to unexpected conditions. The problem being, Amazon’s SLA states:

“AWS will use commercially reasonable efforts to make Amazon EC2 and Amazon EBS each available with a Monthly Uptime Percentage (defined below) of at least 99.95%, in each case during any monthly billing cycle (the “Service Commitment”). In the event Amazon EC2 or Amazon EBS does not meet the Service Commitment, you will be eligible to receive a Service Credit as described below.”

The stated Amazon uptime SLA is 99.95% or 21.56 minutes of downtime per month. Quick math means the Amazon 99.95% SLA guarantees no more than 4.312 hours of downtime per year.

SLA Secret and Tip: With most managed hosting solutions not living up to their stated SLA uptime, it is up to you to take note off all downtime and hold your provider to the fire. As always, never trust the marketing. Read the SLA and understand how 99.95% corresponds to real life downtime figures.

If we could only provide you with two key tips, it would be these:

1. Before you invest in managed hosting solutions, read and fully understand the SLA in question. Understand its flaws and how those holes equate to protecting yourself against yearly service downtime.

2. Always, always, always contact your provider to receive payment for suffered downtime. As noted within the RackSpace managed hosting SLA, “Credit Requests: To receive an SLA credit, Rackspace customers must contact their account manager”

Most consumers believe the SLA is there to protect them against bad service. Sadly, often times the SLA functions as an avenue to protect the company from the consumer.

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