Insurance exists to help the policy holder recover from damages / loss after an incident occurs.
Insurance does not prevent the damage / loss from occurring.
Insurance companies require the policy holder to file a claim after an incident occurs.
And as with all things in life, you never get more than what you pay for.
SLAs are no different.
Article by Stacy Griggs in The WHIR.
Emphasis in red added by me.
Brian Wood, VP Marketing
5 Hidden Problems with Cloud SLAs
The Service-Level Agreement or SLA is often the last thing that a purchaser of cloud services will review. However, since problems are inevitable with the only variables being time and frequency, it’s important that you have a firm understanding of what the SLA guarantees. Additionally, for large buyers of cloud, certain points of the SLA may be negotiable depending on the service provider and how much they want your business. Let’s take a few minutes and review some common misunderstandings with SLAs.
- SLAs Do Not Guarantee Uptime – Even if it’s called an “uptime guarantee”, downtime is likely to occur at some point. The SLA is simply a financial contract which provides you some remuneration in the case of downtime.
- You Have Some Work To Do – Most SLA’s require you to ask for a credit. Having been on the other side of the table (as a cloud service provider), I can tell you that very few of the customers who are entitled to an SLA actually request the credit.
- You Don’t Get Much – SLAs typically provide a credit on a future bill for the amount of time you are down, this payment is based on the amount the cloud provider bills you each month, not how much revenue your site produces. As such the amount you will receive as payment will not come close to covering your actual losses from downtime.
- Most SLAs are Capped – Typically, providers will cap the credit at 100% of the monthly bill, however some of the caps are much lower. Take Amazon’s EC2 for example, their credit is capped at 30% of you monthly bill and doesn’t pay anything for the first 21 minutes of downtime each month and further limits the first 7 hours of downtime to a total credit of 10%.
- Different Services Have Different SLAs – Most customers consume a number of cloud services from their provider and each of those services typically has a different SLA tied to it. For example Microsoft Azure has different SLAs for VMs, Storage, DNS, Service Bus, SQL Services, Authentication and Backup. Going back to point #3, since the credit is tied only to the amount you pay for the service that failed, the amount of the credit will likely be a very small percentage of your total bill.
Ultimately, SLAs are an important factor when selecting a new cloud service provider. But what’s more important is that cloud customers take responsibility for understanding them and select a provider whose SLAs give them confidence in the business relationship moving forward. Ultimately, it’s the customer’s responsibility to ensure that their cloud environments are properly configured to ensure maximum up-time, the SLA is simply there in case things don’t go as planned.