SLAs for hosted, managed and co-located data center services

New Data Center Strategies Newsletter, By Andreas M. Antonopoulos, Network World, 1/30/07

Almost 10% of participants in Nemertes’ data center research cited outsourcing data center facilities as one of their most important funded initiatives.

Over the last five years, the cost of building data centers has increased quite dramatically, mainly because of the increased power and cooling demands of dense platforms such as blade servers. So naturally, many businesses have decided that data centers are too complex and too costly to own, even if they are necessary to have.

Data center hosting, co-location and managed servers have therefore grown in popularity. But how do companies manage the trade-off between managing the data center and managing the outsourcer relationship? Service-level agreements (SLA) are the main tool for ensuring the same QoS as it moves from internally managed to outsourced.

Most data center companies offer SLAs in their contracts, whether for co-location, hosting or managed services. IT executives cite SLAs as the third-most important criterion in selecting a service provider for data center outsourcing. For those managing outsourcer relationships, the SLA is not meant to compensate for lost productivity or lost revenues.

In most cases the impact of any downtime far exceeds the cost of the service provided, so even a 100% refund would be insufficient compensation. What SLAs do, however, is cause pain to the providers and therefore act as a proxy for the customer micromanaging the performance of the service.

An additional aspect of SLAs that is sought by IT executives is the “out” clause - an opportunity to cancel the contract in the case of repeated violations of the SLAs. This is the clause of last resort which allows companies to reconsider their commitment to a service provider in the case when the “service” part is lacking.

What types of SLAs are offered for data centers?

* Facilities or power SLAs - a guarantee that the environmental and power services in the data center facility will operate without interruption. Loss of power, loss of cooling or loss of the entire data center would trigger the penalties in this SLA.

* Network connectivity - the basic “uptime” guarantee for the network connections. Usually, hosting companies require that the customer purchase diverse connections before offering this SLA.

* Network latency and packet loss - a more fine-grained SLA that ensures a minimal amount of packet loss and latency on backbone links connecting the data center. This type of SLA is especially important for real-time communications (voice, video) or time-sensitive transactions (alerts, stock trades, etc.).

* Temperature stability - more recently companies are demanding guarantees of stable (cool) temperatures, needed because of the challenge posed by high-density and super-hot blade servers.

SLAs will not make a provider any better, but they will at least align the provider's interests with yours. Prior to committing to a service provider, ask to see its SLA performance over the past year. Pay special attention to the trend line. Some hosting/facilities providers make their performance available to the public - a good sign! Finally, don’t forget that all important clause-of-last-resort: the contract termination clause.