The evolving role of technology industry SLAs
"SLAs are becoming differentiators and, in many cases, the ultimate decider in purchasing decisions..."
It’s hard to deny that today we live in a world of hype and fake news, where misinformation is commonplace, often leading to an erosion of trust in society. This is evident in both our professional and personal lives, and it’s one of the reasons that businesses are making concerted efforts to improve their corporate citizenship and become more transparent.
It’s for this reason that we’ve witnessed the rise in popularity of Service Level Agreements (SLAs), guarantees offered up by companies as a way to ‘put their money where their mouth is’ when it comes to promising a good service/experience, writes Alex McMullan, CTO International, Pure Storage
In order to retain the trust of customers, when things do go wrong, SLAs need to deliver. There’s a common perception that SLAs look good on paper, until the day you really need them. In much the same way that you don’t really know how good an insurance policy is until you have to make a claim, and are hit with excesses and other unexpected surprises, SLAs often leave disappointment and dissatisfaction in their wake. The challenge for service providers is to ensure the SLA is reflective of the service and is emphasised, so the customer feels there’s a joint investment with the provider they’re entering into a contract with.
The origin of SLAs in the technology sector
The advent of technology sector SLAs can be traced back to the days when mainframes were establishing themselves as corporate computing platforms. At that time, computing availability was the main measure of value and mainframe vendors looked to SLAs as a way to differentiate themselves from competing computing systems, with availability as their main focus. Over time, as the technology landscape has changed, SLAs have, in general, become more ubiquitous, with competing service providers aiming to offer the same level of service. However, what we’ve seen in actuality is a dilution of their effectiveness, so much so that many extend just to the basic limit of liability.
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As an example, it’s common for service providers to offer free months of service as compensation should an SLA not be met. The problem is, this is not what many customers are looking for in a serious SLA – especially in relation to mission critical services. What they are looking for is a genuine investment from the vendor in resolving an issue. Dissatisfaction with SLAs resulting from poor service is a major factor impacting customer retention. Outages can lead to irreparable financial and reputational damage with customers, so a few free months of service do not likely resolve the issue. Now, the challenge for service providers is to re-establish meaningful SLAs that convey real value to the customer.
The changing role of SLAs in technology procurement
Until relatively recently, it was difficult for customers to move to a new platform or service. Vendor lock-in was the norm, facilitated by financial considerations such as overhanging balloon payments on contracts and expensive migration costs in the form of professional services for migrations, data egress charges etc. Added to this, vendors typically encourage customers to reinvest every few years in a technology cycle in the hope that they'll lock the customer into what amounts to a steady maintenance and subscription revenue stream for them. The rise of open systems, the internet, containers, the Linux operating system and a range of other technologies has changed the paradigm, lowering the cost of migration across a wide range of technologies - from network to storage and virtualisation. When customers can choose on the basis of something more than just what it would cost them to stop using a particular technology, change becomes more likely. As a result of this, we’re seeing a renewed emphasis on the contractual elements of SLAs. This can be observed across the technology sector but is particularly apparent in relation to subscription services, which are rapidly growing in popularity.
SLAs as market differentiators
We’re now entering a new phase in technology procurement where SLAs are becoming differentiators and, in many cases, the ultimate decider in purchasing decisions. Traditionally, procurement has been centred on cost, with a checklist as the mechanism for selection. The product or service that came in at the right price, with the most boxes checked, was generally selected. Now, with playing fields being more even in many technology sectors, as similar levels of service or capability are being offered, the SLA has become a differentiating factor and has taken on a more central role in the procurement process.
Along with this shift comes a far greater examination of the terms, conditions and proposed remedial action, should an SLA not be met. Customers are now considering the service level that they think will work best for their business but at the same time, they’re examining in forensic detail what the vendor will do to actually help in the event of an issue that invokes the SLA. This being the case, it’s the vendors who are demonstrably customer-focused that will successfully turn SLAs into a competitive advantage.
SLAs take an innovative leap forward
In the technology sector, the ability to anticipate and react to major market shifts has always been a core tenet of success. Today, some companies are making innovative leaps forward by tying their SLAs directly to customers’ C-level priorities. For example, one of the biggest influencers in technology purchasing decisions is sustainability. Today’s procurement conversations focus on energy consumption and carbon footprint, as well as a sustainable supply chain. SLAs therefore have to relate to sustainability in order to provide meaningful value. Another important trend is data security, driven by the unabated threat posed by ransomware and other forms of cyber-attack. This trend is very prominent in the data storage sector, but it applies to the entire technology industry.
Businesses should look for a data storage partner with SLAs on the power, cooling and data centre footprint requirements of its solutions. In addition, there should be transparent measurement of actual Watts per tebibyte (TiB), and consequences if guaranteed Watts/TiB or TiB/Rack is not met. Some storage vendors can help customers achieve up to 85% reduction in energy use and carbon emissions and up to 95% less rack space than competing offerings, and may even have a commitment to pay for their customers’ power and rack space costs.
From a data protection perspective, we’re also seeing the emergence of new, SLA backed data security and resiliency offerings, with the introduction of services that ensure no data migrations are required, while guaranteeing zero data loss in the event of a cyber incident. These services allow customers to mitigate unplanned costs due to data loss incidents, while maintaining day-to-day business operations amid upgrades. These are the kinds of SLAs making a real difference for businesses today.
The future of SLAs
There’s a clear societal trend towards less ownership and more subscription services. We see this in our personal lives and in business and it’s giving rise to greater emphasis on SLAs, with the aim of improving these services. Above all, SLAs must stay relevant and be reflective of how the customer uses the technology and what it is they are hoping to achieve with it, rather than just what a vendor is prepared to stand behind. Going forward, SLAs will begin to mean something again, and add real value to a technology market that’s developing at a quicker pace than ever before, with the most competition we’ve ever seen.
