Tips while negotiating SLAs with Cloud Computing Providers

As the IT needs of a company expand in order to stay competitive, so too does it seem the number of companies offering cloud computing services. A quick search online for “hosted Microsoft Exchange” will yield well over 7 million results! With the exponential growth of “service providers,” it seems even more difficult to sift through potential candidates for a provider with whom you can trust your mission critical system.  Once you have finalized couple of good choices, next step is to decode the SLAs of cloud computing providers. You need to understand and negotiate the SLA to get most of the cloud computing services.

As you would agree cloud services are usually flexible and predictable (in terms of costs). Hosted providers assure their customers – flawless services with 99.9% uptime. But, do they deliver all their promises? What if they don’t?  What is the difference between promises and reality?  This is where SLAs or Service level agreement are an important document to study and understand carefully.  It is more than a document in case of cloud services because unlike other services cloud services are actually an extension of the organisation.

The SLA paper, usually drawn in favor of the provider carries all the negotiations regarding the contract and the compensation to be provided in case of faulty service. This agreement signed between the cloud providers and the service availing party is the key constituent in concluding the deal.  Though everybody is aware of the cloud benefits but the priorities of cloud consumer and cloud provider could be different. A cloud provider would be proud in the IT cost reduction they are offering to client but in actual the major priority for client could be less downtime. Many businesses pay for their employees on per hour basis so it is crucial for them to get zero downtime else they would be losing productivity. As per a recent cloud survey 77% of SMBs would be deploying mobile technologies at workplace by 2015 to enable their employees to be able to work anywhere and from any mobile device. Well it is obvious – expectations of client and focus of vendor differs. It is important to be synchronized and hence you should understand and negotiate SLA properly.

Crucial points to consider in a SLA

The business manager or IT manager responsible for signing the deal should be very specific on certain terms and conditions to avoid fretting later.

Security: Hiring a cloud service provider means, client is entrusting all the core activities related to their email or data to a third party. Security is the major cause of concern in this case. The client authorities should make sure that SLA has specific details about the people handling their core data, their authenticity and the various measures taken to shield their valuable data. This part could be overlooked in many SLAs. But it is important to frame certain clauses claiming the ultimate authority handling the client’s data and measures for settling any security infringement. SLA must encompass the security levels (as per the criticality and sensitivity of your data) and responsibilities of vendor in case a security breach happens.

Stable performance: Though all the online hosted services promise permanent uptime and of course this should be their goal. But sometime situations are truly out of control like a natural disaster or any unavoidable circumstance. You need to know how prepared is your vendor and what SLA says about the vendor role in supporting your business operations in case any such situation occurs. You should have an idea regarding how your service requests are going to be handled and what is the response or resolution timeframe.

Next thing related to performance is downtime. Of course ideal situation is zero downtime and this is probably a metric you want to be 100% ensured of. So what is an outage according to cloud provider? This might seem funny. The SLA should define anything interrupting the process of serving the customers is an outage. It is up to the client to stress this point carefully. This is truly the most basic of which is uptime guarantee. Most service providers offer more than 99% uptime, which sounds quite good, but there are some key variations that must be examined.


  • 99% uptime = approximately 7.5 hours of downtime per month
  • 99.5% uptime = approximately 3.5 hours of downtime per month
  • 99.9% uptime = less than 45 minutes of downtime per month


For the most part, guarantees of this nature exclude certain conditions, such as weekly maintenance periods, for instance. As a general rule, any SLA that makes provisions for more than 1 hour of scheduled maintenance time per week should be viewed carefully to ensure that this time is scheduled at a time that is most convenient to your users.


The SLA should also address these questions.

  1. What measures will the cloud computing providers take in case of interruption?
  2. Do they have a division in a geographically different area, from where they can keep the process running uninterruptedly?
  3. What is the worst case scenario or the maximum number of hours a SMB can be affected? Is the compensation provided the same for worst case scenario and the minor repairs?

Obviously a clever customer should not select the cloud computing services which offer better compensation. Instead they should go for services which have strong backup plan to keep the service running continuously. Companies which offer the following should be preferred:

  • Regular services through scheduled downtimes for maintenance and prior communication
  • Companies which have an alternate data access plans
  • Redundant staff with relevant tools to clear the outage immediately
  • Companies with proper incident reporting systems

Cost: When it comes to cost SLA usually define the basic fee structure. What you need to explore is

  1. Hidden costs usually termed as external fees
  2. Taxes
  3. License cost and upgrading cost if any
  4. Costs for exceeding storage limits
  5. Charges for using high level customer support extensively

The only way to know about these charges is to have a detailed look at the SLA and get the slightest doubts cleared immediately.

Negotiation: Any unacceptable clause or fees in the SLA can be negotiated and a genuine provider would understand that one size cannot fit all. For example if you are a medical or financial organization, keeping your data private is a legal requirement and hence you need to mention this to your provider that data privacy and security is quite critical  for you and hence there should be extra terms of data protection. Similarly you need to know what happened to the data created in the process or simply metadata. Of course you are the owner of your business data but software would create additional meta data like user feedbacks, traffic statistics, usage trends, failed login attempts and much more. You need to know what happens and who owns this metadata created while adopting SaaS.

To summarize cloud computing is continuously changing the traditional IT landscape.  Now the aesthetic appeal of IT is not about installing and managing complex infrastructure on premise. Cloud computing where companies lease their IT infrastructure and operations have power to affect the most important things you are concerned about – productivity, scalability, costs and business growth.  Because of this cloud may seem quite attractive but it is extremely important to find a reliable service provider as well as a client centric and effective SLA.

About The Author: This post is contributed by Richa Pokhriyal , Digital Media Specialist @ Egocentrix. Egocentrix is Canada based reliable cloud computing provider offering Hosted Exchange 2010, Hosted Sharepoint, VPS, online backup, Hosted Blackberry and other related cloud services.