Service-Level Requirements

When an organization outsources services like cloud or data center operations to a third party, it's important to clearly define the scope of work, service-level agreements (SLAs), and timelines.

Both the organization and the provider must have a shared understanding of expectations and responsibilities.

This should include a detailed description of both performance and security functions. As with other projects, the organization must define a set of minimum requirements for success. However, in this case, requirements typically cannot be dictated unilaterally and must be developed in cooperation with the provider. The organization may also need to incorporate third-party tools to meet its objectives.

Together, the parties will develop a business contract that explicitly states the terms of the arrangement. A key component of this contract is the SLA, which outlines the minimum requirements and formalizes their delivery.

Each element of the SLA should include a clear objective and measurable metric to assess success or failure. Without this, the SLA cannot be implemented fairly or reasonably for either party.

For example, an SLA clause that states, "There will be excellent uptime for the duration of the service," is inadequate. In the event of a dispute, the vague term "excellent" could lead to prolonged legal debates over its meaning. A more effective clause would be: "The customer will have continuous access to the service throughout the delivery period; any interruption lasting more than five (5) seconds per period will constitute a failure." This type of specific, measurable language reduces ambiguity and provides clear standard for performance.

The strength of the SLA lies in its ability to influence payment terms.

SLAs are typically structured with contractual stipulations stating that a failure to meet a defined SLA clause will result in a credit to the customer's account—often in the form of additional service time added to the end of the contract at no cost.

This incentivizes the provider to meet SLA terms and helps compensate the customer if the service falls short of expectations. Customers should also consider offering suppliers a way to remedy penalties-for example, by exceeding all SLA targets over the following three months-to encourage continuous improvement and maintain a collaborative relationship.

SLAs best serve recurring, continual requirements, not singular or infrequent events. For instance, a weekly performance report might be included in the SLA, but a disaster response and recovery metric probably is not suited for the SLA. However, specific terms for addressing uncommon events (e.g., disasters) can and should be included in the contract, even if they are not in the SLA.