Cloud SLA Negotiation: The Basics Are Still Critical

Given that the majority of Saugatuck clients today utilize multiple (usually dozens or more) Cloud-based IT and business services, how many have dusted off the SLAs related to those? What we’re finding out from our ongoing SaaS and Cloud IT research programs is that most have not given enough time and thought to viewing and understanding their Cloud IT SLAs. And too many, it seems, have not even negotiated the terms of those SLAs with their providers. That’s bad business for enterprise user/buyer and provider both.

This week, we’re reviewing and updating our original guidance regarding SaaS/Cloud SLA provisions and negotiation, and we strongly recommend that our client do the same. We’ve updated our core Strategic Perspective on the subject, which is being published this week for clients of our CRS subscription service. Here are the five points that every IT and business executive needs to understand and negotiate when it comes to any Cloud service level agreement:

1. Understand the relationship between Master Services Agreements (MSAs) and SLAs, as well as which terms and conditions belong in one and/or both.

2. Know which availability and support terms and conditions are worth worrying about.

3. Focus on performance standards-related terms and conditions that are business-critical.

4. Know which penalty-related provisions are most important.

5. Understand all SLA exemptions.

A key piece of advice: Enterprise executives, especially IT and business leaders, stand to gain by promoting the expectation that SaaS SLAs should be widely available and open to negotiation. However, the burden is on those executives to determine which SLA terms and conditions are most critical to their business requirements. and thus should be subject to negotiation. Not all SLA terms and conditions need to be negotiated.

Note: Ongoing Saugatuck subscription clients can access this premium research piece (1065CLS) by clicking here, and inputting your ID and password.

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Bruce Guptill

Most research firms can explain what happened; some can explain what is happening. Saugatuck Technology excels at understanding both in order to explain what else is likely to occur, and to guide its clients toward the actions that deliver them the greatest business value while enabling the safest business path.
To accomplish this, and to continually improve the value of Saugatuck’s work to clients in a Cloud-obscured marketplace, Saugatuck SVP and Head of Research Bruce Guptill pushes his team to continually re-examine and re-invent the company’s research programs to focus more on the costs, benefits, effects, and value of an ever-changing mix of technologies and providers in different markets.
Guptill’s own technology and business background laid a solid foundation for such a flexible, yet stable, approach to IT research value for clients. His technology research work includes mobility, collaborative IT, telecom, data networking, web commerce, and electronic marketplaces; his research work for enterprise IT and business clients includes return on IT investment, total cost of IT ownership, and business planning for IT. His research and guidance on vendor channel management, market identification and development, and buyer behavior analysis has enabled hundreds of established and startup IT providers to find, enter, and profit from new and traditional markets, while helping to guide user enterprise leaders toward optimal IT procurement and vendor management.
Guptill’s research background includes several years as a VP and research director with Gartner, senior positions with TeleChoice and Robert Frances Group, and editorial work within the IDG companies, including four years as a writer and editor with NetworkWorld. His marketing business focus was honed as VP of marketing for firms ranging from custom development providers to non-IT firms in aviation and other industries. His sales and channel experience started by traveling with a sample bag, then working for IT VARs, then advising telecom and wireless carriers on partner choices, to developing partner programs for traditional and Cloud-based software development firms and ISVs.
Guptill holds an MBA in marketing and finance, and a BA in the psychology and business of mass media communication. He is licensed to fly airplanes, drive boats, and sell houses; he is also a certified baseball coach, serves on the boards of regional civic groups, and is a serial home renovator. Married with three children, Guptill resides on Cape Cod in southeastern Massachusetts, and is a lifelong fan of the Red Sox, Patriots, Celtics, and the University of Connecticut Huskies.

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