Service-level agreements (SLA) are becoming a popular tool for ASPs to manage relationships with customers and partners, and to market their services. These written agreements set standards for service and specify penalties if those standards arent met, including conditions allowing a customer or partner to terminate the relationship.
WebEmporium, for example, guarantees that its hosting application will not go down for more than one hour per month. If it does, "We eat the cost and pay a penalty," says Susan LeWinter, co-founder and VP of business development.
StrataSource, meanwhile, offers a money-back guarantee of monthly fees to any customer who is not completely satisfied with its service. And Qwest Cyber.Solutions offers three different packages of guaranteed service levels—99 percent, 99.7 percent and 99.99 percent uptime.
Analysts say that more than half of ASPs use SLAs for customers and partners, but the standards they use vary widely, which creates some problems.
"Many [SLAs] arent worth the paper theyre written on," says Ted Chamberlain, an analyst at Gartner Group, "because there is no standardization of terms and clauses."
The ASP Industry Consortium, an international organization of ASPs and other software developers, is trying to change that. This past summer, the group published a white paper outlining the results of a survey that gauged the importance and content of SLAs throughout the ASP value chain, from network providers to help desks. Three hundred service providers and end users were surveyed.
"A contract that clearly outlines the rights and obligations of the parties significantly reduces the potential for disagreement to arise in the course of the parties business relationships," the paper says.
Among its findings: About 60 percent of hosting and e-service providers offer SLAs, and most of those believe such agreements are the best method for ensuring quality service. An equal percentage of end users want customized SLAs.
Also, about 85 percent of end users believe the primary solutions provider should guarantee its own services, as well as those of its partners and subcontractors. However, only 36 percent of service providers agree.
In other words, SLA standardization still has a long way to go.