SAP AG doesnt believe it needs one. Salesforce.com only offers one upon request. NetSuite provides one as part of its standard license agreement, but with enough wiggle room to allow for several hours of unscheduled downtime a month, on top of scheduled outages for upgrades.
These are SLAs (service-level agreements), which provide a guaranteed uptime to on-demand customers—somewhere in the range of 99.5 percent and beyond monthly. They are becoming increasingly important as more and more users both sign up for the on-demand model and experience downtime as that model grows to maturity.
But many users, relatively new to the on-demand model, or with few problems at hand, have thought little about their service agreements with vendors. However, recent issues with Salesforce.com—often pointed to as the gold standard for on-demand CRM (customer relationship management) application service—changed all that.
In December, Salesforce.com experienced a 6-hour outage, with another overnight outage following shortly after that. Then in January, users began complaining about a host of issues that came up after the companys Winter 06 release on Jan. 17.
Those outages, combined with recent potentially game-changing on-demand announcements from competitors SAP and Oracle—SAP is offering a hybrid model for on-demand CRM, while Oracle acquired on-demand CRM provider Siebel Systems Inc. earlier in February—have brought the question of service-level agreements to the fore.
For Salesforce.com customer Mark Siler, vice president of technology at Priority One Financial Services, SLAs, or rather his companys lack of one, have become a preoccupation.
After a particularly frustrating Jan. 30 outage at Salesforce.com—and with his contract up for renewal—Siler contacted his account representative to inquire about obtaining an SLA.
“They first told me they dont do SLAs, then when I quoted what Marc [Benioff, CEO of Salesforce.com] said—that they do SLAs if the customer requests it—the account executive told me she didnt have the authority to do an SLA and a vice president would have to contact me,” said Siler. “She wanted to know why I wanted one. I said to cover their outages; if they have any more, I want to be compensated. “
Nearly two weeks later, by Feb. 8, Siler still hadnt been contacted by Salesforce.com. Hes now researching his options, looking at agreements from competitors NetSuite and SalesNet.
“NetSuite has a lot of terms with latitude for installing a new update and to be down for several hours. But what is several?” said Siler. “SalesNet said they could be down during an installation, but not more than 8 hours—they capped it.”
Siler said there were some similarities in both SLAs, namely that each provides compensatory guarantees should an outage last more than the stated time allowed.
SalesNet also offered Siler the opportunity to renegotiate the SLA if he doesnt like the terms.
“It does factor in that Salesforce is not willing to make any concessions when they are down,” said Siler. “Theyre not willing to put in writing what their downtime guarantees are. Were putting all our eggs in their basket, but theyre not willing to guarantee it.”
Jame Ervin, an account manager with Dynamic Network Factory Storage Inc., experienced another 75 minute outage with Salesforce.com on Feb. 9.
She said that because the outages are becoming “far too frequent” she will look into obtaining a SLA, something she hadnt considered last year when DNF contracted with Salesforce.
“Its one thing we didnt inquire about. Last year we probably had no outages; this year its a lot more frequent. Im sure if they run their numbers now, uptime will is probably still technically 99.9 percent, but now its occurring during business hours” said Ervin, in Hayward, Calif.
“Our organization is using Salesforce for a lot of things—production, checking our orders that go out—and it causes a lot more problems when the system goes down. Were going to look into a SLA.”
Ervin will look for what kind of compensation her company can expect in the event of further outages, what contingency plans Salesforce has in place, and that its improving its offline access.
“If that could be more full featured so you could log into cases, it would be a more workable solution,” she said.
Coincidentally, Salesforce is also pushing more support, at a higher premium, according to Ervin.
“Salesforce is encouraging customers to upgrade to premium technical support,” she said. “It isnt really clear what benefits you get since it of course does not compensate for system downtime.”
Ervin said that for $2,000 more she can get 10 hours annually of premium support from Salesforce.
“We get lots and lots of e-mails about it,” Ervin said. “It says you get faster answers to your questions. Our questions are all about downtime.”
Analysts suggest that because on demand means that the actual performance of an application is outside the users control, companies need to ensure that an SLA is defined at the outset in order to wrest back some control.
Earlier this year, Liz Herbert, an analyst with Forrester Research, conducted an evaluation of SLAs available with leading on-demand software providers. Herbert found that while nearly all on-demand vendors provide SLAs as standard provisions within their license agreements (with the exception of Salesforce.com), there is still some language users should be aware of.
“Customers definitely want to be clear when theyre looking into it, whether [the SLA] is inclusive of planned downtime windows or not, and be clear what those windows are—and how frequent,” said Herbert, in Cambridge, Mass. “They also want to be clear on whats required of them to get a payout if something happens, and what that payout is.”
A standard part of an SLA often promises recompensation for services should the users applications be unavailable for a certain amount of time. On-demand ERP (enterprise resource planning) provider NetSuite, for example, states that if its 99.5 percent uptime guarantee is not met in a calendar month—outside of its planned downtime windows, usually in the middle of the night on a Saturday and never during the last weekend of the month—it will credit a customer with one month of fees, with customer support costs included.
SalesNet, which promises 99.96 percent uptime a month, provides a formula that takes into account how long the system is actually down, versus how much a customer paid for their total subscription fee that month.
NetSuite, however, also reserves the right “at any time and from time to time to modify” the terms of service. Its also incumbent on the user to monitor downtimes that fall outside of the upgrade parameters, and notify the company to request a refund.
On-demand CRM provider RightNow Technologies has a “service-level objective” of 99.5 percent uptime and has achieved better than that since 2003.
“We dont have guarantees on our contracts per se,” said Jason Treu, director of corporate communications at RightNow. “However, if we fail to deliver on the stated time, and it is attributable to us, customers can get hosting fees returned.”
RightNow has never had a customer ask for a refund—not an atypical response.
“All vendors [I evaluated] said theyve never had to pay out on an SLA; the burden is on the customer to prove in writing a complaint about downtime,” said Herbert. “The first thing is, customers have to take the initiative. The other caveat is customers need to make sure any issues are not with their Internet service provider,” an even harder metric to track.
Typical recompensation plans come in the form of free application time—in the best case one free month for all users. Weaker SLAs only compensate users for downtime, which “really isnt that much” when you think of all the usage hours in a month compared with the number of outage hours, according to Herbert.
The other thing Herbert points out is that even with a 99.5 percent uptime guarantee, an on-demand system can go down for several hours a month, beyond the predicted upgrade hours, without violating the SLA.
In an S-1 statement filed with the Securities and Exchange Commission, Salesforce.com states that “interruptions or delays in service from our third-party Web hosting facility could impair the delivery of our service and harm our business.”
Likely with this caveat in mind, the company has invested some $50 million in two new data centers—one on the East Coast, the other on the West Coast—that provide failover capabilities and better safeguards for customers. The second data center went live in January.
Other vendors also provide safeguards for users. SAP, which announced Feb. 2 its CRM on-demand offering, provides an isolated tenancy model that keeps each users software on a separate database instance, while providing the on-demand model of pushing upgrades on a quarterly basis. It also hosts its software with IBM, which does provide SLAs.
RightNow has used a combination of open-source and hosting technology to build a redundant system with data mirroring capabilities to ensure reliability. The assurances are important for users like Siler. He maintains a 99.93 percent uptime at Priority One.
“We went through and established what we can do, as a national company operating out of a single location, to ensure uptime,” said Siler, in St. Petersburg, Fla. “We did just about everything you can do. When we invest that much in our infrastructure, we expect other companies we contract with to be up as well.”
Editors Note: This story was updated to include comments from a user who has experienced outages.
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