Application Service Providers (ASPs) - Guide to Cloud Computing for Business and Technology Managers - page 234

11.3.1 Service Level Agreements (SLAs)

SLAs spell out the customer's expectations for service, which might range
from expected response times to minimum bandwidth. Some ASPs include
guarantees such as 99.9% uptime and disaster recovery. ASPs will add secu-
rity to an already secure platform (e.g., Windows NT/2000 or .Net) to guar-
antee security levels.
An SLA details the day-to-day expected service. There should be means
to award exceeded minimum requirements that can be offset against days
that failed to meet expectations. The SLA might also include provisions for
days when the ASP's servers are offline for maintenance. An SLA should also
include a clause that allows the customer to terminate the contract without
penalty if it receives poor service. A customer should also make sure that it
can get out of the deal with whatever it needs to bring a new ASP on board—
data, customized software, and the like. Customers should keep the contract
term as short as possible—no more than 3 years. It is difficult to know what
hosting will look like in 5 years. Make sure that the performance penalties
truly motivate the ASP to address the organization's issues (remember, the
ASP has other customers) and that penalties escalate each time the prob-
lem occurs. Establish metrics that truly measure growth. Choose two simple
ones and agree on a firm price for the service as usage grows. Furthermore,
customers should not try to trade reduced service for lower monthly fees.
The only way for an ASP to lower the organization's costs is to cut service
levels. The quality of the service is key to the customer's successful use of,
and, therefore the benefit derived from, the ASP.

11.4 ASP Value Drivers
Factors driving the ASP solutions are as follows:

1. Enabling technologies

a. Pervasiveness of the Internet

b. Access and declining cost of bandwidth capacity

c. Shared applications in a client-server environment

d. Browsers as an accepted GUI application

e. Potential of e-commerce and e-business solutions

2. Technical drivers

a. Utilization of emerging technologies and best-of-breed
applications

b. Accelerated application development