E-Business Service Level Agreements:

E-BUSINESS SERVICE LEVEL AGREEMENTS:
STRATEGIES FOR SERVICE PROVIDERS, E-COMMERCE AND OUTSOURCING
by Andrew Hiles

Published by Rothstein Associates Inc.

Your customers don't care whether it is you, your ISP, ASP, or other outsourced provider who
screws up - they just know they can't do business with you when they want to. All that
matters
is that your e-business is failing to deliver - and that you need to hold someone accountable.

Meaningful Service Level Agreements (SLAs) are unambiguous, comprehensive, and
enforceable. SLAs commit suppliers to a defined quality of service: failure to meet explicit
service levels can result in penalties or even legal action.

Spectacular losses often follow e-business outages, particularly when SLAs are not in force.
The biggest hit is not necessarily loss of income or profit, but impact on stock values -
especially when markets are skittish. Some losses have exceeded $40 million with stock
values falling by 26%.

This new book offers the keys to effective SLAs with Internet Service Providers (ISPs) and
Application Service Providers (ASPs), which can go a long way toward averting catastrophic
losses as well as day-to-day headaches.

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EXCERPT FROM THE PREFACE
by Paul F. Kirvan, FBCI

“With all the interest in e-business, companies large and small are jumping on the
techno-business bandwagon. While this certainly sounds like a positive trend, much awaits
the company that hopes to enter – and succeed in –the world of e-business.

“First, one must have a good business plan, one that uses a model that factors in the unique
aspects of the Internet and today's advanced networking technologies. Second, one must
understand the nuances of e-business, as it is a different world than ten years ago; customer
relationships are orchestrated and managed much differently. Third, one must have a
well-designed technology plan, one that maps precisely to the overall business plan. Both
strategic and tactical business issues must be addressed in the technology plan. Fourth,
one
must have solid funding, whether from private resources or initial public offerings. Fifth, one
must have the right team members, thus ensuring the business objectives are met. Sixth,
one
must be prepared to adjust expectations and business processes as the company grows
and
matures. Finally, one must have a way of ensuring that the all-important technological
underpinnings of the company are able to continue functioning without interruption.

“This last issue is where we are especially concerned in today's e-business world. It is not
enough to design and implement the most technologically sophisticated systems and
network
services for a new e-business. What are really needed are programs that provide
documented assurances that equipment and network service providers will deliver their
goods on time, in proper working order, and remain in good working order. Loss of
information systems, business applications, Internet and worldwide web access, and voice
and data communications systems and networks could immobilize any enterprise.

“One of the most important ways to ensure that information systems and networks are
protected is to enact Service Level Agreements, or SLAs. These documents detail the
products and services to be provided, the expected quality and reliability of service, and the
penalties and remedies the vendor faces for failure to perform as contracted. But with all of
the nuances of e-business today, where do service level agreements fit into the overall
picture?

“This book by Andrew Hiles, an internationally respected consultant, author and educator,
provides important guidelines and insights about SLAs and how they factor into e-business.
The book is supported by anecdotal information, industry statistics, and product
descriptions.
One can actually get a solid picture of how an SLA ought to fit into the grand scheme of
things.

“But this book is not just for brand-new e-businesses. Established firms that are entering the
world of e-business, as a way of expanding into new markets or growing existing ones, will
find the wisdom contained in this book especially useful.

“The worst thing to do when entering the world of e-business is to be poorly prepared. One
of
the best things to do is to read this book. Use its guidance and insights. It will help ensure
that the systems you need for success are protected, thus ensuring that your e-business –
stays in business.

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CONTENTS

PREFACE

INTRODUCTION
1. Service Level Agreements: a Brief History
2 Service Level Agreements and E-services
3. Service Level Agreement — Definition
4. Service Quality - Definitions
5. The Service Level Agreement
6. Principles of Service Management
Figure 0.1: Making Service Meet Business Needs
7. Service Support Characteristics
Figure 0.2 Service Support Levels
8. Service Management Disciplines
Figure 0.3: The Service Management Toolkit
9. Availability Management
10. Performance Management
11. Capacity Management
12. Security Management
13. Change Management
14. Problem Management
15. Environment Management
16. Quality Management
17. Service Ownership
18. Point of Delivery
19. Internet-specific Issues
Table 1.1: Recent Surveys
KEY POINTS

1 THE E-BUSINESS CONTEXT
1.1 the E-business Context: the Need for SLAs
Table 1.2: E-losses
1.2 Service Level Agreement — Definition
1.3 What to Include in a SLA
1.4 Service Quality — Definitions & Metrics
Figure 1: Example of Network Availability and Response (Transit
Time) Definition
Figure 2: How Averages Can Distort User Reality - Supplier View
Figure 3: How Averages Can Distort User Reality - User View
1.5 Penalty Clauses
Table 2: Cost of E-commerce and Online Service Outages
1.6 Planning for Change
Key Points

2 SLAs for ISPs
2.1 Overview of ISPs & SLAs
2.2 America on Line (AOL)
2.3 AT&T
2.4 ISP SLAs
2.5 Psinet
2.6 Sprint
2.7 Uunet
2.8 Qwest
2.9 Cable & Wireless
2.10 Monitoring Delivery

3 SLAs FOR ASPs
3.1 Asp: Definition
3.2 Scalability
3.3 Asps - Benefits
3.4 How Viable Are ASPs?
Table 3.1: ASP Size
3.4.1 AOL
3.4.2 NetStore
3.4.3 Corio
3.5 Quality of Service
3.6 Optimization
3.7 ASP SLA Metrics
Table 3: Critical Component Analysis - Cumulative Availability
Table 4: Contacts for Monte Carlo Analysis Tools
KEY POINTS
4 SLAs FOR CLECS & OTHER *SPs
4.1 CLECS: Definition
4.2 About CLECS
4.3 Verio
4.5 Other Services; Package Hosting & Website Development
4.5.1 DataSoft
4.5.2 ClearDaze
4.5.3 Global WebNow
4.5.4 BriSpeed Technologies, Inc.
4.5.5 Intira
KEY POINTS

5 MEASURING & MONITORING *SP PERFORMANCE
5.1 Monitoring Tools and Their Use
5.2 Application Monitoring
5.3 Network Monitoring
5.4 CASE STUDY
5.4.1 Vigil
5.5 Systems Monitoring
5.6 Satisfaction Monitoring
5.7 Monitoring and Litigation
5.8 Measurement and Monitoring Tools: Summary
5.9 Web Sites

6 OUTSOURCING ISSUES
6.1 Background
6.2 Issues of Service "Ownership"
6.3 Outsourcing Disputes
6.4 Case Studies
6.4.1 Satisfactory - Info
6.4.2 AimNet
6.4.3 The Salvation Army
6.4.5 Bermuda.com
6.5 The Invitation to Tender
6.6 Analysing Quotes & Supplier Capabilities
6.7 Outsourcing Service Specifications
6.8 Outsourcing Vendor Evaluation Criteria
6.8.1 Criteria
6.8.3 Desirable Criteria
6.8.4 Preparing for Supplier Evaluation
Table 6.1: Supplier Evaluation Checklist
6.9 Handling Tenders
KEY POINTS

7 SOURCES OF HELP & ADVICE
7.1 SOURCES
KEY POINTS

ACKNOWLEDGMENTS

BIBLIOGRAPHY

APPENDICES

APPENDIX A: SLA FOR CACHE
A.1 SCOPE OF SERVICES AND SLA
A.1.1 Objective
A.1.2 Definitions
A.1.3 Availability
A.1.4 Support
A.1.5 Service Levels

APPENDIX B: EXAMPLE INTERNET ACCESS SLA
B.1 SERVICE: SCOPE
B.2 SERVICE LEVELS
B.2.1 Network Availability
B.2.2 Packet Loss
B.2.3 Backbone Latency
B.2.4 Outage Notification to Customer
B.3 Security Service Levels
B.4 Credits

APPENDIX C SLA FOR A MANAGED LOTUS NOTES SERVICE
C.1 SERVICE OVERVIEW
C.2 SERVICE LEVELS
C.2.1 Availability
C.2.2 Reliability
C.2.3 Response
C.2.5 Service Objectives
Table C.1: Services and Service Objectives
C.3 Credits

APPENDIX D: GLOSSARY

APPENDIX E: CUSTOMER SATISFACTION SURVEY

ABOUT THE AUTHOR

OTHER SLA TOOLS AND RESOURCES BY ANDREW HILES

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EXCERPT:

“INTERNET SPECIFIC ISSUES

“Internet based services, whether ISPs, ASPs or dot-coms play in a difficult and risky market.

“Time to market is deemed crucial – yet the old saying “you can have it cheap, you can have
it right, or you can have it now” remains true: at best, usually only two of those three are
attainable. At worst, two are sacrificed for speed to market. The Application Service
Providers are trying hard to prove all three can be achieved. There is danger, too, in quick
time to market – it is a matter of fact that most of those first in the market do not succeed:
the
hare is overtaken by the tortoise who sees, and avoids, the pioneer’s mistakes.

“While growth of voice traffic is growing at 10% a year, IP traffic is growing at 1,000% a year.

Individual growth of a service or a supplier can be unpredictable and dramatic.

“There are many inter-relationships and inter-dependencies. To the customer, this spells
danger. While SLAs cannot by themselves ensure continuity of supplier, SLAs are
imperative
with and between e-service suppliers to provide a degree of security and consistency of
service quality.

“E-business is growing and becoming increasingly an indispensable part of business
activity.
Loose virtual relationships are growing alongside more formal outsourcing and
contract-based services. What is still missing, in many cases, are meaningful Service Level
Agreements (SLAs) that are unambiguous, comprehensive, and enforceable.

“Typically SLAs will cover:

- Availability timings and service levels
- Maintenance and scheduled service outages
- Reliability (i.e. number of incidents of outage)
- Packet loss
- Latency service levels
- Outage resolution times (possibly in different priorities)
- Escalation procedures (possibly in different priorities)
- Customer / user satisfaction
- Service Performance Review items.

“Key weaknesses in existing Service Level Agreements include:
- Specification of effort or targets rather than of results
- Unclear service specifications
- Unclear definition of service level metrics
- Inappropriate or misleading measurements.”

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ABOUT THE AUTHOR

ANDREW N. HILES is founder and Chairman of Survive, the international user group for
business continuity planning and was a founding Director of the Business Continuity Institute,
the international body for certification of business continuity professionals. He is a founder
Director of Kingswell, international consultants. Having commenced his management career
with the Royal Air Force, he pioneered IT systems before leaving to take up a position within
the Finance Department of London Transport. Subsequently in their Central Productivity Unit
he was a Senior Projects Manager and later became responsible for the business
re-engineering function, implementing new services and major technical projects. He left to
take up a position with the UK Post Office as their first Business Systems Consultant
responsible for major projects. Andrew then joined the UK Atomic Energy Authority at the
Harwell Laboratories where he managed the supercomputing, mainframe and other bureau
and outsourcing services. Andrew is a pragmatic consultant and trainer in the areas of
Business Continuity Planning and Service Management.

Andrew left Harwell to set up Kingswell, an international training and consulting company
specializing in service management, customer - supplier relationships and enterprise risk
management.

He has helped hi-tech, financial, transport and government bodies to develop and enhance
Customer Support and Service Desk functions and has supported both customers and
suppliers in Service Level Agreements, Market Testing and Outsourcing.

Andrew is an international speaker on service management and has featured on conference
programs in the USA, Southern Africa, Europe, the Middle East and the Pacific Rim. He has
presented workshops and seminars on these topics for Frost & Sullivan (Europe), IIR/ IFF
(Europe and Gulf), AIC (South Africa), CEL (Hong Kong), UPOM (Middle East) and other
companies having also lectured at Ashridge, Cranfield, GEC Dunchurch and Henley
Management Colleges in the UK. He has broadcast on radio and TV.

He has published over 300 articles on service management and is author of two other books
on Service Level Agreements.

Andrew is a Fellow of the Business Continuity Institute, a Member of the British Computer
Society and a Freeman of the City of London.

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IN STOCK FOR IMMEDIATE SHIPMENT.

ISBN #0-9641648-9-2. 2002, 177 pages.
Order #DR590.
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