Understanding the Mechanics of Service Levels

While AWS services have returned to normal from the widespread outage earlier this month, this outage is a good reminder of some of the ongoing activities associated with the lifecycle of technology agreements. Many cloud service providers offer service levels in connection with their services, which are commitments from the cloud provider as to how the service will perform.  For example, vendors will commit to their services being “up” or operational for a certain percentage of time in a month, that the vendor will respond to issues with the services within a certain time frame, and that the vendor will resolve the error in a timely manner.  In the event that these services levels are not met, vendors will often provide credits to their customers, and in some cases provide a root cause analysis of the issue in an effort to mitigate its reoccurrence.

The service levels and credits offered by vendors are straightforward, however, the practical deployment of service levels include operational nuances that are important for receipts of these services to understand:

• Measurement of uptime. When negotiating an uptime commitment, it is important to consider what is excluded from the commitment for the service to be up and functional. For example, vendors may try to exclude maintenance or certain hours from the uptime commitment.  It is important to understand what is carved out from the uptime commitment to ensure that services are operational when needed.
• Monitoring of uptime. Whether the vendor or customer is responsible for monitoring the availability of the services varies from contract to contract.  It is important to understand whether this is your organization’s responsibility because without proper monitoring credits will not be available.
• Provision of credits. Similar to monitoring of uptime, whether a credit is provided to the customer is sometimes dependent on the customer notifying the vendor that it is eligible for a credit.  Understanding this mechanism is important for receiving remuneration for service level failures.

The Baird Holm TIPS attorneys are always available to assist with contracts related to service levels in technology agreements.