Negotiating a SLA for SaaS

If you are considering using a SaaS (Software as a Service) solution, John Heckman has some great advice on negotiating a Service Level Agreement. His post includes several tips on provisions to try to get included in the agreement, including:

– Specify levels for uptime, response time, support coverage, and escalation of issues (you don’t want to get stuck on hold with first-level support for hours)
– Is there a provision to have a backup of the data on a local server? This is the reverse of the usual “Internet Backup” scheme – here your data is on the internet and your backup is local, not the other way around.

Some of his best advice comes at the end of his post, however, where he points out that now is the time to negotiate for these provisions:

You can be almost guaranteed that very few, if any, of these types of provisions are contained in a standard SLA. As always, Read the Fine Print!! Companies are trying to push everybody to SaaS formats (much more profitable for them), so right now it is a buyers’ market.

4 thoughts on “Negotiating a SLA for SaaS

  1. I’m a fairly new reader, but I also enjoy reading your blog 🙂

    I’ve noticed many SaaS companies provide a terms box, about the size of this comment box, that you can scroll through and accept. I wonder how many people actually read this fine print. It indeed seems like a hastened formality.

    A quick plug for our company, ConXPoint. Our SLAs are often reviewed in a web conference and electronically signed using our e-signature tool. The signer gets a PDF copy via email for their records. We also specify free training, support coverage, as well as backup provisions. And, the print isn’t “Fine;” it’s actually readable by us not versed in legalese 🙂

    This is an interesting subject, but I hope it doesn’t make people wary of using SaaS. SaaS still provides many advantages that traditional installation software cannot, such as month-to-month agreements. If the SaaS provider doesn’t meet expectations, you can quit. So we put extra emphasis on the last “S” in SaaS, Service, because customer services is just one of our key differentiators.

    Thank you for letting me comment.

  2. SLA’s are just plain evil. 99.9% up time is insane. Factor in responce time and requirements to fix the highest severity issues (sev-1) in 2 hours or less. Imagine being the lowly person on call who recieves the call while on 94. You could be stuck in traffic during rush with the construction for an hour before being able to log in. And with so many companies down sizing IT staff, more and more SLA will start getting missed.

    Another consideration is how both sides review and negotiate a missed SLA. What happens when a down server isn’t reported for 3 hours. When did the clock start counting on this? What if the cleint needs to approve an emergency fix but the client is unavaialbe by phone for 2 hours because they are at the theater (back up on vacation).

    The sales people that negotiate SLA’s and the contracts generaly don’t have an idea of what is really required to keep a system running, yet they set the financial penalties for the SLA’s.

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