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Cloud SLA

The current trend of computing is moving to the cloud.  It is easy; it is convenient; and it is cheap.  The main worries on cloud computing are security and availability.  The competitive environment of this market is very intense, with a lot of entrants competing on price.  Besides speed and capacity, on which all service providers could have similar offers, the battle ground for niche and diversity is also on security and availability.

There is no compromise on security.  Everyone is going for maximum security.  Cloud service providers all ensure that their cloud is safe, plus some added-value security products for the paranoid customers.

The latest business model for the cloud service providers is the SLA – Service Level Agreement.  It aims at the other major concern – availability.  IT World has an article recently on the issue.

In the service agreement with customers, there is always a provision on service availability.  It is not possible to maintain an uninterrupted service continuously all the time.  The normal service level guaranteed in the agreement is usually 99%.  Recently, Hewlett-Packard and Amazon Web Service both introduced different types of SLA at different price level.  The top level agreement offers an up-time of 99.95%.  Keeping a vigilant watch on the running of the cloud and providing intensive resilience is resource demanding.  Although 99% availability is often good enough for the average users, it may not be desirable for the enterprise users, especially for businesses which are running and making money 24 hours a day.  Also, 99% availability could mean a monthly average.  There is the danger that the cloud may be down for 7 hours, which would be disastrous.

To have a better assurance on availability, enterprise users are willing to pay more.  Cloud service providers could generate better revenue by tiering SLA.  The offer of Hewlett-Packard is credit to bills based on service availability.  Should the availability level falls below 99.5% in a month, there will be a 20% discount on the bill. Amazon Web Service offers a similar credit of 10% discount should the service level falls below 99.95%.  But both would still hardly compensate the customer’s real loss.  The latest plans offered by Rackspace are in three tiers: Managed, Intensive and Critical, with a tiered price level.  The bottom line is: If customers are willing to pay more, the cloud environment will be managed better under a better SLA.  From the industry point of view, the present situation is still messy.  Thus there are a lot of opportunities in competing in this niche.  It is predicted that cloud SLA will be a major battle ground when cloud computing further heats up in the near future.