One of the companies I'm talking to has an interesting SLA (service level agreement). For an ethernet feed, they promise that in any one month, the availability will be at least 99%; that means an outage of 8 hours is just over the allowable amount. But what happens, I ask, if it goes over 8 hours? Do I get an apology? A box of chocolates? Compensation?
The answer, of course, is compensation. But how much?
An eight hour outage (which is really very bad, it means that business is at a stop) will generate £28 compensation, and that's not really much of a "sorry". But what's really hilarious, is if you have an outage for the entire month. So you've paid for a month's connectivity, and you've had none whatsoever. In that case, you get a third of your money back. It's like, you go into a supermarket to buy a loaf of bread, they don't have any bread, but they still charge you 2/3 of what a loaf would cost.
I pointed this out to them. Of course, it is pretty unlikely - well, extremely unlikely - well, it just doesn't happen - that an outage would last for a whole month. So really, they could be a lot more generous in their offer of compensation.
Maybe as much as getting half your money back?
But more seriously, another vendor offers a 50% refund of the month's bill if the outage is between 4 and 11 hours, 100% if it's more than 12 hours. That gives me a warm feeling that they will bust a gut trying to fix a problem.
I would expect that the network engineers would do that anyway - they just want their network to *work*. But what about the accountants? When the network engineers say to the accountants, "we want to have a spare BFG9000 onsite, so that if the live one breaks down, we can slot in the replacement in five minutes, instead of ordering a new one that arrives next day". And the accountants work out what it would cost the company to have a 24 hour outage, and compare that with the significant cost of the BFG9000, and decide, quite rationally, that it'll be more cost-effective not to spend the money on a unit that will probably never be used.
And that's why having serious compensation penalty for breaching the SLA is a very good idea.
Moral of this story - when a vendor talks to you about how great their SLA is, be sure to find out to what extent they put their money where their mouth is.