“Be sure to review your SLA” is advice you often hear from technology consultants and outsourcing specialists. In a talk last year, I too stressed importance of understanding your Service Level Agreement.

In light of the Amazon Cloud failure as well as some failures in SoftLayer’s cloud, I’ve learned something about an SLA – they are often worthless.

Here are 3 reasons why your SLA may be worthless

SLA Credits are Too Low

SLA financial or service credits rarely cover your losses. With many IT services and hosting in particular, simply covering a portion of the underlying IT costs rarely accounts for lost revenue.

While I realize SLAs are not intended to make up for lost revenue, I find many people turning to the SLA for some sort of relief after an outage. Unfortunately, the money offered by the SLA is more of an insult than a help.

Uptimes Guarantees Have No Teeth

Recently, I reviewed SLAs from several prominent hosting and IT service vendors. Only in one case (and it was a bit unclear) was the claim of a 100% uptime guarantee actually supported by the terms of the agreement.

Most providers offer 100% uptime guarantees. However, if you read carefully, you will soon discover that SLA credits do not kick in until after 30 minutes or more of downtime.

This is a nice little marketing tactic: Guarantee 100% service availability but build your agreements such that there is no financial liability to the service provider should they not meet the guarantee. In one case, I found that no SLA credits were available unless downtime exceeded four hours. That breaks down to around 99.5% not 100%.

So while you may have a guarantee of 100%, you may not be able to claim any SLA benefits, as small as they are, until services drop below much lower levels.

SLAs are Ambiguous

I’ve been working in hosting since the days of Robert Marsh and Rackshack (circa 2000). As I result, I’ve reviewed many SLAs. Too often, the terms are confusing, ambiguous and do not address what you really care about.

For example, many companies, including our own, will guarantee response times but not resolution times. Read that sentence again – there some terms — response time vs. resolution – that have very precise meaning to us as a service provider but may not be as clear to our clients

As a business owner, I suspect you care more about getting the problem fixed (resolution time) rather than how long it takes from someone to simply acknowledge your request (response time).

With fixed priced services, trying to define the line between what is and is not included can be challenging. I am always weary of a service provider who delivers anything “unlimited.” Often, somewhere, there are limits. When you hit these limits, you may find they were listed in the SLA but obscured by techno babble or legalese.

If you review your SLA and are not clear what’s being provided, ask. I cannot stress this enough. Ask specific questions in writing and save the responses.

Your SLA Disputes?

If you have SLA problems with a service provider, let me know. As more businesses move the cloud, understanding your SLA is more critical than ever.