Watch out, there’s a catch…

I’ve had a look through my sporadic LinkedIn posts and spotted a pattern.? I’m always on the scrounge with nothing to provide in return.? Usually it’s to find some work experience for one of my children. ?Actually, that’s a good point – https://www.dhirubhai.net/in/raphael-thompson-9b441a198/ youngest son, bags of potential, NO experience, takes a bit after me, although in most respects an upgrade (which he is oft known to point out).? If you’re looking for raw talent, he’s your man.

Anyway (see how I did it again), look: This time it’s different.? This time I have something to GIVE BACK, but as always, there’s a catch.? If you get to the end of this article and felt it wasn’t the worst way to while away a few minutes, there’s a favour I have for you. To get through to the ‘Catch’ I’d like to share with you a modified briefing note I issued in one of my existences on the topic of Operator/Service Provider SLAs.? Sounds a bit dry I know, but trust me, if you’re a Procurement person in particular, or an employee of company that provides service availability SLAs, you might find this of interest. Specifically, the steaming pile of ordure wrapped up in floral English that is the standard offering and remedy in the event of failure to meet them Vendors provide their customers.

If you were being taught this at Hogwarts it would be by Snape or Mad Eye.? You’re a long way from Herbology Harry…

Here’s an example of a clause you’re likely to encounter:

Vendor shall offer below parameters as part of SLA:

1.Service Availability

“Service Availability” shall mean an average network uptime excluding the periods of downtime as mentioned hereunder Exclusions (Valid Downtime) over SLA on a quarterly basis. Vendor commits to maintain Service Availability of

>=99.5% every calendar quarter. Service Availability will be calculated as per the formula given below at every quarter of a calendar year

For the first quarter post activation, number of days would be calculated on pro rata basis.

Whilst one knows intuitively what the calculation is, once you start looking at it closely the less clear it becomes. There should be a calculation of how many minutes per month constitutes the maximum availability.? This should be reduced by the total amount of excusable delays.? This represents 100% availability.? The actual amount of availability should be divided by this and multiplied by 100.? This gives the % that should be compared to the SLA target.? It is always worth getting a worked example of this.

As and aside, I found a cracking webpage that I’ll PM the link to anyone interested enough to want it.? It shows what a percentage SLA actually converts to in hours, minutes and seconds depending on what time frame one is measuring that SLA against.?

For instance, using the example above, Vendor’s 99.5% SLA equates to 10 hours and 52 minutes per quarter of outages above allowable exclusions.? The first item of note for me is the period of measure.? Quarterly or yearly SLAs are, in general, [Oh dear – reading this back now I realise I used some fairly rough Anglo-Saxon which is not suitable for public broadcast.? Insert your own word HERE].? It allows operators to get away with major outages (4 hours at a stretch) without any discernible impact on them.? It also allows them plenty of time to take remedial action under the banner of ‘Allowable exclusions’ which you’ll find being stretched in order for them to make network corrections.? The net effect of both is that the network can be down for quite significant amounts of time without it impacting their SLA.

It also means that if there is a significant outage in the middle of month 1 you have to wait until 30 days after the end of month 3 to receive any remedy.?Meanwhile, EVERYONE with even the slightest opinion on the topic will be pointing at the Dear Old Procurement Department and wondering which clown agreed to these terms.

Get previous performance reports from the Vendor to see how they compare to the SLA.? Ordinarily this will go to prove that you’re never going to win the SLA game, but you can open everyone’s eyes on what to expect.? Get clarity too on whether this is partial network (if anywhere on the network is down then this counts as an outage for the entire network) or entire network (the entire network has to be down to constitute an outage). This is an important distinction. In brief - is the reporting tailored to our experience? Granted - with such a poor SLA it's unlikely to make much of a difference.

Another thing to consider is that the availability figure is always calculated on the entire month.? Whilst this is lovely, with a lot of services we don’t really care about most of the month, we really care about working hours in whatever geography is being covered by the service.? You must check that the excusable outages are restricted to weekends and out of hours.? This seems obvious, but if there’s a carve out that allows them to include excusable delays for planned outages to repatch a system during peak hours this will not appear on your SLA calculation.? You’ll see below that this could allow them to get out of a couple of contractual levers that one should focus on.

Let’s see how this shakes out below:

1.MTTR (Mean Time to Repair)

“MTTR” shall mean an average time taken by VENDOR to close all complains related to downtime, faults and/or service unavailability reported by the Customer. Vendor shall provide services with MTTR of 4 hrs measured during the calendar quarter.

In case, Service Availability is measured below than 99.5% (or downtime is more than 0.5%), Vendor shall provide Service Credits to Customer as given in the below table:

Service Availability

SLA remedies of service credits are overwhelmingly useless and generally unenforceable (see the drop down below on this for reference).? The only times I’ve had to go to the mattresses on availability is when there has been a protracted failure to provide reasonable service over a prolonged period of time.? It has always shaken out this way:

Someone with a prefix of ‘C’ in their job title receives a complaint.? The nature of this complaint falls into two broad categories:

1 – “There’s a major outage (again).? What the hell is going on?? I know someone else that can do this much better / why do you put up with this / what are you doing about it?"

2 – “This lot’s service is patchy.? Service keep dropping and we/customers keep having small irritating and very public disruptions. If you can’t get them to improve, can you kick them out?”?

First thing of note is that,using our example above, no matter the duration of outages beyond that 97.5% bottom limit there is no further remedy.? This is the real battleground.? Before we get there though, let’s see what the numbers mean:

97.5% = 2 days 6 hours. Check the remedy of this.? It is 3 days?? In other words – if you are out of action for 2 ? days and the compensation is 3 days? the actual ‘compensation’ is ? day fee.? As this compensation usually represent the full and total limit of the Vendor’s liability too you’ll be left holding an empty sack.? This should be the real focus.?

I would take it as read that you will always look at the SLAs being made available by competitors and what is standard in the market and identified anything clearly anomalous to the provider’s offering.? Using this example – Vendor are offering 99.5%.? If Vendor’s main competitors are offering, say, 99.95% alarm bells should be ringing.

Anyway – that last SLA is the problem one. No matter how bad the service is your only remedy is capped at 4 days’ rental.? It is highly likely that the SLA will be the sole remedy and we are not able to terminate the contract (in fact it's likely to be specifically excluded).? Always try to get in an additional baseline SLA, below which failure to provide service (probably on a multiple strike basis and you’re out basis) kicks in.? ?

Here are a couple of clauses to look at and play around with:

• Either party may terminate this Agreement by serving notice on the other party in the event that the other party has been in material or persistent breach of this Agreement (and in the case of remedial breach has failed to remedy the breach within 15 days of notice of the breach having been served by the other party). Persistent breach shall include failure to meet the [include whatever level of SLA is appropriate, but as an example] minimum service availability SLA given in [insert ref] on two consecutive months.
• Chronic SLA Failure.? if Vendor fails to meet a Service Level in any two months in a rolling six-month period during the Subscription Term, Customer may terminate the Agreement upon written notice to Vendor. In the event of termination under this article, Vendor will refund to Customer the balance of any prepaid amounts for any Services under the terminated Order.??

Mmmm…grim reading eh.? But I hope something you find useful, or at least thought provoking.? Now you’re all experts on SLAs here’s something else to keep you awake at night.? Once you’ve got through the calculation farrago and general restriction of further liability, take time out have a swim in the gotchas contained in the small print under ‘Exclusions’ and how caveats are included to make your SLAs even less enforceable.

Note – in our example above, hiding in plain sight: An outage is only considered an outage if you complain about it, and then it is calculated from the time you put the complaint in.?

There’s also be fun to be had with exclusions for ‘partial outages’ not counting, and the infinite hilarity of intermittent service and the dreadful customer experience created not adding up to sufficient outages to get a credit, let alone terminate the service.

I hope some of you found this article of help, and if not, at least interesting, and if not that, thought provoking.? I suspect a lot of fellow procurement professionals will have read this and signed with the inevitable familiarity of it all. If you represent an operator do you see all of this as fair game, or am I off the mark?? Well done for getting to the end either way.

And now the quid pro quo (I’ve long promised myself I’d write an article about how angry I get when I see Latin dropped into contracts.? I’ll save that for another day).

This is Phoebe Ford https://www.dhirubhai.net/in/phoebe-ford-02152a225/. She is the middle daughter of one of the greatest friends I ever had. I would regard it as a personal favour if you’d take some time out to participate in her research for her dissertation on Mindfulness which finishes at the end of April 2024.? If you do, please add her as a LinkedIn contact.? She’ll send you the joining instructions.? The survey and video will take around 15 minutes to complete.

Thanks all

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