In-Depth

Survey: SLAs Ratchet Up Pressure on IT

A study of over 1,000 data center administrators sheds light on how service level agreements are being used and the penalties imposed when performance falls short.

• By Stephen Swoyer
• 02/10/2004

SLAs have long been a fact of life in the hosting and services space, in which providers must guarantee maximum levels of application availability and minimal downtime. But in a survey of more than 1,000 data center administrators in the United States and across the globe, Dynamic Markets found that 59 percent of them have implemented SLAs with their own lines of business.

In organizations in which SLAs have been implemented, researchers say, the vast majority are structured to address agreed-upon levels for processing performance (37 percent), system availability as a percentage of uptime (35 percent) and restoration times following an outage (29 percent).

The study also highlighted a telling difference between SLA implementations in the U.S. and elsewhere: Formal SLAs seem to be more popular in U.S. companies, for example, where 44 percent say that restoration times after an outage are covered by formal SLAs, compared to just 26 percent for companies in Europe, the Middle East and Africa (EMEA).

Elsewhere, researchers report that 88 percent of IT organizations implementing SLAs for key services are typically required to report to other parts of the company about the effectiveness of their support. At the same time, however, 10 percent of IT organizations say they never do, while another 10 percent in EMEA countries say they have no set policy for reporting and do so only on an ad hoc basis.

When IT organizations do have SLA reporting requirements, Dynamic Markets found that only 43 percent of them report to top company management, however. The majority report to departmental heads (37 percent) or to operations directors (20 percent). All told, only 30 percent report to finance directors or CEOs.

Penalties for Missing the Mark

What happens when an IT organization fails against an SLA? Researchers say that in the most common scenarios—i.e., those associated with company performance—42 percent of American respondents (compared to just 15 percent of those in EMEA companies) believe that an IT administrator’s job could be at stake, while another 20 percent think other IT staff could be fired or reprimanded.

Survey respondents said that failure against an SLA doesn’t always result in a hail of fire and brimstone from above, however: 45 percent of American survey-takers and 16 percent of EMEA respondents said their organizations would purchase new data center hardware to ensure compliance with SLAs. Another 36 percent of U.S. and 16 percent of EMEA IT administrators said they’d purchase new software to address the problem.

Elsewhere, 24 percent of U.S. respondents (compared to just 8 percent in the EMEA) suggested they would consider various steps to improve their organization’s IT monitoring processes, including assigning more people to monitor IT systems. Finally, 31 percent of respondents in U.S. companies—compared to 13 percent in EMEA organizations—said internal business processes could be examined and improved.

One caveat: the research study was sponsored by storage software giant Veritas Corp., which—like many of its competitors—has recently made noises about utility computing. Not surprisingly, the study makes an excellent case for utility computing technologies, finding that in spite of the array of server hardware in place at most IT organizations, only 10 percent of companies are measuring system utilization in real time across all of their servers and storage hardware devices. What’s more, 57 percent of companies say they’re utilizing at most 70 percent of their current server capacity, with only 2 percent claiming 100 percent utilization and 11 percent saying they’re unsure of usage, in spite of the majority of respondents (60 percent) believing a server utilization rate of 70 percent or less is unacceptable.

Similarly, Dynamic Markets researchers found that the largest organizations typically support a benumbing array of management interfaces—as many as 100,000. (For the record, the average for all respondents was 325, with a median of 3.) Only 10 percent of respondents said they have a single user interface that lets them monitor and measure utilization, availability, and performance across all of their systems. Finally, organizations typically maintain from one to 150 employees to monitor and manage the performance of their data centers, with an average of 6 and a median of 3.

Also of interest: most companies with formal chargeback systems also have formal SLAs. Researchers found that companies that have implemented chargeback systems also report facing more potential consequences if they fail to meet those SLAs. Nearly one-quarter said that IT staff could be fired or reprimanded if SLAs are not met, compared to only 9 percent without chargeback systems.