Firms, vendors not keen on lower SLAs

Despite economics of easing parameters in service level agreements, Asia's tech stakeholders warn against going down that path just to save money.
Written by Vivian Yeo, Contributor

Despite being touted as an effective cost-cutting measure, lowering the parameters in service level agreements (SLAs) is not a move companies in Asia are willing to take.

Last month, a Gartner analyst recommended IT heads lower business expectations around service levels because striving for perfection "costs too much" in the current economic environment.

Colin Quek, CIO of Raffles Medical Group, told ZDNet Asia that any decision to lower SLAs will not be an easy one. There needs to be substantial dollar savings to justify the increased risk, Quek noted in an e-mail interview.

In addition, SLA reductions cannot be initiated solely by the IT department--there must be concurrence between the various business units, he said.

Quek explained: "While it is intuitive to think of lowering SLAs as a way to cut costs, the more important consideration is really whether the business side of things can tolerate the potential service degradation."

Nitin Bhat, Asia-Pacific region senior vice president for ICT practice at Frost & Sullivan, noted that businesses in the region are not looking to implement any "deterioration in service levels".

In the current economic climate, companies would ideally want to have the same service levels at a lower cost, but that may not be practical, Bhat said. At the same time, they are open to establishing flexible contracts, which means that a "number of things are on table for discussion".

According to Quek, there is room for negotiation should companies decide to lower SLAs.

"There is probably an opportunity to have different SLAs for different departments, depending on whether it makes economic sense for them to tolerate a longer downtime," he said. "For instance, a backroom office worker might be able to work on a colleague's PC [during downtime], but a front-counter [officer] dealing with customers may require a near-immediate fix."

In the case of service availability, Bhat said, a contractual level of 97 percent would mean that out of 30 days a month, there could be a full day of downtime. That may not be viable for many businesses, he pointed out.

Tata Consultancy Services (TCS) also told ZDNet Asia its customers were not looking to review their SLAs with such intent. Neither does the IT services company recommend such moves, its Asia-Pacific executive vice president and regional director Girija Pande, said in an e-mail.

In fact, Pande noted, TCS recommends a greater focus on customer service levels He added that organizations should explore streamlining their IT operations "in a manner that does not compromise SLAs".

"We propose multiple alternatives that customers can adopt to reduce their TCO (total cost of ownership). These range from moving higher volumes of work to lower-cost countries in order to leverage our global delivery network, to leveraging our solution accelerators to provide higher value," he said, adding that these included shared services model, application virtualization, service standardization and automation, and TCS' pay-per-use offerings.

Richard Bowman, regional manager for South Asia at Symantec's MessageLabs, said companies can afford to lower IT service levels in "non-critical software and hardware". However, for critical services such as IT security within an environment of rapidly-growing malware, companies should "always strive to receive the highest service levels possible", Bowman said. MessageLabs offers SLAs that boast 100 percent protection against viruses and 99 percent in spam management.

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