Question

Describe the significance and legal implications of SLA in cloud computing with example.

Answer 1

Service level agreement(SLA)- A service-level agreement (SLA) is a contract between a service provider and its internal or external customers that documents what services the provider will furnish and defines the performance standards the provider is obligated to meet.

SLAs establish customer expectations with regard to the service provider's performance and quality in a number of ways. Some metrics that SLAs may specify include:

• Availability and uptime -- the percentage of the time services will be available.
• Specific performance benchmarks to which actual performance will be periodically compared.
• Application response time.
• The schedule for notification in advance of network changes that may affect users.
• Help desk response time for various classes of problems.
• Usage statistics that will be provided.

An SLA may specify availability, performance and other parameters for different types of customer infrastructure -- internal networks, servers and infrastructure components such as uninterruptable power supplies, for example.

Overview of SLAs: Penalties and exclusions

In addition to establishing performance metrics, an SLA may include a plan for addressing downtime and documentation for how the service provider will compensate customers in the event of a contract breach. Service credits are a typical remedy. Here, the service provider issues credits to the customer based on an SLA-specified calculation. Service providers, for example, might provide credits commensurate with the amount of time it exceeded the SLA's performance guarantee.

The SLA will also include a section detailing exclusions, that is, situations in which an SLA's guarantees -- and penalties for failing to meet them -- don't apply. The list might include events such as natural disasters or terrorist acts. This section is sometimes referred to as a force majeure clause, which aims to excuse the service provider from events beyond its control.

Who needs a service-level agreement?

SLAs are thought to have originated with network service providers, but are now widely used in a range of IT-related fields. Companies that establish SLAs include IT service providers, managed service providers, and cloud computing service providers. Corporate IT organizations, particularly those that have embraced IT service management (ITSM), enter SLAs with their in-house customers (users in other departments within the enterprise). An IT department creates an SLA so that its services can be measured, justified and perhaps compared with those of outsourcing vendors. Service providers need SLAs to help them manage customer expectations and define the circumstances under which they are not liable for outages or performance issues. Customers can also benefit from SLAs in that they describe the performance characteristics of the service, which can be compared with other vendors' SLAs, and also set forth the means for redressing service issues -- via service credits, for example.

For a service provider, the SLA is typically one of two foundational agreements it has with customers. Many service providers establish a master services agreement to establish the general terms and conditions in which it will work with customers. The SLA is often incorporated by reference into the service provider's master services agreement. Between the two service contracts, the SLA adds greater specificity regarding the services provided and the metrics that will be used to measure their performance.

Types of SLAs: Evolution

Over the years, SLAs have expanded to govern a growing set of IT procurement models. When IT outsourcing emerged in the late 1980s, SLAs evolved as a mechanism to govern such relationships. SLAs set the expectations for a service provider performance and established penalties for missing the targets and, in some cases, bonuses for exceeding them. Since outsourcing projects were frequently customized for a particular customer, outsourcing SLAs were often drafted to govern a specific project.

Important points-

• Service Level Agreement (SLA) describes agreement on non-functional requirements between provider and customer.
• SLA consists of service level objectives (SLOs) that are evaluated according to measurable Key Performance Indicators (KPIs).
• Automatic SLA protection enables further increase of the system utilization and system profit.
• In currently available systems only some basic SLAs like "uptime over a time period guarantee" are available.

Service models

Cloud is divided into three basic service models, each addressing a specific business need.

• IAAS (Infrastructure as a Service). This is the most basic of the cloud service models. The end customer is purchasing raw compute, storage, and network transfer. Offerings of this type are delivered as an operating system on a server with some amount of storage and network transfer. These offerings can be delivered as a single server or as part of a collection of servers integrated into a VPDC (virtual private data center).
• PAAS (Platform as a Service). This is the next layer up, where the end customer is purchasing an application environment on top of the bare-bones infrastructure. Examples of this would be application stacks: Ruby on Rails, Java, or LAMP. The advantage of PaaS is that the developer can buy a fully functional development and/or production environment.
• SAAS (Software as a Service). This currently is the highest layer in the cloud stack. The end customer is purchasing the use of a working application. Examples of this are NetSuite and SalesForce.com. (This service is not the focus of this article.)

   Why is Service Level Agreement important in Cloud Computing?

Many cloud providers are vague on the specifics of the underlying hardware and software stack they use to deliver a virtual server to the end customer, which allows for over commitment. Techniques for overcommitting hardware include (but are not limited to):

• Specify memory allocation and leave CPU allocation unspecified, allowing total hardware memory to dictate the number of customers the hardware can support

• Quote shared resource maximums instead of private allocations

• Offer a range of performance for a particular instance, such as a range of GHz

• Overallocate resources on a physical server, or thin provisioning. Commercial virtualization management software such as VMware or Virtuozzo offer the ability to overallocate resources on the underlying hardware, resulting in reduced performance during peak loads.