SLAs and Tire Warranties

Business by on April 27, 2008 at 11:25 am

Both are nearly always useless, but are often used heavily in the marketing or sale of products and services. However, SLAs are frequently demanded by businesses. What gives?

But my tire has an 80,000 mile warranty
Read the fine print on your tire warranty. Here are a few snippets from Goodyear’s warranty:

Tires not eligible for replacement [greater than 2/32” of treadwear or 12 months] … will be replaced with a comparable Goodyear tire on a prorated basis. Replacement price will be calculated by dividing the tire’s retail price at the time of adjustment by the percentage of usable tread that has been worn off…You pay for mounting and balancing and any applicable taxes.

So, if your tire dies (due to normal wear and tear) at 70K miles in the middle of nowhere, you get a 8.75% discount on a new tire… if you can prove that you did all of the proper rotating, have your original invoice, etc. There is no compensation for you hassle or even the additional cost of having to put no tires on.

But my hosting SLA says I get 99.999% uptime
The crux of the reason why most SLAs are useless is that they have no teeth. Let’s look at Rackspace’s SLA (which guarantees 100% network uptime):

Upon experiencing downtime, Rackspace will credit the customer 5% of the monthly fee for each 30 minutes of downtime (up to 100% of customer’s monthly fee for the affected server).

If the Rackspace datacenter goes down again, and you lose a day (or more) of business, all you get back is 1 month of hosting fees. I expect that Rackspace’s outage (or 365 Main’s) cost ill-prepared customers way more than a single month of hosting fees.

And therein lies the problem with SLAs. No reasonable service provider is going to contractually put their business on the line for each customer (for large customers, the actual cost of a network outage can be huge). Their primary (and fully aligned) motivation is that if their service sucks, customers will go elsewhere.

EC2 and AppEngine don’t have SLAs
This meme echoes around the blogosphere from time-to-time. Companies are uncomfortable running on EC2 because EC2 has no SLA or or comment on AppEngine’s lack of SLA for that matter.

SLAs rarely make a service. Instead evaluate the service and their historic performance. Understand how they are prepared for outages. What happens to them if their service goes down? I’d contend that Amazon would face such a crisis of confidence that it would cripple their new offerings.

And do your own disaster planning.

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