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Perception, Reality, and Service Level Agreements (SLAs)

Comedy comes from pain. Art, too. Sure, some people are so creative that amazing stuff just pours out of them, but just as creativity springs from need, pain is the largest precursor to artistic expression.

So what alternate reality creates Service Level Agreements?

I came across this post at GigaOM, and something I’ve been telling clients for many years sprung to mind immediately: Service Level Agreements (SLAs) are Nonsense.

I even commented there, using my two personal favorite examples of the ludicrousness of SLAs and other numeric-based service guarantees. Pure and simple: you cannot adequately define customer expectations or the customer service contract by attaching numbers to them.

The example I’ve used for the longest time is about software performance, and strictly speaking I don’t believe there’s ever been a real “Service Level Agreement” attached to it, although it’s certainly implied. Typically, Optical Character Recognition (OCR) software is promoted using claims like “99.9% accuracy guaranteed!”

Now do the math. OCR is Optical CHARACTER Recognition. The software recognizes one letter at a time when it converts a printed page to a searchable digital copy, meaning that 99.9% accuracy equals one error for every 1000 characters, or approximately 2.5 errors on ever page of text you ask OCR software to recognize. Now imagine you OCR a ten page document, twenty-five errors are made, and you need to wade through that ten pages to find those errors. At that point I’m not sure using the OCR software saved any time over just re-typing the printed document. And that’s with the very impressive sounding 99.9% accuracy. Drop the claim to 99%—which still sounds great, right?—and you’re up to 250 errors in that ten-page document.

Nice Guarantee, huh? Now change the focus to Cloud Computing.

I’ve said recently that you need to get serious about moving your computer operations into the cloud, and I’ll stand by that. But if the stuff you work on isn’t in a box that you can touch and work with directly—and in fact is in a place that you can’t even identify, as is almost always the case when your work is in the cloud—you need to have some understanding of the potential problems.

Cloud Computing providers will throw around numbers very much like companies that sell OCR software. 99.9% Up-Time Guarantee! Let’s dissect that. 99.9% up-time in a month equals approximated 45 minutes of downtime being “allowable” under the SLA that is used to sell you the cloud computing service. That’s fine, as long as it happens at 3 AM and nobody is using your stuff. But what if your operations aren’t about your people in your time zone? What good is that Service Level Agreement if you run a global e-commerce operation and even in the middle of the night a forty-five minute outage costs you thousands of dollars?

Drop to that more credible 99% level. Now, 7.2 hours of downtime is allowed each month before you have any right to compensation under the Service Level Agreement. And the compensation you’re entitled to is generally defined with words that sound like “in no case will compensation be greater than the amount we charged you for service in the month when the SLA isn’t met”. That’s one full business day. Take me out for a whole business day, and I lose … a whole business day of revenue, employee productivity, and who knows what else.

SLAs don’t help you. They simply restrict liability for your service provider.

Service Level Agreements, pure and simple, are a bad idea if you’re the service purchaser. When purchasing services from a Cloud Computing or any other type of service provider, make sure your customer service agreements are defined in human terms, not numerical abstracts. And Perception is Reality.

Need help with that whole customer service thing? Contact Me Here.


  1. I’m glad you pointed out that fact. I think we are number people by nature. As leaders we think you can’t measure something unless there is a number attached to it. And then all we can focus on is the number.

    Yet how many times do we underestimate value? Value is different from numbers because we look at the benefits we gain as a whole instead as a singular piece.

    Think about the last time you found true value. You can’t go telling everyone you got a piece of trash for a really good price. There has to be something there.

    SLAs should focus on value first.

    • Thanks, Bryce. It really does amaze me that software/services are marketing using numerics like SLAs when they really don’t mean anything, but you hit it on the head: we’re numerically driven.

      The kick in the pants on that is that as the Internet continues to take hold and the way business gets done turns ever more to “what can you do for me?” instead of “how do you measure that?” it’s going to shift; it has to.

      Maybe that’s the good news here …

  2. I’ve been using optical character recognition software for a couple of months, I have Smart OCR. I am quite pleased with it, almost no errors for me even for low-quality documents.

    • Thanks, George. And I accept the idea that OCR “works”. I just don’t think it works well ENOUGH, and that trumpeting accuracy numbers for Optical Character Recognition software is the wrong way to market it.


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