This document discusses shortcomings of traditional service level agreements (SLAs) and proposes an alternative approach using performance decrements. It notes that while SLAs are needed, they are often disliked due to unrealistic terms and paltry penalties. The document then recommends focusing SLAs on major outages instead of minor issues by using bonuses for exceeding targets and penalties for missing critical thresholds. It acknowledges challenges in implementing this approach but provides examples of how decrements could work in practice and lessons that could improve more traditional SLAs.

1. Toward a New
Perspective on SLAs
Justin G. Castillo
Levine Blaszak Block & Boothby LLP
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2. Topics
 Why We Need SLAs
 Why We Hate SLAs
 Breaking the SLA Mold
 Decrements in the Real World
 An Action Plan for SLAs
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3. We need SLAs (or something
like them)
 Many applications need
performance metrics
 Customer experience can be
impacted
 Internal stakeholder issues
 Getting what you pay for
 Get carrier to put skin in the game 3

4. But we also hate SLAs
 The network is the network
 Stock SLAs are a joke
 Inverse credit/performance
relationship
 Carve-outs/restrictions
 The need to jump through hoops
for paltry recoveries
 The vendor doesn’t feel your pain 4

5. So what do we do?
 Give up
 Get redundant vendors for
everything
 Improve SLAs on the margins
 Change the paradigm
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6. Changing the SLA paradigm:
performance decrements
 Goal: forget the small stuff; focus
on the BIG problems
 Move past pure credits and find
other ways to incent performance
 What about bonuses for exceeding
numbers?
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7. Challenges of decrements
 Contract integration
 Selling it to the vendor – you need a
certain size of spend/complexity
 Pricing considerations
 Achieving the right mix of
• points,
• penalties &
• pain
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8. Operationalizing decrements
 Tracking decrements (reporting)
 Following through
 Modifying/refining the model
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9. Decrement case study
 What happened
 What worked
 What needed refinement
 Lessons learned
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10. Can we port any of these
lessons to non-decrement
SLAs?
 Yes (to some extent)
• Reporting
• Account team support/escalation
• Periodic SLA reviews
 Breaking the rigidity that comes
with focus on the network alone
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