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Cloud providers' service level promise refusals offset by outage fixing incentive, says expert

Cloud providers may refuse to give meaningful guarantees about service levels to even their biggest customers but that can be offset by their incentive to fix outages more quickly, an expert has said.

IT contracts specialist Lindsey Brown of Pinsent Masons, the law firm behind Out-Law.com, said that suppliers of cloud solutions will generally offer fewer guarantees about the level of service they will deliver than other IT suppliers.

She said that whilst cloud suppliers have shown some flexibility in responding to customers' need for greater assurances around data protection, in light of the strict rules that apply in the EU around personal data processing and data security, those same providers have been less willing to agree to deliver enhanced service levels that are sought by customers.

"The main perceived advantage of using cloud solutions is the cost savings that can generally be gained by making use of a third party's IT infrastructure as opposed to buying, operating and maintaining your own," Brown said. "The cost savings can be delivered because cloud providers achieve economies of scale by selling commoditised solutions based on their own standard terms and conditions, thus eliminating costs involved in delivering bespoke solutions to customers, including in relation to delivering and reporting negotiated service levels."

"Even customers with a strong commercial position struggle to get cloud providers to commit to individualised service level agreements for this reason," she said.

However, Brown said that there are some non-contractual assurances customers can draw comfort from when deciding whether or not cloud providers offer suitable availability of services. She said some cloud providers proactively disclose the past availability of their services and any disruption to those services and added that competitive pressures serve to drive up cloud providers' service level standards and drive down the time it takes them to resolve availability issues when they arise.

"Cloud providers trade on reputation and any 'downtime' to their services can be very damaging to their business and ability to attract and retain customers," she said. "Cloud contracts can often be easier for customers to get out in the event of significant outage than contracts with other IT suppliers."

"While some businesses will be able to obtain better contractual assurances around service levels from non-cloud suppliers, cloud customers can gain some comfort from knowing that cloud providers are likely to be operating modern, up-to-date systems and will have a pressing business need of their own to restore availability quickly in the event that an outage occurs," Brown said.

Brown was commenting after Microsoft reported that the availability of some of its IT services via its Azure cloud platform had been interrupted on Monday. The problem was present in "multiple regions" and affected cloud services, automation, backup, site recovery and mobile services, among other applications available on the Azure platform, it said.

Brown said that an EU initiative to try to standardise cloud service level agreements could help provide cloud customers with better assurances over the availability of services they can expect to receive from their cloud suppliers in future.

"If a minimum set of service levels can be agreed across the cloud computing industry, cloud providers may start to try to differentiate themselves from rivals on the service levels they provide by offering customers enhanced service levels or service credits above the minimum market standard," Brown said. 

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