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Time to negotiate a better data centre deal

Despite the massive importance of a data centre in today’s extended business infrastructure, and the huge divergence in requirements, just 10 per cent of companies opt to negotiate the data centre terms & conditions – with the rest opting for the standard Service Level Agreement (SLA).

In a market that is beginning to embrace radical change – from hourly power costs to free service if power outages occur, Jon Arnold, Managing Director of Volta Data Centre, insists, it is time for companies to look beyond vanilla SLAs and standard service credits and demand that data centres back up their resilience and availability promises with SLAs that really make a difference.

Promises, Promises,

Most data centres promise 100 per cent availability and 100 per cent resilience. But what happens when an outage occurs? Under the typical Service Level Agreement (SLA), the standard service credit of 5 per cent of the monthly fee kicks in – rising as the outage continues, until typically reaching the 30 per cent cap. Given the complete standardisation across the data centre market, it is little wonder that just a fraction of companies look to negotiate the SLA and, if possible, push for a small percentage service credit increase.

But is this really good enough for any business? When even a ten second outage can have significant financial and reputation ramifications, especially for a cloud or infrastructure provider, just what is the value of a 5 per cent monthly rebate?

The problem is that companies have had little leeway for negotiation in a market that has got away with vanilla SLAs for too long. Why are data centre providers not delivering SLAs that match their much vaunted investment in resilience and availability? Is it because, perhaps, when you look beyond the headline promises, that resilience actually looks a little more fragile than at first glance?

Understanding Resilience

There are, of course, degrees of resilience and availability. While one data centre can boast failover generators should the main electricity grid fail; another can offer two separate power lines from two separate grid supplies – ensuring uninterrupted service even if part of London experiences black out – as well as batteries and generators. While one can cite 11KV power connections; another can point to two resilient power connections from two main grid stations and its own 33kV transformers on site – it is all a matter of scale. Similarly, while some data centres are reliant on traditional and inefficient CRAC (Computer Room Air Conditioning) and low density racks; others can boast high density racks and row based cooling, delivering a completely different quality of experience.

Given this divergence in actual data centre resilience and quality, isn’t it time the market reflected this difference in the SLA and terms and conditions? Wouldn’t that be a clearer way for organisations to determine the value of different data centre providers? It is not just data centre differences – all companies have different requirements. How much more consequential loss would a cloud provider incur with systems outage that may affect tens or hundreds of customers, or a city firm’s trading desk, when compared to a business co-locating a number of non-critical operational systems?

When data centre customers have such different requirements, and the implication of outage will have such varied results, is the standard, inflexible, service credit based SLA still relevant?

Shake Up

It is time to shake up the data centre market. One radically different approach to traditional, inflexible contracts is the evolution towards hourly charging. A pay-as-you-go service means businesses are charged on an hourly basis for the amount of power used, with itemised billing to enable companies to accurately monitor their power consumption by the hour.

Another new model is to provide organisations with a choice of SLA – the standard SLA offering the traditional service credits and a top level SLA providing one year of free service credit if 100 per cent power availability is lost to a rack. For companies in the finance and legal markets requiring the guarantee of 100 per cent uptime, this top level SLA option is compelling.

The reality is that despite the ubiquitous model, not all data centres are the same and not all companies have the same data centre requirements. A vanilla SLA across this market makes no sense – and the fact that just 10 per cent of companies look to negotiate that SLA simply reflects the frustration many feel about the lack of choice.


If a data centre really is carrier-neutral and totally confident of its power resilience, the SLA could and should reflect that fact. Those data centres without such confidence will have to remain with the standard, 5 per cent monthly service credit model. The result will be a far more transparent offer for the customer base.

The cloud has transformed the way businesses operate and data centres are recognising the need to become more competitive, to make changes to service offerings and create clearer market differentiation.

Changing the SLA small print is set to increase choice across the data centre market – and will ensure companies finally match resilience and availability promises to business reality.

Image source: Shutterstock/wavebreakmedia