Cutting costs with variable SLAs

CIO Connect CEO Nick Kirkland looks at how service level agreements (SLAs) are often overlooked as vehicles for reducing costs.

Mark Twain once said that history never repeats itself, but it does rhyme - and no phrase is truer when it comes to the economy and its knock-on effect on companies and their expenditure, writes Nick Kirkland, CEO at CIO Connect. 

In the current economic climate, as in every recession, boards are looking to cut costs where they can and the IT budget is often one of the first to be reduced, or at least frozen. Ensuring IT is able to demonstrate it runs lean, and is still able to make savings for the total operating costs of the organisation is critical.

The difference with this recession, however, comes in how companies can make the cuts - it's not enough to simply stop buying kit and licences in order to reduce expenditure.

The world of IT doesn't work like that anymore, so IT decision makers are having to look more closely at where they can make the cuts, without affecting the service they provide to their users.

One area that's often overlooked, but presents an opportunity to make real savings is around contracts with service providers, particularly looking at the service level agreements (SLAs).

This suggestion may come as a surprise to many, as 99.999% uptime used to be a standard requirement for an IT department buying services, no matter what the size of the company or sector they operated in. In today's world, though, this blanket view of availability is just no longer valid.

I say this because, unless you're running something where it's critical for you or your customers to access systems at all times, most companies and the departments could work unhindered with guaranteed uptime only when they require it. For the rest of the time, they could survive even if there was an outage.

A good example of this is the finance team, which uses its specific applications day-to-day, but may only actually require guaranteed access for a few days at a time, around month or year end. As a result, it's possible for the IT team to negotiate a contract where there is an SLA in place for those busy times and a lower level of service for the less busy times.

The challenge to achieve this is two-fold: to many tech-minded IT directors, it's almost a badge of honour to have service availability at all times. The second, which is quite different but equally difficult to resolve, is understanding the business sufficiently to know when each user requires the best uptime possible - and, coupled with this, not building contracts that are so complex that they shift the savings straight over to the legal team.

The former requires a change in mind set in order to look at guaranteeing availability only when needed. The analogy that I've heard drawn to describe the over-provisioning is building a power station to power a kettle - and that's exactly what a lot of companies are doing with their SLAs.

What they need to do is question why they're looking for 24/7 availability, especially if there's a cost involved and changing the approach could save much-needed budget that could be spent elsewhere.

Surmounting the second challenge involves being immersed in the business in order to understand the requirement cycles and exactly what it needs and when, tailoring the IT services to individual teams so that they have guaranteed availability at critical times or for specific purposes.

Provisioning IT to meet users' needs is nothing new, but provisioning guaranteed service or negotiating SLAs for only when it's needed is. It requires a detailed understanding of the business' requirements, and for certain functions may not be appropriate.

However, it's a trend that I believe will emerge as an accepted practice in IT service management over the coming years, helping to reduce spend on IT services, whilst not impacting departments' abilities to perform their roles effectively.

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