Warning to ASPs over SLAs

IDC analysts in the US are issuing warnings to application service providers (ASPs) offering overly ambitious service level agreements (SLAs) in an effort to secure customers.

While SLAs have the power to differentiate a quality ASP from the mob, IDC believes the cost of fulfilling an agreement, and the personnel required to do so, can be a major and possibly destabilising expense.

The advice follows the release of SLA guidelines published by the Information Technology Association of America (ITAA) and the ASP Industry Consortium.

IDC concedes that SLAs, which hold the ASP responsible for the speed, flexibility and reliability of access, are "instrumental in governing and strengthening the ASP business model".

However, Merv Langby, chief analyst of services at IDC Australia, feels the Australian ASP market is not mature enough to warrant such grave predictions.

"The level of industry talk and noise about ASPs far outweighs the reality in the market," he said"At the top end, there are some very tight SLAs. The likes of Westpac and Telstra don't sign up a 15-20 year outsourcing deals unless they have some pretty ugly SLAs backing them up. But as a general rule the local market is too young to warrant such gravity."

Langby says ASPs are subject to the same principles as any service provider - access, response, support and flexibility.

"When a market is so embryonic, people are loath to get down to gritty detail," says Langby. "This may sound like dodging and weaving, but it's really just an apt reflection of where the market is at."

Langby feels there is a climate of mutual caution regarding SLAs in Australia. The two sides of the agreement are taking a "proving the concept" approach rather than dumping unrealistic responsibility on the ASP.

"Responsibility never rests entirely on the shoulders of the service providers," he says. "The ASP signs the contract but they are backed up by a whole set of partners, such as telcos, software manufacturers and networking infrastructure, which contribute their part of the solution."

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