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Ask the right questions before committing to a colocation SLA policy

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Secure a colocation agreement you can live with

To land a colocation deal that you'll be happy with, know what a good SLA covers -- and what it doesn't -- and how to negotiate one for your business.

Shopping for a colocation provider is like shopping for anything else -- except that it's not. It is a critical decision to entrust your most crucial assets to someone else. So, not surprisingly, it's an activity that produces anxiety and a range of concerns.

Many of the key points of how a colocation relationship should function should be embedded in a service-level agreement (SLA), but shopping shouldn't be confined to the fine print of a colocation agreement. Carefully consider your needs and examine with equal care what the provider is offering.

Know why you're going colo

Start with fundamentals, such as clearly answering why a colocation site will benefit your organization. "Do you just need a physical space to put things, or do you need high bandwidth and ultra-reliable power?" asked Greg Schulz, senior advisory analyst at StorageIO, a consultancy in Stillwater, Minn.

Some companies come to a colocation decision already armed with hardware they have purchased or contracted to use. Others start from square one. Many see a colo as a supplemental facility for computing peaks or merely for business continuity. Some choose a colo as a complete replacement for a traditional on-premises facility. Still others need it as an interim step during a relocation or renovation or as a move toward the cloud.

Then the question is: What exactly is it that your organization wants from the provider? Is it simply an inexpensive place to park things? Or will you get some level of management and attention? The types of colocation services offered vary widely, as do the facilities.

For example, Schulz explained, an organization must decide whether it needs -- and whether it's being offered -- services such as someone to "check your cage every day" or perhaps "push a button on a machine if you ask them to." Or maybe you need more active monitoring and real on-site professional services.

It's also worth talking with references that have encountered an issue yet remained customers.

Kelly Quinn, research manager at IDC Datacenter Trends and Strategies headquarted in Framingham, Mass., said a good colocation agreement will guarantee something like 99.999% uptime and performance of all workloads. Another important detail, Quinn said, is the availability of what she characterizes as zealous phone support.

"You can smartly prepare for an ongoing relationship with your vendor by asking the vendor what their long-term support strategy is, what their technical upgrades are. A good vendor should always be improving the environment," Quinn said.

A potential customer should want to know the vendor's long-term strategy as well as the steps planned to execute that strategy. Indeed, Quinn said the most important questions to ask a provider relate to vendor references. References from customers that have never had downtime with the vendor are useful, but, she noted, it's also worth talking with those that have encountered an issue yet remained customers. "Talking with these references can give you real insight into the level of support the vendor provides when it matters most," Quinn said.

Even so, it's critical to recognize that a colocation agreement may mean very little in the event of an actual outage, said Tony Faoro, an IT consultant at Circumventures in Issaquah, Wash. In other words, the consequences of not meeting an SLA policy are usually pretty mild for a provider.

"A data center company could offer a 100% availability SLA but still actually have multiple events of downtime each month," Faoro said. That's because the SLA probably only provides reimbursement for unplanned downtime, and whatever reimbursement that results from such an incident won't amount to much. So, if your infrastructure is down for two to three hours, a credit to your account of $100 or $200 after the fact is not going to be meaningful, he said.

What an SLA covers -- and doesn't

It's important to understand which portions of your service are covered by the SLA policy.

"There are multiple components to colocation. Therefore, you need to be certain you understand which components are covered under SLA and which are not," Faoro said. For example, it is not uncommon to have separate SLAs for power, cooling, network connectivity and remote-hands response time, Faoro said.

"Ask your provider what SLA is in place for each of these components," he said. "I once experienced a site-wide power outage at one of my facilities, only to discover after the fact that the network connectivity was the only portion of my services covered under SLA," he said. As a result, a four-hour outage resulted in just a $50 credit, as that was the portion of networking services that were unavailable while the power was out.

Nate Josephs, senior manager of data center operations at Parallel Technologies in Eden Prairie, Minn., said there are a few keys to a good colocation agreement. They include a 100% guarantee that power, network and cooling are available to the customer's equipment 100% of the time. There should also be a provision for a root-cause analysis report for all customers affected by an SLA breach. And the SLA should include a clause that allows customers to terminate their contract without penalty if an SLA policy is breached more than a certain number of times within a specific timeframe.

Each of the guarantees or commitments should be listed separately and described carefully. For example, the power-availability guarantee should be described separately from cooling or internet access, Josephs said. Each guarantee or commitment should also include a measurable quantity of availability and amount of credit that will be given if SLA terms are not met. You also want to make sure an SLA contains a termination clause for situations when the provider consistently misses requirements, he said.

That termination clause in a colocation agreement can be crucial.

"With traditional hosting or managed services in the cloud, you are on someone else's image or equipment, and it might be harder to extract yourself from that particular situation," Schulz noted. More to the point, an organization needs to know if it can get out in a hurry if the provider goes out of business or is disrupted at a single point of failure. In other words, he said, "you need to know whether you are doing business with a data hotel or a data jail."

Next Steps

What to know -- and what to do -- about those noisy neighbors

Besides low costs, what should you look for in choosing a colocation provider?

It's easy to confuse SLO and SLA. There are important differences.

This was last published in April 2017

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