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Community Blog What Is SLA and Why Is It Important for Your Business?

What Is SLA and Why Is It Important for Your Business?

Alibaba Cloud is the first cloud provider to offer 99.975% SLA for single instance and network by fixed bandwidth. Why is it important for you?

Alibaba Cloud is at the forefront of innovation. Right from launching innovative products to bringing industry-specific solutions, Alibaba Cloud ensures providing a second to none customer experience.

In fact, Alibaba Cloud is the first cloud provider to offer 99.975% SLA for single instance and network by fixed bandwidth. In this article, we will deep dive into how Alibaba Cloud is setting benchmarks with its new and upgraded Service Level Agreement and payment methods.

Service Level Agreement (SLA): Importance and Challenges

In business, Service Level Agreements (SLAs) play a critical role and organizations assess the cloud service providers against various service-based SLAs. Service availability or uptime is a key performance indicator for organizations availing IT services as it eventually determines their service or application downtime.

Service availability is usually expressed as a percentage of uptime for a given period. According to industry standards, service providers must ensure 99.999% availability. However, in reality, things are not that bright as many service providers struggle to adhere to the industry standards. Consequences seem rather grim if you look at the actual numbers, as even service providers ensuring 99% availability leave customers to struggle with downtime for a considerable time. The following table reflects how critical the actual downtime numbers are.

Uptime Percentage Average Annual Downtime
99% 87.66 hours
99.9% 8.76 hours
99.99% 52 minutes
99.999% 5.25 minutes

Let's take a look at primary costs that businesses occur due to a service outage. According to the 2019 Statista Survey, 25% of global respondents reported the average hourly downtime cost between $301,000 and $400,000.

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Organizations facing availability issues are losing business value as downtime results in several costs.

  • Business Disruption: Downtime hampers the application service and any halts in business-critical application impacts the brand value and adversely affects the customer experience.
  • Loss of Data: Any system outage may result in potential loss of data that may lead to significant legal and financial implications. Missing data may restrict an organization from meeting regulatory requirements. According to a report by Unitrends, the rate of organizational data loss has remained consistent at 30% between 2014 and 2019.
  • Loss of Revenue: Halted services means lost business hours. The losses are huge for business-critical applications where every single second may ht the bottom line.
  • End-User Productivity: Whether the service supports internal operations or external customers, downtime impacts the pace of their respective operations and reduce their overall productivity.
  • IT Productivity: Outage also results in lost productivity of IT personnel and raise questions on ineffective work procedures as well as require them to rework.
  • Loss of Brand Reputation: Service downtime is never a good experience for customers as slow or interrupted creates frustration. Frequent or long outages adversely affect brand reputation.

A recent survey from Continuity Software unveiled that 32% of the organizations don't have formal service availability commitment to customers

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Now let's find out how Alibaba Cloud is working towards improving service availability at minimum cost.

Alibaba Cloud ECS: Optimizing Service Availability and Performance

Alibaba Cloud ECS now offers an all-new service-level agreement as Alibaba Cloud believes "Every Instance Matters". While before 1st December 2019, Alibaba Cloud provided 99.95% monthly uptime for single instance and 99.99% monthly uptime for multi-zone instance, after 1st December 2019, Alibaba Cloud is committed to offering minimum unavailability. With an aim to offer unparalleled customer experience and industry-leading SLAs, Alibaba Cloud now offers 99.975% monthly uptime for single instance and 99.995% monthly uptime of multi-zone instance. Moreover, Alibaba Cloud also offers minimum unavailability commitment.

The announcement of the new SLA is supported by the launch of a 12-month ECS free trial plan for small-to medium-sized enterprises (SMEs) to help them migrate to the cloud at no cost.

Apart from availability leadership, Alibaba Cloud also adds a new feature to Pay-by-Bandwidth. Let's understand both the payment methods to differentiate the benefits of the newly added feature:

  • Pay-by-Traffic

In this method, the fee is charged by the traffic usage. You can just set a peak value for the outbound bandwidth and circumvent any excessive fees due to traffic bursts. Alibaba Cloud only charges fees for outbound traffic usage, which is calculated on an hourly basis, and the billing unit is USD/GB.

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  • Pay-by-Bandwidth

In this case, the fee will be charged by the bandwidth that you specify. In actual scenarios, the outbound bandwidth will not surpass the specified value.

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Alibaba ECS is a high-performance and scalable IaaS service that offers virtual cloud servers with fast memory and latest intel CPUs. With the enhanced SSD support (ESSD), Alibaba Cloud ECS offers optimized storage performance for instances. Compared to SSD, ESSD provides better performance for scenarios that require low latency and high throughput. Unlike traditional hardware, companies can deploy ECS instance in just a few clicks. IT teams can scale it up or down depending on the real-time needs. ECS offers flexible payment methods to ensure there is cost-efficiency for businesses. With ECS, businesses no longer need to invest to procure expensive hardware or build a huge network team.

Learn more about Alibaba Cloud Elastic Compute Service, and experience various ways to get the maximum benefit from our cloud solutions.

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