Service level measures the performance of a system. Certain goals are defined and the service level gives the percentage to which they should be achieved.
Examples of service levels include:
- Percentage of calls answered in a call center.
- Percentage of customers waiting less than a given fixed time.
- Percentage of customers that do not experience a stock out.
Service levels are an important way of ensuring that a provider meets the level of service expected by the customer. This is particularly important where the cloud computing service is critical either to the functioning of a customer or to the customer's clients. There are three elements common to an effective service level regime:
- The service levels have to be meaningful — that is, they need to measure performance that is important to the [customer].
- The provider's performance against service levels should be able to be easily measured and auditable.
- The incentive (whether stick or carrot or combination of both) for the provider to meet the service levels has to be sufficient to encourage performance at the required level. Any service level credits paid to a customer for the provider's failure to meet the service levels should not exceed a genuine pre-estimate of the loss to avoid being a penalty and therefore unenforceable.
It should come as no surprise that providers will generally only offer to meet service levels that they know are well within their performance capability and so considerable negotiation may be required for a customer to achieve levels that are suitable for its needs, where these exceed the standard commercial offerings.
- "Cloud computing" section: Negotiating the Cloud–Legal Issues in Cloud Computing Agreements, at 12-13.