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The cost for meeting SLA dependability requirements; implications for customers and providers

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  • Følstad, Eirik L.
  • Helvik, Bjarne E.

Abstract

A Service Level Agreement (SLA) describes the service, the service-level objectives (SLOs), the price the customer should pay and the compensation if the SLOs are not met. There is a trade-off for the provider between the costs for improving the deployed service quality vs. probability of paying compensation. We propose how to estimate the provider׳s optimal service deployment. We show that the optimal deployed service quality is dependent on the SLOs, deployment cost, compensation and observation interval. A service deployment based on cost optimization results in targeted dependability objective values that are significantly better than stated in the SLOs. The proposed approach provides valuable insight for an aggregator, who buys services from other providers, to negotiate adequate SLOs, price and compensation from the providers to make a valuable offer for its own customers.

Suggested Citation

  • Følstad, Eirik L. & Helvik, Bjarne E., 2016. "The cost for meeting SLA dependability requirements; implications for customers and providers," Reliability Engineering and System Safety, Elsevier, vol. 145(C), pages 136-146.
    • Handle: RePEc:eee:reensy:v:145:y:2016:i:c:p:136-146
    DOI: 10.1016/j.ress.2015.09.011
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    2. Loretta Mastroeni & Alessandro Mazzoccoli & Maurizio Naldi, 2022. "Pricing Cat Bonds for Cloud Service Failures," JRFM, MDPI, vol. 15(10), pages 1-18, October.
    3. Pietrantuono, Roberto & Popov, Peter & Russo, Stefano, 2020. "Reliability assessment of service-based software under operational profile uncertainty," Reliability Engineering and System Safety, Elsevier, vol. 204(C).

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