Sealing the deal

One of the critical issues when dealing with a Web-hosting provider is the service-level agreement. To be safe, it is best to include worst-case scenarios.

Ted Chamberlin, a Gartner Inc. analyst, recommends writing an acquisition clause in the agreement that gives you the right to rewrite the contract if more than 25 percent ownership in the Web-hosting company changes. He also stresses the need for a clause covering availability. "If the Web site is down more than 15 minutes at a time more than three or four times a month, you want the ability to renegotiate or terminate the contract," he said. "And be careful to itemize who pays when you have to move in-house or to another hoster." Like the Web sites they cover, service-level agreements are growing more complex. Genuity Inc. worked with systems integrators last year to expand the coverage of its agreements. "In the past, we have had no responsibility for the applications," said Joel Whitman, the company's vice president for Internet strategy. "If the infrastructure broke, we handled it, but not the applications. This doesn't work for the end-user customer, so we began to work with systems integrators in an escalation procedure."

The procedure, which specifies who does what and when they do it in case of a catastrophe, is in a combination of a service-level agreement and a quality-of-service agreement, Whitman said.

Service-level agreements commonly contain penalties for failure to adhere to performance requirements. "If the network is not up 99 percent of the time, then the provider should pay penalties for not hitting that mark," Chamberlin said.

And service-level agreements increasingly are linked to network architecture. Service-level agreements "are becoming the way to dictate how a network needs to be architected," said Paul Kayatta, president of government markets for Global Crossing Ltd.

There is no one-size-fits-all agreement. Different agreements require that varying levels of redundancy be built into the system architecture. "If a customer asks for 99.5 percent availability, then that can be accomplished with a single server," said Chris Nicoletti, director of complex hosting for IBM Global Services. "If they want 99.9 percent availability, then it requires dual sites with geographic load balancing."