Amazon Web Services Go Down – What Does it Mean to Cloud Buyers?

“Technology is great when it works,” says Ben Trowbridge, founder and CEO of Alsbridge Inc. “But what happens to a buyer of cloud services when a lapse in technology creates a service disruption?”

Unfortunately, users of Amazon Web Services (AWS) had to answer that question on April 20 when the cloud provider’s Northern Virginia data center suffered a service outage for its hosting service at 10:41 p.m. EDT. This failure knocked thousands of websites off the Internet for 30 hours including some household names in the social media world such as Foursquare, Hootsuite, Quora and Reddit and the clients of at least three popular platform-as-a-service (PaaS) providers (DotCloud, Engine Yard and Heroku).

Cost of Service Outages

AWS’s standard service level agreement (SLA) on uptime is 99.95 percent for the year for computing (Amazon EC2). That means a client can expect to be down for six hours, 43 minutes and 12 seconds every 365 days. Since 30 hours is clearly over the SLA, the typical agreement calls for Amazon to pay the buyer a service credit equal to 10 percent of its monthly bill. Calculating the cost, if the client was paying $20,000 a month, then Amazon would credit the account $2,000.

What about regaining lost revenue for those companies who were unable to conduct business during 30 hours of downtime?

“Because service providers generally do not offer an SLA credit covering direct damages, clients should ask for increased penalties from their cloud providers,” suggests, Trowbridge, who has negotiated cloud computing agreements with Amazon for Alsbridge clients. “It’s a negotiation point.”

Protection Against Service Outages

“All IT outsourcing involves risk however, buyers of cloud services can do a number of things to protect themselves from service outages,” says Trowbridge. “Being an informed buyer has never been more important.

One way buyers of cloud services can protect themselves is to ask the same questions as you would when sourcing a traditional ITO agreement, including:
•    What is the back-up plan?
•    What is the plan for corrupt data?
•    What is the recovery speed? This is especially important for large files.
•    What are the SLA penalties?

Another way buyers of cloud services can protect themselves is to use multiple data centers and mirror sites to increase the up-time.

Or buyers of cloud services can leave the current provider and to find one with better metrics and performance.

Finding the Right Cloud Provider

Trowbridge has just written a book entitled “Cloud Sourcing the Corporation,” which will be available for purchase on May 18, 2011. It provides a holistic perspective on the evolving cloud services market and acts as a guidebook for IT executives on their journey to the cloud. Included in the book is the Cloud Sourcing 100 Index, an exhaustive review of the emerging cloud services providers complete with classifications and ratings. The Index is also online at www.cloudsourcing100.com.

After this event, Amazon will probably work harder to prove its business case and come up with ways to improve its reliability. Cloud buyers will probably be willing to pay more for mirrored sites within their outsourcing agreement.

The bottom line: Achieving five nines is nearly impossible and, more often than not, cost prohibitive. So plan for service disruptions.

About Alsbridge Inc.

Alsbridge provides world class sourcing advisory and benchmarking services for IT, finance and sourcing executives. With over 150 consultants located globally, we’ve helped hundreds of companies reduce costs and get more value from their vendors.  Our experienced consultants leverage proprietary tools and information databases to identify and engage the optimal vendors for your situation, negotiate best practice terms at fair market prices, and improve the way you work with your vendors. Alsbridge clients utilize the most cost effective and value added sources globally for IT infrastructure services, hardware and maintenance, network services, software and maintenance, application support and development, business processes and cloud services. Our commitment to delivering value to our clients has made Alsbridge a distinguished member of the 2010 Inc. 500 fastest growing privately held companies in America.