Service Credits for Downtime: Negotiating Support Remedies That Protect Your Enterprise
Why This Topic Matters
Downtime isn’t just an annoyance – it’s a serious liability. When a mission-critical SaaS platform goes down, every minute can mean lost revenue, frustrated customers, and damage to your reputation.
If your vendor’s service level agreement (SLA) doesn’t provide meaningful recourse, your business ends up carrying the full cost of those service failures.
Consider an example: an e-commerce site experiences a six-hour outage during a holiday sale, resulting in over a million dollars in lost orders, yet the standard SLA only offers a few thousand dollars in credit.
Without proper remedies, such as service credits for downtime, you’re left footing the entire bill for the vendor’s lapse. Read our complete guide to Salesforce Support and Success Plans.
This is why SaaS downtime compensation clauses are essential in enterprise agreements. Service credits shift a portion of the risk back onto the vendor.
They create a financial incentive for the provider to deliver on their uptime promises – or pay the price if they don’t. In short, a strong service credit clause holds your vendor accountable.
You’re not just passively accepting apologies for downtime; you have a pre-negotiated remedy that helps offset the impact. A well-crafted SLA with meaningful remedies ensures you are expecting performance — or compensation when that performance falters.
Defining Service Credits & Extensions
First, let’s clarify what service credits are for downtime. In simple terms, a service credit is a form of compensation given by the vendor when they fail to meet agreed service levels (for example, if uptime falls below a defined threshold).
Typically, this compensation is provided as a credit to your account or a discount on a future bill, rather than a cash refund. Essentially, it’s a small financial remedy for the inconvenience and losses incurred due to unexpected downtime.
For instance, if a SaaS vendor guarantees 99.9% uptime and delivers only 98% in a month, the contract might entitle you to a certain percentage credit of that month’s subscription fees.
Monetary credits vs. time extensions:
There are two common ways these remedies are structured. Monetary credits are discounts or refunds applied to your subscription fees.
An example would be, “For every hour of downtime beyond the SLA, the customer gets a credit equal to X% of their monthly fee.” On the other hand, time-based subscription extensions compensate you in the form of service time.
For example, a vendor might add extra days or weeks to your subscription term in response to a significant outage. Both approaches aim to make up for the lost value you experienced.
A credit effectively reduces your cost for that period, while an extension gives you additional usage beyond your original contract term. It’s important to clarify which method applies (some vendors let you choose between credit or extended service duration).
How credits are triggered:
Typically, the SLA defines a specific performance standard – often an uptime percentage or maximum downtime per month/quarter.
If the vendor breaches that standard (e.g., uptime drops below 99.5%), it triggers the service credit. Some agreements measure downtime in hours or minutes and have thresholds (for example, “more than 1 hour of unplanned downtime in a month triggers a credit”).
Others use a percentage of total available time.
The key is that the trigger condition must be precise and agreed upon, so there’s no ambiguity about whether an outage qualifies for compensation.
Common structures for service credits:
Vendors structure downtime remedies in a few ways, and it’s critical to understand these during negotiation:
- Flat percentage refunds: A straightforward model is if the SLA is breached, you get a flat credit, such as 10% of that month’s subscription fee. This is easy to administer but may not scale with the length of the outage – whether you were down for 1 hour or 10 hours, the credit is the same flat percentage (which could be unfair if the outage was huge).
- Tiered credits: A more nuanced structure provides tiered service credit SLA levels. For example, uptime 99.0–99.5% = 10% fee credit; uptime 95–99% = 20% credit; uptime below 95% = 30% credit. In some cases, particularly severe downtime might even allow the customer additional remedies (like the right to terminate the contract without penalty if uptime drops below, say, 90%). Tiered credits align compensation with the severity of the breach – a bigger outage yields a larger credit.
- Time-based compensation: Another approach is granting extra service time. For instance, if an outage lasts more than 4 hours, the vendor may extend your subscription by a certain number of days or add extra user licenses for a specified period as compensation. This is essentially a downtime mitigation strategy on the financial side – compensating for lost service with complimentary service later.
- Flat-rate or token credits: Unfortunately, some vendors use very minimal “token” credits – for example, a fixed $100 credit for any qualifying outage, regardless of actual loss. These are usually not sufficient for enterprise needs, but it’s something to watch out for and negotiate against.
By clearly defining the type of credit and how it works, you ensure that when an outage occurs, there’s a predetermined formula for SaaS downtime compensation rather than scrambling for a solution in the heat of the moment.
Read about Salesforce Support Tiers.
Essential Elements of a Service Credit Clause
Not all service credit terms are created equal. To truly protect your enterprise, an SLA’s credit clause should include several essential elements.
When negotiating or reviewing a contract, pay close attention to the following components of the clause:
- Trigger Definition: Be precise about what events qualify for a service credit. This means clearly defining “downtime” or “unavailability” and the threshold that triggers credits. Is it a percentage of uptime per month, a certain number of minutes of continuous downtime, or several breaches in a quarter? For example, the SLA might state “if monthly uptime falls below 99.9%” or “any outage longer than 30 consecutive minutes” triggers the remedy. Also, ensure that you define any excluded events here (such as scheduled maintenance) in a narrow manner – more on exclusions will be discussed later. A precise trigger prevents the vendor from wiggling out by arguing whether an incident counts.
- Credit Formula: The clause must spell out in transparent terms how the service credit is calculated once triggered. Is it a fixed percentage of that month’s fee? A certain percentage per hour of downtime? Tiered, as discussed above? For instance, “for each 1% below the 99.9% uptime target, a credit of 5% of monthly fees will apply,” or “for each hour of downtime beyond the first, the customer gets a credit equal to 2% of the monthly fee.” A clear formula means both parties know the stakes: the vendor can quantify their penalty for failing, and you can estimate what compensation to expect for a given disruption.
- Claims Process: Outline the process and timing for claiming service credits. Many vendors require customers to notify them of an SLA breach and formally request credit within a specified time frame (e.g., within 15 days of the incident or receipt of the monthly uptime report). The contract should specify this process, including who to contact, what information to provide, and any necessary verification. Simplify this as much as possible. Ideally, you want a process where credits are automatically applied, but if not, at least ensure the claims procedure isn’t burdensome. A key support remedy for negotiation points is to push for automatic credit issuance for well-documented outages, so you’re not stuck in bureaucracy when your focus should be on recovery.
- Timeframe for Credit Application: It’s not enough to know how much credit – you also need to know when you can expect to receive it. The SLA should specify that once approved or an outage is confirmed, the service credit will be applied promptly (for example, within the next billing cycle or one month). Without a clear timeframe, a vendor might drag their feet and issue credits long after the fact, which dilutes the impact. Downtime compensation strategies are most effective when the remedy is timely, helping your budget in the immediate aftermath of a disruption.
- Cap & Escalation Terms: Many service credit clauses include a cap, such as “credits in any given month will not exceed 50% of that month’s fee” or even “capped at one month’s subscription fee per year.” Vendors include caps to limit their financial exposure. However, low caps can render the remedy almost meaningless (if a massive outage occurs, you might hit the cap and still be left with most losses uncompensated). Negotiating service credits means scrutinizing these caps – try to remove them or, at the very least, significantly raise them for critical services. Additionally, consider escalation language: what if the vendor has repeatedly breached the SLA? An escalation clause could state that multiple failures lead to increasing credits or additional actions. For example, “two or more SLA breaches in a quarter doubles the credit percentage,” or even an option to terminate the contract for substantial or repeated failures. Escalation provisions ensure that if service problems are chronic, you’re not just getting credits, but can also seek a more significant change or exit if needed.
By covering these elements – trigger, formula, claims process, timing, and cap/escalation – your service credit SLA clause becomes a well-defined mechanism.
It’s essentially a mini insurance policy within your contract: if the vendor doesn’t perform, you have clarity on how you’ll be compensated and what your next steps are.
Learn more about Negotiating Salesforce Support Fees and Packages.
Common Real-World Scenarios
It’s helpful to illustrate how SLA credit clauses play out in practice.
Here are a few real-world scenarios that enterprise customers often encounter, highlighting why careful negotiation of these terms is so important:
- Major Outage, Token Credit: Imagine a global CRM system goes offline for an entire business day during end-of-quarter crunch time. Sales can’t close deals, support can’t assist customers, and everything is at a standstill. The business impact is huge – say $500,000 in lost opportunities and productivity. When the dust settles, you review the contract and find that the remedy is just a token credit: perhaps 5% off your $ 50,000 monthly fee (about $2,500). That’s nowhere near the actual damage. This scenario is all too common when companies accept the vendor’s initial, minimal credit policy. It underscores why negotiating meaningful SaaS downtime compensation upfront is critical – to avoid being left with pennies on the dollar for major disruptions.
- Vendor Declares a Carve-Out: In another scenario, your SaaS vendor experiences downtime, and you rush to claim the SLA credits. However, the vendor points to the fine print: the outage, they argue, doesn’t count as an SLA breach due to a broad exclusion clause. Perhaps they classify it as “scheduled maintenance” even though it happened at an inconvenient time, or they blame a “third-party service provider” (like their cloud host) and call it beyond their control. Many standard agreements contain stealth exclusions that allow the vendor to escape liability in various cases. In this scenario, the vendor disputes your claim, insisting the downtime doesn’t qualify – leaving you without recourse. It’s a frustrating situation that stresses the need to tighten those definitions (what counts as downtime, what’s excluded) during contract negotiation. You don’t want a situation where the vendor can easily shrug off a disruption by invoking vague exceptions.
- Delayed and Buried Credits: Consider a scenario where you do have a right to credits, but the process and timing blunt its effectiveness. Say there was a minor but irritating service degradation last quarter; you went through the required steps to claim a credit. The vendor finally issues the credit six months later as a line item on a future invoice that no one on your team notices. Accounting might view it as a minor adjustment. The compensation doesn’t resonate within the organization as a recovery for downtime – it feels like a rebate coupon that arrived after you already moved on. This happens when SLA terms allow vendors to apply credits very slowly or require so much paperwork that it falls off your team’s radar. The enterprise downtime recovery lesson here is that a remedy delayed can be a remedy diminished. If credits are issued long after the incident, they fail to provide timely budget relief or incentive for the vendor to improve. That’s why we emphasized setting a clear timeframe and making the process straightforward earlier. You want those credits applied promptly and visibly, so their effect is tangible.
These scenarios show pitfalls of weak SLA remedies: either the credits are too small, too easy for the vendor to avoid, or too slow/hidden to matter.
They make the case for a vendor-skeptical approach: assume that if there’s a loophole or minimal interpretation available, a vendor under pressure might use it. Structure your service credit terms to preempt these maneuvers.
Read about Maximizing Value from Salesforce Support.
Strategies & Best Practices
How can you structure and negotiate service credits so they truly protect your interests? Here are key strategies and best practices to ensure downtime remedies are worthwhile and not just lip service:
- Align Credits with Business Impact: The value of service credits should, as much as possible, reflect the actual impact of downtime on your business. While no vendor will ever compensate you for all your losses (they typically won’t agree to cover things like lost profits), you can push to make credits more than a symbolic gesture. Calculate what an hour of downtime costs your organization in tangible terms (lost revenue, employee productivity, SLA breach penalties you owe your customers, etc.). Use that as leverage to argue for higher credit percentages or a longer service extension period. For example, if a critical system outage costs you approximately $50k per hour, a credit of a few hundred dollars is insulting. Aim to negotiate a structure where, say, each hour of downtime yields a credit that at least covers a meaningful chunk of your costs. The goal is downtime compensation strategies that offer real financial relief, not just a pat on the back.
- Tiered and Scaling Credits: One best practice is implementing a tiered credit scheme (graduated remedies) as mentioned earlier. Small blips yield a small credit, but as the outage length or frequency grows, the credits increase significantly. This not only compensates you better for major incidents, it also strongly incentivizes the vendor to avoid large-scale failures. For instance, you might negotiate something like: 99.9% uptime = 10% credit, 99% uptime = 20% credit, and <98% uptime = 50% credit, plus an option to terminate if the uptime falls below 95%. Tiered remedies ensure that a larger outage results in greater compensation. Without tiers, a vendor faces the same penalty for a 1-hour outage as for a 1-day outage, which isn’t logical. Tiered credits are a best practice for service credits because they calibrate the remedy to the severity of the breach, making the vendor think twice about letting a minor incident escalate into a major one.
- Include Subscription Extensions: Don’t limit your thinking to just money; time can be just as valuable. In negotiations, consider asking for subscription extensions as an alternative or supplement to fee credits. For example, “if cumulative downtime exceeds 8 hours in a month, the next renewal date will be pushed out by one week at no charge,” or “we get X number of extra user licenses for the next quarter.” Extensions can be easier for a vendor to swallow (since the out-of-pocket cost to them is low if their marginal cost of service is low), and they provide you with tangible value – essentially free service to compensate for lost service. This can be especially beneficial for long-term SaaS deals: an extra month on a multi-year subscription might be more valuable to you than a small refund. Make sure any extension granted is clearly defined (e.g., added to the end of the term or added as credit hours for usage) and ideally at your discretion to use.
- Automatic Credits for Big Failures: A savvy strategy is to negotiate automatic application of credits in the event of major, well-publicized outages. If the vendor’s whole platform went down for a day, you shouldn’t have to file a claim – they know it happened, you know it happened. Insist that for high-impact incidents (perhaps those affecting all customers or exceeding a certain duration), the vendor will proactively issue credits to your account. This ensures timely remedy and saves you the extra administrative step during a crisis. Even for less obvious breaches, try to at least negotiate that the vendor will inform you when you’re entitled to a credit. Some vendors will already do this (sending an email: “We fell short of our SLA, you’ll see a 15% credit on your next invoice”). If they don’t offer it, bring it up. Automatic or at least vendor-initiated credits demonstrate good faith and ensure you get the compensation without a fight – a support agreement remedy approach that treats downtime as a serious event, not something to hide.
- Cover Key Functionality (No “stealth” exclusions): Often, uptime is calculated only when the overall system is completely down. But what if a critical feature or module of the service is broken, while other parts of the service function properly? For your users, that’s effectively downtime, even if the homepage loads. Be wary of SLA definitions that are too narrow. Ensure key functionalities are part of uptime calculations. You might need to negotiate language like “Service Unavailability includes the inability of users to access any material functionality of the platform, not just total system outage.” Similarly, if the service has regional instances or multiple components (e.g., API, web app, mobile app), ensure the SLA covers the components that concern you. Otherwise, a vendor could claim “the service is up” when, say, the core is up but the integrations are failing. Good practice is to review the SLA’s technical definitions and expand them if needed, so you’re not left without remedy when a partial failure significantly impacts your business. In short, there should be no stealth exclusions of what matters – the SLA should measure the service from the perspective of your actual usage and critical needs.
Following these best practices will help you craft truly protective downtime remedies.
The theme is to close loopholes, make compensation proportional to the pain, and hold the vendor accountable for delivering quality service or making you whole when they fail to do so.
A little extra effort at the negotiation table can save a lot of frustration (and money) when an outage inevitably occurs.
Negotiation Levers to Use
Securing strong SLA remedies often depends on negotiation power and strategy.
Here are some effective negotiation levers you can use to get worthwhile service credit terms, not just token perks:
- Leverage Your Business Value: Vendors treat SLA concessions as a cost-benefit decision. If you’re a large enterprise customer or are committing to a big contract, use that weight. Trade volume or multi-year deals for stronger uptime remedies. For example, “We’re willing to sign a three-year contract at a healthy price point, but in exchange we need enhanced support remedies – including higher service credits for downtime and faster response commitments.” Vendors might be more flexible with SLA terms if they see a significant opportunity on the line. Make it clear that a subpar SLA is a deal-breaker for you, especially given the critical nature of the service. Your spend is your leverage – use it to insist on provisions that protect that investment.
- Reject “Best Efforts” Vagueness: Watch out for any SLA or support language that sounds non-committal – phrases like “targets” or “we strive to” or “as commercially reasonable.” These indicate that the vendor isn’t firmly bound. Reject weak “best-efforts” language and demand enforceable commitments. For uptime, this means a clear percentage guarantee and a clear penalty (or credit) when the guarantee is breached. If a vendor’s standard terms say something like “We aim for 99.5% uptime but do not guarantee it,” that’s as good as no SLA. Push back and insert binding terms: “Vendor shall maintain at least 99.5% uptime, measured monthly, and if not, Customer will receive X remedy.” In negotiations, be firm that you require concrete service level breach penalties – otherwise, you can’t justify the risk. Often, vendors will start with a soft stance and firm it up when they see you’re serious about holding them accountable.
- Benchmark Against Competitors: One useful tactic is to come prepared with examples of competitor SLAs or industry standards. If other providers in the market offer a 99.9% uptime with a 10% monthly fee credit for breaches, why should you accept 99% with a 5% credit from this vendor? Leverage competitor SLA structures as negotiation benchmarks. Explain that you have options and that you expect a comparable or better deal, given that the vendor presumably believes in their service quality. This puts pressure on the vendor to avoid appearing less customer-friendly than its peers. Even citing general industry best practices for enterprise software (for instance, many enterprise SaaS vendors offer at least some credit, up to 100% of monthly fees, for severe outages) can bolster your case. Just ensure your comparisons are reasonable and apples-to-apples.
- Use Timing and Renewal as Pressure Points: Negotiation levers can also include timing. If you’re renewing an important contract or considering a new vendor during a competitive bid, that’s when you have the most influence. Vendors are keen to close the deal, and you can insist on improved SLA terms as part of it. Additionally, if the vendor has recently experienced a public outage or is facing competitive pressure, you may find them more receptive. Don’t be afraid to ask: “We saw that outage last quarter – what assurance can you give us? We’d like stronger support agreement remedies in the contract.” Use any signs of vendor weakness or need (such as quarter-end sales quotas) to obtain what you need in the SLA.
- Consider Give-and-Take: In some cases, you might trade something to get better SLA terms. For instance, a vendor might not budge on price but might concede better downtime remedies if you agree to a slightly longer term or a certain payment schedule. From your perspective, robust SLA credits and terms can be more valuable than a small discount, especially if downtime risk is high. Let the vendor know you’re willing to be flexible in some areas (like maybe accepting standard pricing or fewer customization requests) if they meet your requirements on reliability guarantees and remedies. This framing shows you’re prioritizing reliability and partnership – a savvy vendor should respond to that by offering a bit more on the accountability side.
By using these levers, you transform the conversation from simply “what’s the price?” to “what happens if you don’t deliver?”
Vendors often have more room to negotiate on contractual terms than on core product pricing, especially if it doesn’t cost them anything unless a failure occurs. Use that fact to your advantage to secure negotiating truly worthwhile service credits.
Avoiding Common Pitfalls
Even with a well-intentioned SLA, some pitfalls can undermine the effectiveness of service credits. Here are some common pitfalls to watch for, and how to avoid them:
- Vague “Goodwill” Promises: Be wary of language where the vendor says they “may” offer credits as a gesture of goodwill or at their discretion. Such wording makes the remedy non-binding. Don’t accept vague language like “we will consider credits” or “goodwill gestures.” Your contract should have a clear, objective commitment, not just a promise to be nice. Similarly, avoid clauses that require executive approvals or mutual agreement after the fact to issue a credit – you want it automatic if criteria are met. Always push for precise, enforceable terms so you’re not left begging for mercy when an outage happens.
- Overly Low Caps: As discussed earlier, caps that are too low can gut the value of service credits. For example, if the SLA caps credits at 10% of your annual fees, the vendor essentially knows their maximum penalty is just a small fraction of the contract value no matter what goes wrong. That might not be enough incentive for performance, and it certainly won’t cover your losses in a disaster. Push back on low caps that render credits meaningless. If a vendor insists on some cap, negotiate it upwards (e.g. at least 100% of a month’s fee per incident, or no cap in the case of prolonged outages). Another approach is to have the cap lift in extreme scenarios – for instance, “Credits are capped at 50% of monthly fees for typical incidents, but if uptime falls below X% or an outage lasts longer than Y hours, the cap doesn’t apply.” The key is to ensure you’re not left high and dry by an arbitrary ceiling on compensation.
- “Sole and Exclusive Remedy” Clauses: It’s very common for SLA language to stipulate that service credits are the sole and exclusive remedy for downtime or service failures. From the vendor’s perspective, this prevents you from suing them for additional damages or terminating the contract for SLA breaches – you only receive the credits, nothing more. This is a pitfall because if the credits are small (as they often are), you essentially waive any real recourse beyond that. Whenever possible, avoid clauses that make credits the sole and exclusive remedy. If the vendor insists, try to carve out exceptions: for example, “except in cases of gross negligence or willful misconduct” or “except if the vendor fails to provide the credits as agreed.” At a minimum, ensure that if the exclusive remedy clause stands, the credits themselves are beefy enough to be taken seriously. You don’t want to sign away your right to other remedies unless you’re truly comfortable that the built-in remedy suffices for even a worst-case scenario. It might not always be possible to remove this clause (many vendors hold firm on it). Still, you should be aware of its impact and negotiate credit amounts accordingly (because you won’t have any other way to recover losses).
- Overbroad Maintenance and Force Majeure Exclusions: Nearly every SLA will exclude scheduled maintenance periods and force majeure events from the downtime calculations. That’s understandable – vendors need windows for routine maintenance, and they don’t want to be liable for things truly outside their control (natural disasters, war, widespread internet outages, etc.). However, these exclusions can be abused. Ensure that scheduled maintenance and force majeure clauses don’t exempt the vendor from liability for major downtime. For maintenance, negotiate for reasonable limits: maintenance should be infrequent, during off-peak hours, and communicated in advance. You might specify that maintenance beyond a certain number of hours per month counts as downtime, or that any maintenance not communicated X hours in advance is not exempt. For force majeure, watch out for language that sneaks in things like third-party outages or vague “acts of technology” as excuses. You can’t realistically get a vendor to pay credits for a true force majeure disaster. Still, you can ensure that the definition of force majeure is clear (e.g., affecting a broad area, not just the vendor’s data center, because they failed to implement redundancy). Also consider a provision that, if a force majeure event causes prolonged service loss (for example, more than several days), you have options such as terminating the contract or obtaining a more comprehensive form of relief. The bottom line: don’t let “maintenance” become a loophole for the vendor to schedule excessive downtime, and don’t let “force majeure” cover scenarios that a robust service should have mitigated (like a single server failure). Carve-outs should be fair and not completely nullify your SLA.
By anticipating these pitfalls, you can either negotiate them out of the contract or have an action plan to handle them. The theme is ensuring the SLA’s protective clauses aren’t just talk, but also action. A bit of healthy skepticism about vendor-drafted terms can go a long way to avoid signing something that looks good on paper but fails in practice.
Governance & Ongoing Management
Negotiating a strong SLA is half the battle; the other half is managing it over the life of the contract.
Here are some governance best practices to make sure you reap the benefits of those downtime remedies:
- Implement Independent Monitoring: Don’t rely solely on the vendor’s reports to know if you’re entitled to credits. Use an independent uptime monitoring tool or service to track the availability of the SaaS product from your end. This could be as simple as ping tests/health checks or as sophisticated as third-party monitoring services that log every outage or performance degradation. Having your data helps in two ways: (1) It alerts you to downtime in real-time so you can respond operationally, and (2) it provides evidence if there’s ever a dispute with the vendor about whether an SLA breach occurred. When you can show logs of 4 hours of inaccessibility on a certain date, it’s much easier to claim your service credit without debate. Essentially, independent monitoring keeps everyone honest and ensures you’re aware of incidents the moment they happen.
- Establish an Internal Credits Claims Process: Ensure your team understands how to obtain the credits you have negotiated. Often, this is where things fall through the cracks. Assign responsibility to someone in vendor management, IT, or procurement to monitor SLA performance. For example, after each month or quarter, have a quick review: was the uptime as promised? If not, prepare the notification to the vendor as specified in the contract. Mark calendar reminders for any notice deadlines (e.g., “must claim within 30 days”). By setting up a reliable claims and tracking process, you ensure you don’t accidentally forfeit credits simply because you forgot to ask. Some companies integrate this into their IT service management or contract management routine. It could be as formal as a monthly SLA report to leadership, or as simple as a checklist that someone reviews. The key is to operationalize it so it doesn’t depend on memory or ad-hoc effort.
- Insist on Timely Credit Fulfillment: If you invoke an SLA remedy, ensure that it is applied to your account. Sometimes, vendors might agree that you’re owed a credit, but then your invoices or renewal payments need to be checked to verify that the credit was deducted. It’s a good practice to cross-verify billing after a claimed credit has been issued. This is part of ongoing management – accounting and procurement should be informed that “Vendor X owes us 15% off next month’s bill due to the outage last month.” By tracking this, you ensure the vendor follows through, and you realize the financial benefit. It also signals to the vendor that you’re diligent, which might encourage them to be proactive next time.
- Review and Update SLA Terms at Renewal: Don’t assume that the SLA you signed initially will automatically carry forward forever, or remain adequate. Each time a contract comes up for renewal (or if you’re scaling up your usage significantly), revisit those downtime remedy terms. Your business might have evolved – perhaps you’re more reliant on the service now than when you first signed, meaning you need even tighter SLAs. Or perhaps the vendor’s performance history reveals a pattern that requires attention (e.g., if they barely met 99.9%, consider pushing for 99.99% if possible, or higher credits for the near-misses). Also, vendors sometimes update their standard SLA policies over time; ensure that any changes do not introduce weaker terms. Review service credit terms at renewal and don’t let them quietly erode. Negotiate improvements where you have leverage, especially if you’ve gone a period without any issues – that might be the time to say “we expect you to formalize that reliability by raising the guarantee or credit next period.”
- Document and Communicate Internally: Keep a record of any downtime incidents and the methods used to resolve them. This is useful for internal stakeholders (like risk management or the CIO) to see the value of the SLA and to make decisions about vendor management. For instance, if one vendor had to issue credits three times in a year, that’s a red flag to discuss with them or consider alternatives. Internal communication ensures everyone (from technical teams to finance) understands that you have these remedies and that they’re part of the contract value. It also prepares your team to utilize the SLA – e.g., support teams are aware of alerting procurement when an outage occurs, allowing the contract terms to be invoked.
By actively governing the SLA, you transform it from a document on the shelf into a living part of your vendor management strategy. The best negotiated clause means little if you never use it.
Conversely, suppose you consistently enforce and manage the SLA. In that case, you’ll get the dual benefits it was designed for: some financial recovery when things go wrong, and a vendor that is keenly aware you’re holding them accountable.
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