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Service Level Agreements

Posted on 2013-06-27
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Last Modified: 2013-07-09
We've have service agreements with our customers but now want to introduce an option to replace equipment by charging extra each month to provide a "pot" of money that can then we accessed as and when.

In essence this seems a simple process. Instead of charging £100 a month we charge £200 and after 6 months they can spend £600 on new equipment.

However it is also potentially fraught with problems because we are holding clients money in trust. In the UK I know that if a property landlord takes a deposit they have to hive it away in a special account.

Has anyone used this idea successfully and can point out any advantages or potential pitfalls?
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Question by:Gordon710
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CloudedTurtle earned 500 total points
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I have seen cases were there is a markup on the service and the added profit gets put into an account that is used for hardware updates. In my experience this isn't included as an Extra cost, it tacked on as the cost of the service.

You could create a service level that includes "Hardware Assurance" that is extra and includes the option to replace/update hardware. But there are some inherit pitfalls.
Who/how is the money tracked per client
Who/how manages the money to ensure that it gets spent properly

Is the hardware upgrade something that the customer requests, or is it just part of the service agreement? My suggestion would be to include this specific upgrade terms in your agreement instead of allowing the customer to request the upgrade.

With all that said, I also think that it depends on your hardware setup. Are all the customer on dedicate physical machines or are they Virtual machines on a Shared host?

In the physical machine aspect I my recommendation would be to keep these funds seperate and very tightly controlled (special account may be the best method) mainly for the reason that hardware updates could fluctuate in cost based on the physical hardware.

If customer systems are VM in a Shared Host then the requirement is on you to maintain the hosts to ready for any updates the customer may want. In effect the extra monies would be used to update the host hardware with CPU, Memory, disk space, etc. So that when the customer needs more, its there and just needs to be assigned. In this case it is all "funny money" as you have already updated the host hardware with the fund. Then it is just a matter of tracking who has how much contributed to determine how much of an upgrade they get.

Anyway, not sure if this helped at all. I haven't tried to implement something of this sort, these are just some of my overall thoughts on the process. Again, hope it helps.

-CT
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