SLA a Myth?

In today’s changing IT landscape is SLA a myth? With hyperscalers like AWS, Azure, Google, etc giving 99.9% uptime guarantee, do companies still ask for SLA’s from managed service providers? If yes, how much does the company pay extra for SLA adherence?

In late 90’s early 2000’s when companies used to host their workload in data centres or in manage service providers custody with Licences, network, hardware & storage equipment all procured and managed by SI. SLA was a key term as the companies were dependent on the SI. In some cases the SI’s also developed applications for the customer or used to work with software development partners. In this case the complete ownership was with SI.

What changed after hyperscalers entered and disrupted the market? Hyperscaler not only gave compute, but slowly started offering platforms like DB, storage, networking, middleware, etc. Companies only had to focus on developing the applications and SI or manage service providers' role shrink. In this case SI only runs the show. 

So when the SI has been asked to sign the SLA of 99.99999% they don't hesitate to sign the contract. Even though the penalty is more than 10% of the contract value. The SI in there contract has the caveat of hyperscaler and application ownership transferred to customer as that is out of their jurisdiction.  So as a company executive one should ask for which task/product/service SI takes ownership for SLA.

So in some cases which is still true where the SI plays a key role in managing data center, hardware, networking, storage, etc SLA makes sense as it is a single point of failure. But where there are multiple stakeholders the SLA’s are transferred from one OEM/SI to another and the customer suffers by paying extra for SLA rather than changing the strategy.