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System Design Masterclass · Observability Monitoring
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In December 2021, AWS suffered a multi-hour outage in the US-East-1 region. Thousands of businesses, from Netflix to small startups, were affected. When the dust settled, AWS issued service credits to affected customers under their SLA.
An SLA is a contract between a service provider and its customers that specifies what level of reliability the provider promises, and what happens when they miss it. Unlike an SLO (an internal target), an SLA has teeth. Break it, and you owe customers money, service credits, or in extreme cases, face breach-of-contract lawsuits.
Every major cloud provider, SaaS platform, and enterprise vendor has SLAs. AWS promises 99.99% for EC2. Google Cloud promises 99.95% for Compute Engine. Stripe promises 99.99% for the Payments API. These aren't aspirational goals, they're contractual obligations with defined financial penalties.
| Concept | What It Is | Who Cares | Consequence of Missing |
|---|---|---|---|
| SLI | A specific measurement (e.g., error rate) | Engineers | Nothing directly, it's just data |
| SLO | An internal target for the SLI (e.g., 99.95%) | Engineering team | Shifts priority from features to reliability |
| SLA | An external promise to customers (e.g., 99.9%) | Business, legal, customers | Financial penalties, credits, contract breach |
The relationship is layered: SLIs feed into SLOs, and SLOs should be stricter than SLAs. If your SLA promises 99.9% and your internal SLO is also 99.9%, you'll frequently breach the SLA because there's no safety margin. The standard practice is to set SLOs at least one nine above the SLA, if the SLA is 99.9%, the internal SLO should be 99.95% or 99.99%.
SLA components:
Most SLAs follow a tiered credit structure: miss by a little, credit 10%. Miss by a lot, credit 25-30%. Complete outage, credit up to 100% of that month's bill.