12 Things to Cover in Your Managed Services Agreements
This blog post was originally published November 1, 2016
Have you ever opened up a product with ‘some assembly required’ that failed to include instructions (or included them, but only in a language you don’t understand)? So frustrating. Sadly, many clients feel the same way about their managed services agreements.
And that’s not good for your profit potential in this practice area of your business.
As a technology solution provider (TSP), you want to build a relationship and position yourself as a trusted advisor. Make agreement terms clear and concise—no confusing jargon. The better your agreement, the more you and your clients benefit.
6 Benefits of Creating Managed Services Agreements
Developing a managed services agreement (MSA) is often the first thing that a technology solution provider (TSP) does to prepare for delivering services to a prospective client. It helps you:
- Identify what hardware, users, vendors, and services are covered, as well as those that aren’t.
- Clearly document the managed service roles and responsibilities for the client and the TSP.
- Accurately represent the clients’ existing environments.
- Define environmental prerequisites for service.
- Establish a baseline environment.
- Create a framework to ensure profitability.
Managed Services Agreement Template: What to Include
The agreement should embody your service-level agreement (SLA), prioritization process, response times, termination clause, limitation of liability, and a definition of support tiers and your service desk escalation process. Plus, it should reflect your labor rates or fees for requested services that fall outside of flat-fee support. Here are the top 12 things you should clearly outline in your managed services agreements:
- Client terms and conditions. Identify the client and the primary contact, along with primary and after hours contact information. Clearly state the price, payment terms (net 10, net 30, etc.), and the length of the contract. What specific day does the contract start? When does it end? Does it auto-renew? This should all be clearly outlined in the terms and conditions.
- Services. Clearly identify what’s covered, including which systems you support and don’t. For example, if they have a Windows® 2000 machine that you’ve identified and communicated as a security risk and they choose to not remediate, you can outline that it’s not within the scope of your service. Make sure it’s clear who’s responsible for what between you and your customer.
This is why it’s also incredibly important to clearly outline what’s NOT covered. You could be held liable in the case of a security incident if this information is not clearly outlined (see #8). This also creates an opportunity to sell time and materials, work for issues outside of the scope of the agreement, or open the door for conversations about upselling their managed service package. For example, are travel expenses covered? Are there any onboarding fees? Are there any modifications to the agreement? Is this a Service-Level Agreement (SLA)? These all need to be addressed regarding the services that are and are not included in the agreement.
- Hardware. Explain warranties lengths and specifications as well as purchasing information. Be sure to cover Hardware-as-a-Service.
- Licensing of MSP. Provide a thorough explanation of MSP-owned licensing, as well as Software-as-a-Service (SaaS).
- Termination of agreement. Outline the specific rules of termination, the need for licensing (if transferring MSP-licensed OS, backups, etc.), and who owns the data in the event of termination.
- Backups. Specify the conditions, length of incremental copies, and number of copies.
- Limitation of liability. What limit do they have on suing you for negligence? Be sure to provide details regarding allocation of risk.
- Cybersecurity insurance. How much coverage do you have? What is covered with your policy? What is NOT covered? It is important to give thorough detail of possible liabilities.
- Confidentiality. Include a confidentiality agreement, licensing agreement, non-disclosure document, and non-compete document for employees.
- Illegal behavior. Include policy of immediate reporting to police of any illegal behavior, emphasizing that you are not obligated to notify them first.
- Assignment clauses. Clearly outline which contractual obligations, rights, and duties may be transferred.
- Definitions. What does something “mean” to you? Include all company-specific terms.
While this list scratches the surface of what to include in a managed services agreement, it provides a strong foundation for MSAs that satisfy clients and build your business. If you'd prefer to have a plain-Jane managed services agreement with only the standard terms and conditions make sure you're covering all these extra specifics outlined above in an addendum.