Managed Services Agreements

What is an MSP contract or a managed service agreement?

In the IT and tech world, an MSP contract is also known as Managed Service Agreement (MSA). It is an agreement between the service provider and the client regarding the services the MSP will provide to its client. When the contract is drafted, certain factors need to be kept in mind like the response time, liability protection, the basic payment structure, and more. There must be a clear definition of the services that you are willing to provide the client.

Drafting an MSA can help you create a proper framework to facilitate a profitable business through your MSP’s services.

What is a master service agreement?

Master service agreements is an agreement or a contract between an MSP and their client that outlines a flexible time frame and framework for completing an assignment. It also includes the decisions that need to be taken along the way for entering subsequent agreements in the future.

An MSA establishes the foundation of the relationship for the work that needs to be carried for the benefit of their client. It is efficient in ensuring that the work is progressing as planned. It is equipped to solve any subsequent problems or issues that may arise in the future, during the course of a project.

Master service agreements also discuss the basics of negotiating and crafting the MSP contract. It gives a clear outline of the best possible practices that MSP will put to use to achieve the desired goal. The agreement also takes into consideration the most common problems that may arise during the course of the project and sets guidelines on how they should be resolved.

A well-drafted Master Service Agreement can help prevent a litigation scenario, hence saving precious time, money and energy for an MSP.

What is a service level contract/agreement?

The SLA or the Service Level Contract is crafted in a way that sets the relationship’s tone between the service provider and its client. The SLA is inclusive of a well-defined set of deliverables and their delivery guidelines that the vendor has agreed upon.

An SLA or Service Level Contracts is different for different MSPs. However, a traditional MSP Service Level Contract must include features like compliance to regulations, basic response time in the face of unforeseen circumstances, and so on.

Managed service agreements or MSP contracts usually contain service level contracts in their clauses. MSP’s often use the term Service Level Contract or SLAs to refer to the blueprint of the actual MSA that is to be presented to their client.

How to write an MSA?

Drafting an MSA can be tricky. Many technicians and IT MSPs are still now aware of how to draft and design a proper MSA.

Let us understand this with an example of managed service agreements.

An ideal MSA contract template should consist of:

  • Proper service descriptions
  • Basic service level contract response period
  • Requirements to avail your MSPs services
  • Proper terms and conditions
  • Repetitive ACH Payment authorization

This MSA service template is considerate of the most crucial aspects on which you will build your relationship with the client. Any good MSP contract should include factors like payment date for your work, work policies and their subsequent renewals and what happens when there is an end of the business relationship between you and your client.

Your MSA can also be used as a sales tool. A good MSA should have a well-defined checklist of products and services that you are willing to provide your customer. Before even reading the full contract the customer will have a proper understanding of what they are signing up for with the agreement.

An MSA or MSP contract should be designed well to protect your business from any form of exploitation. MSAs are meant to set the right expectations of your business by the client.

The above example of a managed service agreement template should help you draw a comparison between your present MSA contract and an ideal MSA contract.

How to draft a master service agreement?

A master service agreement is designed to provide clear parameters in performing the future work established in the contract. It is very crucial to draft a master service agreement by keeping in mind some important functional areas.

  • Scope of services: This helps the customer understand what kind of work they must expect from their vendor.
  • Payment and price options: This helps both sides to agree on a common price, payment schedule and mode of payment.
  • Resolving disputes: This helps understand how the vendor and the client will act in a situation of dispute. Both sides can negotiate litigation costs and find common grounds to facilitate quicker resolution of disputes in case of contractual failure.

    For instance, problems can be solved by appointing a subsequent mediator who has been agreed on by both parties. The vendor and the client may also reach a common ground of dispute resolution through arbitration, which is an inexpensive alternative when compared to going to a court.
  • Geography: Under this clause, both parties may agree on which geographic location their employees will be working.
  • Allocating risks: The new agreement may impact the pre-existing contract between the actors involved. This term helps outline the risks that each party must assume before entering a new contract.
  • Intellectual property rights: Outlines the necessary regulations and ownership details like copyright and patent information.
  • Change of orders: This involves a detailed description of the process that both sides should follow to make necessary changes to a contract. Traditionally these changes are made in the form of written guidelines either for the scheduled work or the subsequent changes.
  • Provisions for indemnification: These provisions relieve one party from being held responsible for the damages.
  • Scope of insurance: Defines the adequate amount of insurance that both parties should maintain.
  • Security clause: Defines the minimal amount of security that both the vendor and the client should maintain.
  • Human pesources: Provides the necessary guidelines for the minimum amount of human resources required by both parties.
  • Termination of contract: It involves the clear definitions of terms on which a party may choose to dissolve the contractual relationship. The clause mentioned under these headlines also defines which party is obliged to pay for the damages in case of a contract failure.

The two most important kinds of termination are termination of cause and termination of convenience.

  • Termination of convenience defines the terms when the client wants to exit the agreement for some reason.
  • Termination of cause defines the guidelines that must be followed when the vendor does not wish to abide by the duties and obligations that had been agreed upon in the MSA.
  • Legal venue and term: These define the length of time of the contract and the location of arbitration in cases of dispute.
  • Warranties and representation: These state the fact that is written in the agreement. Representation is the reason that made the client and the vendor enter the agreement in the first place. Warranties guide the representations in future.
  • Quality standards: Under this clause, both parties agree on the standard of acceptable work. Not maintaining work and quality standards often give rise to disputes.
  • Confidentiality and privacy: The vendor and the client agree not to share information with a third person.

Other than the areas mentioned above, an MSA can define few other areas that should be focused on. This may include areas like business ethics, property and network access, corporate social responsibilities, purchase orders, risk allocation, statements of work purchasing agreements, limitations of liability and much more. This way both the MSP and clients can save valuable resources in negotiations.

MSAs are effective contracts that require the agreement and understanding of both the parties involved. A good MSA can comprehend future disputes and provide necessary assistance to resolve them. This saves the vendor and the client a lot of money and time.

Why does an MSP need a managed service agreement/MSP contract?

A good MSP should be clear about their offerings and outline their services in a well-written agreement. An MSP contract makes it easier to draft a solution path and describe the working areas of your business relationship with the client. The contract is also designed to set realistic expectations for the client. They also document any kind of legal formality that shall require attention in due course.

  • Contracts that are written well can also make your business dealings with the client easier.
  • A good MSA can not only negotiate the terms and conditions of your period of payment but also control the mode through which you want to get paid.
  • They can handle the renewal and termination of your contract with the client.
  • An MSA manages the overall relationship between the client and the service provider.

When should an MSA be revised?

The simple answer to this question is, when you have fallen out of the pre-set expectations previously mentioned in your MSA, you must revise your contract. This may include factors like your service offerings to the customer, failure of payment terms, or the very language of the contract. The language that is used in drafting the contract provides security and protection to your managed services. Therefore keeping your overall business protected.

Nobody wants a bunch of differential agreements floating all over in ways that you are not sure about factors like which client is under which terms and conditions. An annual review of your MSA can prevent any such misunderstandings between you and your client. You should emphasize changing any terms that negatively impact the business relationship with your client

What are the Managed Service Deliverables or Managed Service Scope of Work?

The deliverables or the scope of work may vary from one MSP to the other. However, there are certain core deliverables that every managed IT service must provide.

  • Remote management and monitoring services: Often, situations requiring immediate attention need services from the remote management and monitoring section of an MSP. This gives an increased uptime to the clients. Many RMM services don’t even require human intervention and can be solved remotely. This saves a lot of time and money. These activities may include anti-spam updates, antivirus updates, path management services, disk optimization, operating software applications, backup updates and backup monitoring. RMM can help your MSP focus on the ability to provide better support to a huge number of clients. RMM also cuts short the number of staff that you would otherwise need to hire, hence saving your time and money.
  • Service desk: MSP offerings should also be inclusive of any kind of desk operation. The service desk assists in giving effective problem resolution and remediation services to the clients. Service desks are the point of contact between the client and the managed service provider. The requests by the clients are identified with their subsequent categories at the service desk and then documented in the trouble ticketing system. The resolution is determined after the necessary escalation and troubleshooting. Service desks can resolve the issues of your customers remotely and save time by not having to make an on-site visit to resolve the issue. A lot of time, money and energy is saved by the service desk as the response and resolution time is reduced. This can also help you meet your customer satisfaction goals.
  • Vendor management: This involves the MSP’s role in building relationships with the customers and their vendors. This allows the client to focus on their business without having to bother about their vendors. This service can create long-lasting relationships between the MSP and their clients. The service desk saves the time and energy of the client by dealing with their numerous vendors. MSPs can either work directly to find a quick resolution by remotely communicating with the vendor in question or they may schedule on-site visits with the vendor to resolve a pending issue.
  • Cloud and security infrastructure: If you are looking to create a distinction for your MSP services, then upgrading security and leveraging a cloud-based infrastructure is something you should focus on.

Managed services related to security can help protect your client from cyberattacks. You can choose to build an in-house or partner with an agency to provide cloud and security services to your customer. Many MSPs have developed cloud services built around Microsoft Azure, AWS and Google Cloud. These services help facilitate quicker migration, cost optimization and application modernization.

MSPs also offer disaster and backup recovery services to their customers. This, alongside cloud and security infrastructure offerings, is usually included in a much bigger portfolio of services and products. All of this can also be included within the RMM professional software automation services of the MSP.

What is the difference between managed service agreements and master service agreements?

When drafting an agreement with your client, one should keep in mind that the master service agreement is different from an MSP contract/managed service agreement.

A master service agreement is designed to serve the future transaction and agreements between the MSP and their client. It is crafted to set expectations regarding future business opportunities by agreeing to comply with regulatory norms that will remain constant for all business dealings between the two parties.

A managed service agreement, on the other hand, is an agreement between an MSP and their client that establishes the time frame and work system for completing an assignment.

Frequently asked questions

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