Managed Services Agreements (MSA) are legal contracts between a managed services provider (MSP) and their client outlining the technical requirements and responsibilities necessary to ensure that experts manage and monitor their IT systems regularly.
As modern businesses increasingly rely on technology to streamline their operations, efficient and dependable IT support has become increasingly vital.
This article will provide an in-depth overview of Managed Services Agreements, including their key features, benefits, and how to craft a bespoke managed service agreement that perfectly fits your business needs.
Why Your Business Needs a Managed Services Agreement
Given that every business has unique IT requirements, it is crucial to develop tailored Managed Services Agreements that cater to your specific needs.
Below, we’ve outlined the most typical features of MSAs and the factors to consider when drafting a customized agreement.
Managed Services Provider Term of Agreement
The term of the agreement is a crucial aspect of a Managed Services Agreement. The term refers to the duration of the agreement, which can range from a few months to several years, depending on the agreement’s nature.
The term of the agreement is an essential component of consideration because it determines the level of commitment between the Managed Service Provider (MSP) and the client.
MSPs typically offer a discounted rate for longer agreement terms. Consider your IT system requirements over the next 12 – 36 months and try to determine where you want to be as a business during that time. A reputable provider will work with you to determine the most suitable terms.
Managed Services Contract Service Level Agreement (SLA)
A critical component of the MSC is the SLA, or service level agreement, which sets the minimum standards for delivering IT solutions. The SLA typically includes provisions for minimum response time, escalation procedures, and problem-resolution processes.
The payment structure, including monthly fees and any additional consultation, is also outlined in the contract. An IT support and maintenance model clearly explains the configuration covered, costs, and potential risks associated with delivering support.
By including a liability protection clause, the service provider limits their responsibility for any breach of contract beyond reasonable control, ensuring customer satisfaction while protecting both parties from unforeseen circumstances and additional costs that may affect service delivery.
This contractual language safeguards against any potential issues and helps establish a mutually beneficial relationship between the service provider and the customer.
The SLA in a Managed Services Contract should include a termination provision, allowing either party to terminate the service agreement with a minimum number of days’ written notice, if there is a breach.
The effective date of the contract and the due date for payment should also be specified. The force majeure clause in an MSP contract should outline any events that may prevent the service provider from delivering services and absolve them of any liability in such circumstances.
The MSP should also include provisions for client information protection and business practices that comply with applicable laws and regulations. The contract should specify the minimum amount of software code, substitute equipment, and lost data required to render services.
Escalation procedures and problem-resolution processes should be in place to ensure timely and effective service delivery.
What Managed Services Agreements Do for Clients and Companies
A Managed Services Agreement (MSA) is essential for businesses looking to streamline IT operations, reduce costs, and improve efficiency. Here are some ways in which an MSA can benefit your business:
Enhanced Cost Savings:
A well-crafted MSA can save businesses by improving productivity, reducing downtime, and preventing costly IT failures. MSPs will make reasonable efforts to identify areas of inefficiency in the client’s IT infrastructure and implement cost-effective solutions that improve operations.
Proactive IT Support:
A managed service agreement can provide proactive IT support by regularly monitoring and maintaining your IT systems and identifying and addressing issues before they become significant problems. This can help your business avoid costly downtime and improve overall system performance.
Access to Expertise:
A managed services contract provides businesses access to skilled IT professionals who can provide guidance and support on IT-related matters. These professionals offer valuable insights and knowledge about the latest IT trends and technologies, which can help businesses stay ahead of the competition.
Scalability and Flexibility:
These are crucial features that allow businesses to scale their IT resources up or down as needed. This can be particularly beneficial for businesses with fluctuating IT needs, such as seasonal businesses.
Contracted services ensure your IT systems are secure, protecting them from cyber-attacks and data breaches. With the increasing threat of cybercrime, ensuring the security of your IT infrastructure has quickly become the number one critical concern for businesses of all sizes.
What Does a Managed Services Agreement Usually Contain?
A Managed Services Agreement (MSA) is a legally binding contract that outlines the vital aspects of the business relationship between a Managed Service Provider (MSP) and their client. It establishes a clear understanding of each party’s roles, responsibilities, and expectations.
To ensure a mutually beneficial and transparent partnership, it is crucial to incorporate several critical clauses within the MSA.
Scope of Services:
Defining the specific services rendered by the MSP to the client is pivotal. It encompasses details such as the types of devices or systems covered under the agreement, the designated service hours, and the expected response time for resolving any issues that may arise.
This clause can outline the software and hardware that the MSP will utilize, as well as any supplementary services that may be available. By formulating a comprehensive scope of services, potential misunderstandings or disputes can be minimized.
Service Level Agreement (SLA):
The SLA is a vital component of the MSA as it establishes the performance metrics the MSP commits to delivering. These metrics typically include uptime, response time, and issue resolution time. By clearly defining the agreed-upon service levels, both parties can have a shared understanding of the expected quality of service. Moreover, the SLA should also outline the consequences or remedies that will be implemented if the MSP fails to meet the established service levels.
The payment clause within the MSA should provide detailed information regarding the financial aspects of the agreement. It should specify the total cost of the services rendered, including any additional fees or charges applicable during the agreement term.
The payment terms should clearly outline the payment schedule, including the frequency and basis of payments (e.g., monthly). Additionally, this clause may address any late payment fees or penalties to ensure both parties know the financial obligations of the services provided.
Confidentiality and Security:
As data protection and privacy are of utmost importance, the MSA should include a section that addresses confidentiality and security. This clause should highlight the measures the MSP will undertake to protect the client’s sensitive data and ensure its confidentiality.
It may encompass elements such as encryption protocols, access controls, and data backup procedures. Furthermore, the clause should also outline the client’s responsibilities in safeguarding any confidential information from the MSP.
Intellectual Property Rights:
In the managed services model context, intellectual property may be created or utilized. Therefore, it is essential to include a clause outlining the ownership and rights associated with any intellectual property developed during the agreement. This clause clarifies the respective rights of the MSP and the client and ensures that intellectual property matters are properly addressed.
The liability clause establishes the responsibilities and obligations of both the MSP and the client regarding any damages or losses that may occur during the provision of services. It should outline the circumstances under which each party may be held liable and the extent of their liability. Additionally, the clause should address indemnification obligations and include any exclusions or limitations of liability the parties have agreed upon.
Termination and Exit:
This agreement section outlines the conditions under which either party can terminate the contract before its designated end date. It should include the notice period required for termination, the specific reasons for termination, and any associated fees or penalties that may apply.
The MSA should ensure a clear understanding between the MSP and the client by providing concise and unambiguous terms. This ensures that both parties comprehend their obligations, expectations, and rights as outlined in the document.
Duly Authorized Representatives:
Throughout the MSA, it is important to specify that all actions and agreements undertaken by the parties are executed by their authorized delegates, ensuring that the individuals signing the agreement have the required authority.
Valid Exemption Certificate:
If relevant, the MSA can include a provision stating that the client must provide a valid exemption certificate for any applicable taxes or fees, relieving the MSP from any responsibility or liability regarding such taxes or fees.
The agreement should address the unauthorized use of the MSP’s services or materials, outlining the consequences and potential liabilities for such breaches.
Other Costs and Lost Profits:
The MSA should clarify any other costs or lost profits that may arise from the provision of services, ensuring that both parties are aware of their potential financial implications.
The MSA may include provisions or clauses that aim to ensure the profitability of both the MSP and the client. This could involve mutual cooperation, performance milestones, or other mechanisms to support achieving financial goals.
Cost of Managed IT Services
The cost of IT Service Management can vary depending on several factors, with cost considerations such as the scope of services, the duration of the agreement, and the MSP’s expertise.
Additionally, the cost of Proactive IT Management can vary by geographic location and business size.
Typically, MSPs charge a monthly fee that covers all IT services provided, ranging from a few hundred dollars to several thousand dollars depending on the complexity of the IT infrastructure and required services.
Some MSPs may also charge additional fees for specific services or projects.
Service Outside Normal Working Hours
Most MSPs provide IT support during normal working and regular business hours, typically 8 am to 5 pm, Monday to Friday.
However, some managed service providers can offer 24/7 support as part of managed services contract for an additional fee.
Businesses with service calls should consider their IT needs and determine whether they require round-the-clock support.
The service provider should clarify the process for raising after-hours support and the associated fees within the service agreement.
Service Provider Potential Contract Issues
When drafting a managed services contract, include clear language outlining the services covered by the entire agreement and the payment structure. The managed services contract should also include a termination clause and an unforeseeable circumstances clause that outlines the actions to be taken in case of unforeseen circumstances that prevent the MSP from delivering services.
The managed services contract should also include liability protection and valid exemption certificates to protect both parties.
It is also essential to clarify the responsibilities of both parties, including the client’s obligation to provide necessary client information and the MSP’s obligation to render services to the problem client in a timely manner and efficient manner.
The contract should also include a hierarchy of escalation and a minimum response time to resolve issues promptly.
In case of early termination, the contract should outline the consequences of such failure for both parties and include language that holds one party or both parties liable for any breach of the contract.
How Does A MSA Differ From A Statement of Work?
A Managed Services Agreement is a comprehensive agreement that outlines all aspects of the MSP’s services, including the scope of services, the payment schedule, terms, and SLA.
In contrast, the scope of work (SOW) or statement of work (SOW) outlines a specific project or task that the MSP will complete.
While an MSA provides ongoing IT support, an SOW or SOW is a one-off project that the MSP will complete.
Atlantic.Net Managed Services
Are you tired of managing your IT infrastructure alone? Are you tired of impossible contract language? Then look no further than Atlantic.Net’s Managed Services Agreement.
With Atlantic.Net as your IT Managed Solutions provider, you can trust that your IT environment is in expert hands. Our team of experienced professionals will manage everything from monitoring and managing your servers to keeping your data secure and ensuring maximum uptime.
Choosing Atlantic.Net as your Outsourced IT Services provider means you’ll have access to our state-of-the-art data centers, advanced security solutions, and cutting-edge technology. We provide 24/7/365 support to resolve any issues quickly and efficiently.
By partnering with Atlantic.Net, you can focus on your business goals and leave the IT management to the experts. Don’t let IT issues hold you or your clients back; choose Atlantic.Net as your MSP today.