What Is Managed Service Provider Agreement

When creating a managed services contract, the agreement must provide a clear understanding of the services that the MSP is intended to provide to the customer. When drafting the limitation of liability clause in the MSA, particular attention should be paid so that the risk of liability in the event of a breach does not outweigh the economic benefit of the MSA. In the case of multi-year contracts, it is important to limit liability each year for all claims in total to the amount paid by the customer for the services in each year, without applying an unused cap to subsequent years. Another nuance is to limit the liability for each service, as for a silo, to the amount paid by the customer for the service that gives rise to the liability. The potential customer is also reassured by providing an easy-to-understand service level agreement that covers both the MSP and the customer`s needs. Many promising IT service providers are in the dark about how to write an MSA. If the Customer does not make payment for the services or items purchased and this error persists for fifteen (15) days, interest will be charged on any amount due at 12% per year until it is paid. In the event that a recovery procedure is initiated in order to recover the amounts due by the client, the client will bear the recovery costs plus reasonable attorneys` fees. Which begs the question: Are you one of the 75% of service providers that still provide à la carte and breakdown/repair services? Changes to the ACL – service providers for the use of mandatory formulations. This section states that the service provider and its representatives do not disclose a customer`s information. The exception only applies if it is necessary to provide the contractually agreed services. Otherwise, the MSP protects the information from unauthorized use. Several points are crucial for the creation of a managed services contract.

In addition to detailing the terms and a termination clause, the agreement should also explain the supplier`s limitations of liability under certain conditions. Customers should be aware of the associated fees and payment schedule for the duration of the contract. As a Technology Solutions Provider (TSP), you want to build a relationship and position yourself as a trusted advisor. Make the terms of the contract clear and concise – no confusing jargon. The better your deal, the more you and your customers benefit. While this list touches on the surface of what to include in a managed services agreement, it provides a solid foundation for MSAs that satisfy customers and grow your business. If you prefer to have a Jane Managed Services plain contract with only the standard terms, be sure to cover all those additional features described above in an addendum. This segment indicates that the agreement is governed by the laws of the respective state and that the MSP is not responsible for the non-provision of services due to circumstances beyond its control. Your standard MSA should cover the most important aspects of the relationship between your MSP and your client.

This includes how and when you get paid, work policies, renewals, and what happens if the relationship needs to be terminated in the future. Another clause often included in a managed services contract is the one that limits the responsibilities of the MSP to the cost of its services. This protects the MSP from costly litigation in the event that the customer`s system crashes and cannot be repaired within the contractually agreed parameters. The MSP may be sued for the amount it invoiced to the Customer, but not for the other costs incurred by the Customer as a result of the failure. MSP SLAs can be tailored to individual customer requirements. However, an MSP agreement that promises to remain effective in the long run should include the following: While your contract is a wealth of information about your agreement, we`d like to highlight six things: Pricing models are often used in managed services contracts. In general, these are based on different metrics to put a real number on the value of the services offered. Misunderstandings and potential disputes may arise if the contract does not clearly describe the pricing conditions and measures.

The services provided for in the contract should be directly linked to the costs expected by customers. This is very different from a service framework contract, which serves as a framework for future contracts or transactions. Imagine that it almost serves as a “model” for future business by providing common terms and conditions that extend to all transactions between the two companies. MSAs can contain quite complex pricing documents as they often have to cover multiple options for each service. For example, support can be provided on a monthly or annual basis with a retrospective or initial payment, or it can be offered in the form of prepaid time blocks per month (which are not carried over to the next month) or on an ad hoc basis. The above are just some of the general key clauses that should be included in an MSA. It is important that, when drafting such an agreement, care is taken not only to cover the services provided, but also to take due account of the risks posed to the MSP. If an MSP hires subcontractors for one of its services, the managed services contract must also specify what customer information can be shared with them. While every business is cautious about protecting important information, some customers may be required by law to ensure that the data they store is secure.

For example, HIPAA medical practices are required to protect patient information, and any company that processes credit cards electronically must adhere to PCI-DSS. In most cases, service providers are in the best position to monitor the results of an agreement with customers. They outsource the work that employees and contractors perform for customers in accordance with the terms of the contract. Nevertheless, customers also have the responsibility to comply with the agreement. The key to mitigating the risks of a successful supplier-customer relationship lies in the use of pension provision and problem solving during the negotiation phase. If your contract has not met your offers or business requirements in terms of customer service offers, contract language and payment terms, now is the time to update it. The draft included in this article provides MSPs with additional protection and the ability to be proactive when a customer requests changes to the service or billing while ensuring their business is protected. Depending on the level of MSP, it can offer basic service levels from email support during office hours or from a complex set of service levels with a range of tiers such as Gold, Silver, and Bronze, with gold being the highest level with the shortest response and resolution times.

Therefore, the pricing plan should reflect the service level areas. If so, you probably intend to add or expand your managed service offerings and generate more recurring revenue sooner or later. If so, your Managed Services Agreement (MSA) will be your most important transformation tool. Many MSPs start as Value-Added Resellers (VARs) and do not require a managed services contract under this agreement. When a product or service requires an SLA or other type of contract, this is often done between the customer and the supplier, with the VAR acting as an intermediary between them. However, with the managed services model, the channel assumes more direct responsibility for the customer`s systems, as MSPs are hired to proactively monitor and repair the network itself. Non-payment: If payment is not received no later than the first of the month for that month of service, MSP reserves the right to cease providing on-site and remote services until payment of the monthly fee, provided that MSP is informed of the late payment five (5) business days in advance. Relationships between customer service providers are unpredictable at best. Some days you get on the big horse while everything goes to the essentials, and then there are days when you think, “Could this get worse?” Imagine you get a complaint call from your customer and ask your team to resolve the issue immediately, and they do it successfully. When you call the customer back to tell them this good news, you are surprised to learn that they are extremely dissatisfied with your slow response time.

Or here`s another scenario – What happens if the customer`s IT infrastructure is attacked by an outside party and they expect you to back up their data (the only problem)? You`ve never agreed on the scope of backup services, and you have no idea what the customer wants to back up and how they want to automate it. An MSP can customize software as part of managed services. An MSP who wants to use the software code for other clients must ensure that the MSA clearly states that the MSP owns the copyright in the literary work that is the software code, otherwise the MSP will be excluded from a potential source of revenue. In this scenario, the MSP grants Customer a non-exclusive, non-transferable, non-sublicensable license to use the Software for the duration of the provision of the Services. This section explains how the MSP charges for service calls when no problems are detected at the customer`s place of business. Have you ever opened a product with “a required assembly” that didn`t contain instructions (or contained them, but only in a language you don`t understand)? So frustrating.. .