What should be included in a managed services agreement?

A well-written managed services agreement should provide a common understanding of the services to be performed by the managed services provider for the client. Learn why the managed services agreement is often the first step taken by MSPs, the value that an agreement should provide to your customer and how to properly prepare the agreement.

What should be included in a managed services agreement?

The MSP's managed services agreement is the contract that binds their level of service between themselves and their client and records the common understanding regarding the following:

  • Services
  • Priorities
  • Responsibilities
  • Guarantees
  • Availability
  • Serviceability
  • Performance
  • Operation
  • Response
  • Resolution

The MSP should make certain to have their legal team or attorney review each and every form and document they utilize in their business to make certain that their rights, as well as their customers' rights, are protected.

There are several items to include when creating a managed services agreement. In addition to the terms of the agreement and termination clause, limitation of liability and your fees and payment schedule, the MSP will want to go into granular detail in regards to their hours of coverage, support and escalation procedures, and policy regarding providing service outside normal coverage hours.

About the author
Managed services expert Erick Simpson is the vice president and CIO of Intelligent Enterprise and MSP University. An acclaimed speaker and trainer, Erick has authored The Guide to a Successful Managed Services Practice: What Every SMB IT Service Provider Should Know and MSP University's The Best I.T. Sales & Marketing Book Ever! Erick's prior experience includes overseeing the design, development and implementation of enterprise-level help desks and call centers for Fortune 1000 organizations.

The agreement should also clearly detail what services, equipment and software applications are included, what is excluded from support, and document the minimum standards the environment must meet in order to qualify for services.

The agreement should embody the MSP's service-level agreement (SLA), prioritization process, response times, a definition of support tiers and service desk escalation process.

And finally, the agreement should reflect the MSP's labor rates or fees for requested services which fall outside of flat-fee support.

The act of developing a managed services agreement is often the first step taken by MSPs in preparation for delivering services for a new prospect. Reasons for this include:

  • Identifying what hardware, users, vendors and services are covered, as well as those that are not.
  • Clearly documenting the customer's as well as the MSP's roles and responsibilities.
  • Accurately representing the customer's existing environment.
  • Defining environmental prerequisites for service.
  • Establishing a baseline environment.
  • Creating a framework to insure the MSP's profitability.

A managed services agreement is valuable to the customer as well, as it will:

  • Provide the customer with the comfort level required to engage with the solution provider through documentation of the deliverable as well as the SLA.
  • Document in a clear and easy-to-understand manner the service provider's services and how they are delivered.

A properly prepared managed services agreement will:

  • Document each party's responsibilities.
  • Establish the entire service agreement between the parties.
  • Protect both parties.
  • Set appropriate expectations among all parties.
  • Insure profitability for the service provider.
  • Provide the client with an SLA for services.
  • Become an instrument by which to measure performance and customer satisfaction.

Return to the managed services FAQ guide and read the rest of Erick's expert responses.

This was first published in September 2008

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