If you’ve decided that managed services are the right fit for your business, you will eventually need to sign a contract with your chosen provider. This managed services agreement should set expectations between you and your provider and outline said expectations in detail. To ensure you understand what you are paying for, let’s look at some key elements the contract should include.
Services: Which Services Will the MSP Be Responsible for Providing?
Your managed services contract should clearly articulate which services your Managed Services Provider (MSP) will and will not be responsible for. Which services fall outside of your MSP’s range? Is there the option to pay for additional services that are not part of your original plan?
Scalability of Services
As your business grows, you want to make sure you are still covered by your MSP. You will want to know how easy it will be to add and remove users as your business evolves. Are there additional onboarding and offboarding fees for each user listed in the management services agreement?
Your business should have the flexibility to grow, change, and innovate without being confined by your managed services agreement.
Starting Environment: What Does Your IT Environment Look Like and What Needs to Be Done for Your MSP to Start Their Work?
Your IT managed services agreement should clearly outline the necessary state of your IT environment at the start of your contract term.
Onboarding
Different Managed Services Providers take different approaches to onboarding, and you should understand what your process will look like.
Your provider may have an onboarding cost that is separate from your managed services agreement’s monthly recurring cost. This would not cover any upgrades. It instead covers the time it takes your MSP to set up the systems they will use to monitor your environment and the time for the engineers to familiarize themselves with the environment they will soon be supporting.
Instead of charging a separate onboarding fee, some providers will use your first month’s fee to cover onboarding. This means your MSP is not completely ready to support at the first month of the contract and will use that time to onboard.
Closely read your management services agreement to understand what the process of onboarding will look like so you are not confused about additional fees or when the services of your contract actually start.
System Upgrade
If you have outdated systems, will your MSP support these systems or accept liability for the systems you decline to upgrade?
Some providers will require all systems be updated before the terms of your contract start. Others will clearly state that they do not cover “End of Support” systems, even if you choose to keep them. Another option providers have is to do time and materials work on these systems for additional costs, but keep in mind your MSP probably will not accept liability for them.
“End of Support” means the manufacturer—such as Microsoft or Cisco—no longer offers support for the technology. This means no ongoing security patches, replacements for defects, or help from these vendors. Something else to look for in your managed services agreement is whether your MSP will support an item if it goes “End of Support” before your contract ends.
Accessibility: When Is Your Managed Services Provider Available to Help You?
You will want to know when your Managed Services Provider is available to help and how long you should expect to wait when problems arise. For example, is your provider available 24/7/365, or do they have limited helpdesk hours?
You will also want to have an expectation for your provider’s response and resolution times. Response time is how long you can expect to wait before initially hearing from your MSP after submitting a ticket. Resolution time is how long you can expect to wait before your problems are fixed. Service Level Agreements (SLAs) help set these expectations between you and your provider so both ends know what to expect as problems arise.
Systems: What Are Your MSP’s Systems in Place to Support Your IT Environment?
First off, you will want to understand where different levels of technology and IT issues fall on your MSP’s priority scale. You don’t want to be stuck thinking pieces of your IT environment are a top priority when they fall further down on your provider’s list.
Another key piece of your managed IT services agreement is the escalation process. How does your MSP go about escalating problems to engineers with more expertise? What about escalating problems to vendors? There should be a set system in place for escalating problems to the party that is qualified to solve your IT problems in a timely manner.
Lastly, what are your MSP’s incident response plans? If something does go wrong and there is a breach in your IT environment, how will your provider respond? Part of this may include data recovery, changing passwords company-wide, and increased monitoring. You want to make sure your Managed Services Provider is proactive but also responsive.
Reporting: What Is Your MSP’s System in Place to Provide Reports of Their Work on Your IT Environment?
Managed Services Providers should have an established and recurring schedule of reports they provide about their work and your IT environment. For example, most MSPs will provide you with reports on the status of your environment and services in the form of a Quarterly Business Review.
You should receive health/status reports that will let you know if your systems are being properly taken care of and show you how much you are using specific services in your plan. These reports will help you know what you are paying for and keep your provider accountable if you notice they are not holding up their end of the deal. Additionally, these reports can help you scale your services if you notice you are consistently not using services you pay for.
Liability: Who Is Liable for What?
Your managed services contract should clearly define the terms of liability. What are you liable for in the agreement? What liabilities fall on your Managed Services Provider? For example, we already discussed how many MSPs that work on “End of Support” systems will not assume liability for those systems.
Another thing to look for in the managed services agreement regards the limitations of liability. What limit do you have on suing your provider for negligence?
Confidentiality: How Is Your MSP Protecting Your Information?
Confidentiality agreements, non-disclosure forms, and non-compete documents are common in managed IT services agreements. To protect your information, many MSPs will have these agreements in place so your information is protected at an organizational and employee level. However, if your provider does not already have these overarching agreements in place for their employees—or even if they do—you can request that they sign an NDA or confidentiality agreement to ensure your company’s information is secure.
Rules of Termination: What Does the Process of Termination Look Like?
When you sign an IT managed services agreement, you want to make sure you are not locked into a contract with no way out in case your provider is not meeting your business needs. Firstly, you will want to know what happens if your contract is not renewed at the end of its term. Also, who will own the data at the point of termination?
Now, what if you want to end your managed services contract early? The agreement should clearly lay out what constitutes an early termination and if there are any cancellation fees associated with early termination.
Note: A reputable MSP should not stick you with cancellation fees, but most will have a cancellation notice in place. For example, PEI has a 30-day cancellation notice with no cancellation fees.
Understanding Managed Services Agreements
As you can probably guess, there is a lot more that goes into a managed services agreement, but this is a starting point. Your contract should include the items listed above so you have a complete understanding of your relationship with your Managed Services Provider, and there are set expectations for the services you pay for. You should never be left in the dark when it comes to managed services.
If you are looking to get started and need a first step, contact PEI today! We are happy to answer any of your Managed Services questions.
Frequently Asked Questions
What should be included in a managed services agreement?
A managed services contract should include details such as the scope of services provided by the Managed Services Provider (MSP), service level agreements (SLAs), scalability options, onboarding processes, system upgrade policies, accessibility and support availability, incident response plans, reporting mechanisms, liability terms, confidentiality agreements, rules of termination, and any associated fees or penalties for early termination.
How can I ensure that my managed services agreement meets my business needs?
To ensure your managed IT services agreement aligns with your business requirements, thoroughly review the contract terms. Engage in open communication with your MSP to address any concerns and negotiate terms that best suit your organization’s needs.
What should I consider before signing a managed services contract?
Before entering into an agreement, carefully evaluate the services offered by the MSP, assess the scalability and flexibility of the contract to accommodate your business growth, review the onboarding processes and system upgrade policies, understand the incident response plans and reporting mechanisms, clarify liability and indemnification terms, and ensure confidentiality agreements are in place.
What happens if I need to terminate my managed services agreement prematurely?
If you need to terminate your contract early, review the terms to understand the conditions for termination and any associated fees or penalties. Communicate your intentions with your MSP and follow the established process for termination outlined in the contract. Ensure that you adhere to any notice periods or cancellation policies specified in the agreement to facilitate a smooth transition to a new provider.
Reporting: What Is Your MSP’s System in Place to Provide Reports of Their Work on Your IT Environment?
Managed Services Providers should have an established and recurring schedule of reports they provide about their work and your IT environment. For example, most MSPs will provide you with reports on the status of your environment and services in the form of a Quarterly Business Review.
You should receive health/status reports that will let you know if your systems are being properly taken care of and show you how much you are using specific services in your plan. These reports will help you know what you are paying for and keep your provider accountable if you notice they are not holding up their end of the deal. Additionally, these reports can help you scale your services if you notice you are consistently not using services you pay for.
Liability: Who Is Liable for What?
Your Managed Services agreement should clearly define the terms of liability. What are you liable for in the agreement? What liabilities fall on your Managed Services Provider? For example, we already discussed how many MSPs that work on “End of Support” systems will not assume liability for those systems.
Another thing to look for are the limitations of liability. What limit do you have on suing your provider for negligence?
Confidentiality: How Is Your MSP Protecting Your Information?
Confidentiality agreements, non-disclosure forms, and non-compete documents are common in Managed Services Agreements. To protect your information, many MSPs will have these agreements in place so your information is protected at an organizational and employee level. However, if your provider does not already have these overarching agreements in place for their employees—or even if they do—you can request that they sign an NDA or confidentiality agreement to ensure your company’s information is secure.
Rules of Termination: What Does the Process of Termination Look Like?
When you sign an IT managed services agreement, you want to make sure you are not locked into a contract with no way out in case your provider is not meeting your business needs. Firstly, you will want to know what happens if your contract is not renewed at the end of its term. Also, who will own the data at the point of termination?
Now, what if you want to end your contract early? A management services agreement should clearly lay out what constitutes an early termination, and if there are any cancellation fees associated with early termination.
Note, a reputable MSP should not stick you with cancellation fees, but most will have a cancellation notice in place. For example, PEI has a 30-day cancellation notice with no cancellation fees.
Managed Services Agreements
As you can probably guess, there is a lot more that goes into a Managed Services Agreement, but this is a starting point. Your contract should include the items listed above so you have a complete understanding of your relationship with your Managed Services Provider, and there are set expectations for the services you pay for. You should never be left in the dark when it comes to Managed Services.
If you are looking to get started and need a first step, contact PEI today! We are happy to answer any of your Managed Services questions.
