Managed Services Contract: Everything You Need to Know
A managed services contract is an agreement between a managed services provider (MSP) and a client.3 min read
A managed services contract is an agreement between a managed services provider (MSP) and a client. The contract is a service level agreement (SLA) that outlines the responsibilities of both parties. It also includes which services the MSP will provide, the minimum amount of time for a response, payment structure, and liability protection.
About Managed Services Contract
When creating a managed services contract, the agreement should provide a clear understanding of the services the MSP is to perform for the client.
Developing a managed services contract is usually the first step taken by the provider (MSP) to prepare the agreement to include the services and terms and conditions for a new client.
By taking this first step, the MSP can identify the potential client's environment and create a framework for the services to ensure profitability for the managed services provider.
The potential client is also put at ease by providing him or her with an easy-to-understand service level agreement covering both the MSP and client's needs.
A managed services contract is a binding agreement that records the following:
A managed services agreement is often broken down into segments to further clarify the conditions of each are. These segments may include:
- Coverage hours
- Covered users, equipment, software applications, services
- Definition of services
- Fees (including labor) and payment schedule
- Hours of coverage
- Limitation of liability
- Policy for providing service outside of normal coverage hours
- Problem management
- Support and escalation procedures
- The term of the agreement
Have an attorney review the managed services contract, as well as any other legal document, to make sure the rights of the business and the customer are protected.
Basic Overview of a Managed Services Contract
Term of Agreement
When creating this portion of the contract, it will list the name(s) of the client and the name of the service provider. It will include the effective date, length of the contract, automatic renewal information, if applicable, termination or suspension policy, and review and modification stipulations. If modifications are necessary, additional fees/percentages are listed. It will also include information about either party providing a written notice and a set timeframe if the agreement is not to be renewed.
Fees and Payment Schedule
The fee section stipulates the dollar amount to be paid and when, such as monthly, and the due date. Information may be included discussing the suspension of service if payment is not received within a certain timeframe.
An explanation of taxes, including federal, state, and local, will be added to each invoice for services and/or materials. If the client can produce a valid exemption certificate, this should be addressed in this section of the agreement.
This segment details the days and hours a client can expect a response to any issues they may be having. For example, the client's computer system is not functioning, and they need help from the IT support group.
Service Outside Normal Working Hours
The agreement shall have clearly stated provisions of what is involved when a service call is performed outside of the regular business hours of the MSP.
Service Calls Where No Trouble is Found
This section explains the billing for service calls by the MSP when no problem is found at the client's place of business.
The agreement will state that the managed service provider is not held liable for things such as incidental, consequential, or indirect damages. This will also include no responsibility for loss of profits or revenue, costs to substitute equipment, lost data, or other costs.
This segment specifies the agreement is governed by the laws of the applicable state, and that the MSP is not responsible for failure to render services due to circumstances beyond its control.
This section states the service provider and its agents will not disclose a client's information. The exception is only if it's necessary to provide the contracted services. Otherwise, the MSP will protect the information from unauthorized use.
Acceptance of Service Agreement
The last section clarifies which services and equipment are part of the agreement as well as any adjustments that need to be made after the effective date.
The last paragraph is signed by a representative authorized to accept the agreement as of the specified date.
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