At the heart of any successful engagement with an IT managed service provider (MSP) is the contract that details the scope of work. The Statement of Work (SOW) defines the goals, timelines, and deliverables for the services so both parties have a clear understanding of the expectations.
While the goal in any relationship is to have a strong partnership that provides value and results, an SOW can be a useful roadmap to clarify that partnership.
Statement of Work
Here are some of the key items you will want to look for in the agreement that defines the business relationship.
Service Scope
The service scope explains the tasks and responsibilities your MSP will handle. It will include a detailed description of the work to be performed along with any specific deliverables required to fulfill the agreement.
This is especially important with co-managed projects to delineate which responsibilities will be handled by your internal IT team or other third parties vs. your MSP.
Your agreement should also include information about any changes in scope, how to initiate a change request, or how to add services.
Just as important as what work will be done is defining what work will result in additional fees. In many contracts, especially those that are sold as a fixed fee agreement, common tasks that will result in additional charges can include:
- After-hours support
- On-site support
- User on/off boarding
- Workstation set-up
Timelines and Milestones
For projects, it may be necessary to break them down into multiple phases with delivery dates assigned to each phase. Your statement of work will also define specific dates for deliverables and important milestones.
You will also want to understand how to track progress and whether there will be regular reporting against timelines and deliverables.
Resources
There should be a clear understanding of the resources provided by the MSP and anything you need to provide. In most situations, you will be contracting for cloud delivery of services, which means the MSP will provide the cloud resources, personnel, and any hardware or software necessary to manage your services.
For cloud service, you will want to know the environment(s) that will be used with defined roles and responsibilities for provisioning and managing the environment. You’ll also want to specify in writing where the data will be stored, preferably in the U.S. If services are overlayed on top of on-premises equipment, you will also want to understand the expectations for managing your resources, especially if the MSP is providing equipment for your facility.
Pricing and payment terms
The price you pay is always an important consideration in choosing an MSP. Your agreement should be clear about pricing and payment terms. For example, you may need to pay upfront for some services or to initiate a contract and then have monthly, quarterly, or annual payments. For other services, there may be a fixed price component.
Regardless of the price and payment terms, you will want to make sure you know the costs, including any extra fees that may be incurred. For example, some MSPs provide 24/7 coverage while others charge additional after-hours or travel fees for on-site work.
Your agreement should also include billing frequency and terms, including payment due dates, payment methods, and consequences of defaults.
Potential risks
While working with an MSP can significantly reduce your risks in several areas, it is impossible to mitigate every risk. For example, natural disasters, vendor failures, or economic conditions may be outside of anyone’s control.
Your SOW should explain the potential risks along with any limits of liability for either party and how to handle dispute resolution. Most agreements contain arbitration clauses to help both parties mitigate legal fees.
Communication
Communication is key, especially if problems or concerns arise. An agreement should include how communications are handled, how issues will be escalated, and how often you can expect updates.
When a problem arises, your agreement should cover response times and what happens if the MSP fails to deliver on its promises. For example, if your service level agreement (SLA) calls for 99.99% uptime and the service falls short, there is typically a defined process for credits along with the remedies or actions the MSP will take.
Most importantly, you should have assurances that there is transparency about the services you get and how problems or concerns will be addressed.
It’s worth noting here that Sagiss doesn’t have an SLA in our contract. We have Service Level Objectives. We always advise businesses to be wary of long-term contracts. Long-term contracts can result in support slipping. Our 30-day cancellation after the first year means we have to “earn” our client’s business every month and we ensure that those service levels remain high.
Terms and conditions
In every agreement, there are legal terms and conditions. This is an important part of any contract because it lays out responsibilities and expectations. For example, because of the unique way in which MSPs operate, they may have access to confidential information or sensitive data about your customers.
That’s why confidentiality agreements should be included, along with any warranties, liabilities, and limitations.
The Sagiss approach to service agreements
Creating the project scope is an important early step in defining the business relationship and making sure everyone knows who is responsible for what. Sagiss provides a master services agreement that details the statement of work for every client. The contract is developed to protect both parties and ensure a clear understanding of what services are being provided.
The service agreement will govern service delivery and establish the limitations of liability. MSPs typically limit liability to up to six months of service fees. However, Sagiss offers liability limits to the full extent of its Errors and Omissions (E&O) insurance — $1 million with a $2 million umbrella — to provide its clients greater peace of mind.
Sagiss provides managed IT services, managed cloud services, and multi-layered managed security services for businesses in North Texas and beyond. With strong core values that guide what we do, you can expect the highest quality of service, transparency in what we do, and follow-through on projects to ensure the job gets done right.
Contact Sagiss today to discuss your IT needs.
Sagiss, LLC
Sagiss, LLC: April 17, 2024 at 10:48 AM
