Drawing up contracts is a basic aspect when running a business. Everything from the least critical choice of who is hired for trash removal service to who will be the IT security contractor will require a contract, and a quality contract can be the difference between success and failure when fulfilling a business’s needs.
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Quick Overview: What Are Managed Services?
There is some debate about what exactly managed services are, but a general concept does exist. A managed service is the act of utilizing an outside company to proactively manage IT management responsibilities and functions. This can be done for a variety of reasons, but the unifying aspect of manage services is that they utilize a subscription model for doing business as opposed to the break/fix or on-demand model thus providing a low cost expert services.
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The Importance of a Contract
When the managed services industry first started out many businesses just used handshake agreements. While nice in theory handshake agreements offer no protection. Should one of the parties violate this agreement, even in places that acknowledge oral contracts, it still turns into a problem of he-said-she-said. Instead a contract spells out what services will be provided, and at what rate the provider will be paid, and what the provider is responsible for.
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The problem is that not all contracts are equal. Downloading and printing out a legal template won’t quite cover all the potential legal ramifications. Even if you contact a friend who is a lawyer to look over this template contract it still may not really help, as that lawyer might not have the right kind of expertise. Instead educating yourself on what should be in the contract for managed services is one of the best ways to protect your business (and sometimes personal) assets and reputation.
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What is the Scope of the Agreement?
The contract should spell out exactly what the service being provided by the Managed Service Provider (the MSP). More specifically what is the client getting? Is it managed email security, telecommunications, or focusing solely on network security? Different services will have different prices for what is being managed, and may even have different expertise. Never assume that an MSP will just over see something when it is not in the contract.
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A good contract is also a response to a series of questions. For example:
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Who replaces damaged equipment? What types of damages are covered? Commonly if the managed service replaces equipment only that which needs to be replaced due to wear and tear and age are covered. What is wear and tear (as well as age)? This should be spelled out.
What is the expected performance? Will the overseen services be down for any period of time? Are these expected down times? What is acceptable and what should be considered a breach of contract should be stated clearly. If the client is entitled to discounts due to excessive downtime should also be stated.
If a contract is about hardware, ISPs, operating systems or anything that utilizes a lot of bandwidth performance expectations should be included. Be warned if an MSP offers 100% up time and bandwidth that will never have any sort of lag then most likely you are dealing with an experienced company or bad contract. Problems will arise; the only question is what will be the contractual response? How quickly can a client expect to be notified that the report of their issue has been acknowledged and that it is being worked on? Does the MSP have 24/7 customer care? Is there an escalation procedure? The policy for any emergency work that would need to be performed outside of normal coverage hours needs to be specified.
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What are the prioritized areas when issues do arise? One or two printers not working does not have the same importance as the network going down. There should also be guarantees. Any promises to warranty services and systems that are not written do not have to be performed and are not (usually) legitimate reasons to break a contract.
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Terms and Termination of Service
When does service begin? When does it end? What if the client wants to cancel the service? In what instances can the client cancel services (typically bankruptcy or business closures are acceptable)? Will there be penalties for breaking the contract before the termination date? These are all questions that should be answered within the contract.
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Non-Solicitation Clause
This is a pretty standard clause in many contracts with those who manage services. It means that the client business will not try and hire away any of the techs that are working for the MSP. Good employees are always in demand and this clause is intended to prevent the loss of quality, knowledgeable employees and avoid souring the business relationship.
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In the end, good, clear and concise contracts make for good business. If a request is not in the contract then it does not need to be completed.
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