Managed IT Services Agreements Explained
Managed IT services agreement templates are designed to be a framework or a guideline that you can use to create a managed IT services agreement for your business. Unfortunately, they will not always fit your needs or the needs of your clients. The managed IT services agreement templates you can find online are very generic and not tailored specifically to any business or specific situation.
A managed IT services agreement is a contract between a service provider and a client in which the service provider agrees to deliver a set of IT services to the client. Managed IT Services typically include support for network infrastructure, cloud computing, data backup , information security, analyzing purchases of updated technology, etc. Properly prepared managed IT services agreements help to mitigage business losses by ensuring that the service provider is protected against complaints that he was not performing to the client’s satisfaction. A managed IT services agreement should also protect the client by guaranteeing that the service provider will hold up his end of the deal.
Any managed IT services agreement template is designed to help you create a managed IT services agreement for your business and should be reviewed thoroughly to ensure that it fits your business and the services that you provided to and want to protect.
What to Include in an IT Services Agreement
To begin with, the scope of services to be delivered is a critical component of an IT services agreement. This section of a managed service/unmanaged services agreement should include:
a) the description of the services to be given,
b) personnel assigned to such services,
c) deliverables to be prepared based on the services being provided,
d) the reporting that will be provided by the provider to the client,
e) definitions of what constitutes "business hours" and "reasonable hours," and
f) an acknowledgement by all parties that the business relationship is a principal to principal relationship between the service provider and the client.
The responsibilities of both the service provider and the client are another key component to an IT services agreement. The service provider has the primary responsibility for delivering quality service. The service provider should assume that the client will use the deliverables in a free and open way. To that end, the service agreement should provide that:
a) the service provider must take all necessary actions to protect the privacy of the client’s confidential information,
b) the client is responsible for obtaining all necessary legal permission to enable the service provider to deliver the services as described,
c) the client and the service provider are responsible for getting each other information and equipment it needs to deliver or receive the services as described in the agreement,
d) the client will utilize its best efforts to enable the service provider to provide the services,
e) the client will be responsible for the acts of third parties that the client retains on a non-exclusive basis, and
f) the client will be responsible for the acts of its employees in both its work and its general conduct towards the IT service provider in connection with the performance of duties under the agreement.
Service level expectations are another key component of a workable IT services agreement. The level of service can be defined in terms of quality and speed of service, or access to service. With quality, the expected level of performance can be measured in terms of user satisfaction or user technical requirements. The expected speed is usually defined by when the user needs to access certain services – such as real time or within a prescribed period of time. The expected access can be measured by whether the service is available on a 24/7 basis or only during regular business hours. An important component of an acceptable service agreement is that the IT service provider and the user agree on what the appropriate evaluation metrics is for measuring the level of service as set forth in the agreement.
Another key component to an IT services agreement is the termination clause. The idea behind the termination clause in an IT services agreement is to enable the contract to be terminated without penalty or damages by either the service provider or by the user under certain specific conditions. These conditions normally include:
a) the failure to make payments as set forth in the contract,
b) the failure to deliver the services as set forth in the contract by either party,
c) the failure to accept the termination as set forth in the contract by either party,
d) the failure to notify the service provider or the user of the intent to terminate as set forth in the contract by either party,
e) the ability to terminate on notice, and
f) the ability to terminate on a material breach by either party, some defined period of time.
Creating Your Own IT Services Agreement Template
In addition to the standard provisions found in most IT Service Agreement templates, like services provided and payment terms, there are some customization components that must be considered. First and foremost, each IT Service Agreement must clearly define the services provided. This includes not only the specific services provided (Internet, email, network upgrade or maintenance…) but also the hours those services are available and how a response and resolution will be provided. For example, for a help desk/technical support services, will support be available only Monday – Friday from 8:00 am to 5:00pm? Or, is support available 24 hours per day, 7 days per week? The provider should set forth what type of support is available at which times, and if there are certain types of support that are only available during certain hours (i.e. tech support during business hours, after hours emergency dispatch only). A good example is one 3CX VoIP system implementation the Meyer Law Firm did. That client already had a functioning phone system and in order to accommodate an off-hours cutover, we met with the IT guy an hour on Thursday afternoon to run through the changes, and then used the "Scheduled Diagnostics" feature to schedule the cutover late Thursday night so it’d be completed early Friday morning. That way, no existing phones were down at the same time. The IT Service Agreement should also explain cancellations and rescheduling. For example, does a cancellation of an appointment need to be made within a certain time frame? If a network backup is included, how often will it occur? How long will it take to restore? Some companies charge for restore time beyond a certain amount. Is anti-virus software included in the IT Service Agreement? If so, what kind of anti-virus software is it? (some companies provide a lower-cost anti-virus program, but others like Symantec Antivirus are higher-cost programs, but have proven to work much better); when margin pressures for margins tighten, you tend to see more cost-cutting measures, which means more reliance on cheap, over-the-counter solutions to problems. If a network is involved, what kind of connectivity is provided, and how is uptime defined? For example, in a recent certificate of completion I received, it specifically says the internet connection has a 99.9% guaranteed uptime. But it also says there’s a bandwidth cap to avoid a throttled response. How will slowness of connection be handled? And then you’ve got issues like termination, limitations of liability (some companies try to hold their providers responsible for anything and everything, including even failed power supplies), by particular function, and representation and warranties.
Legal Issues and Compliance
When venturing into a managed IT services agreement, several legal considerations must be met. For one, you must ensure that the agreement is in compliance with the relevant local, state, and federal laws. This could include compliance with data protection laws (such as COPPA for websites that target persons under the age of 13 or HIPAA for organizations managing patient information). Failure to enter into a compliant managed IT service agreement could result in liability for both the IT provider and the organizing entity. Having a professionally created contract for your managed IT service agreement will help both parties avoid liability from mistakes in the contract.
The subject of intellectual property rights also comes to play when entering into a managed IT service agreement. Most often, this will pertain to any source code that is used to create the IT service or the application or product that the IT service’s outcome will be used with. Generally, the IT service provider will want to obtain ownership of the source code that they used in the execution of the IT service. However, that can change depending on the needs of the parties. Normally, an organizing entity will seek to have the source code returned to them in the event of a termination of the managed IT service agreement. This allows them to seek out another IT service provider without having to start from scratch.
Confidentiality is another major aspect of a managed IT service agreement. The organizing entity will maintain certain confidential information that the IT service provider will have access to. Any providers that they may use (such as third-party vendors) may also have access to that confidential information. This means that an IT service provider must keep certain information to themselves unless it is necessary for the execution of the IT service. An alternative would be for the IT service provider to secure permission from the organizing entity regarding the dissemination of the confidential information. Normally, the IT service provider must notify their client of any legal requirements to disclose confidential information.
Pitfalls to Avoid
Common mistakes when using a managed IT services agreement template are identified as follows:
a. Disconnect between MSA and subsequent SOWs
Too often, an MSA and the SOWs lack the cohesiveness that was intended. When you renegotiate the SOW , the MSA should be revisited to ensure those sections are not in conflict with the terms in the SOW.
b. Conflicting terms in SOWs
Every SOW should reference the MSA to ensure there are no conflicting terms.
c. Failure to update SOWs
SOWs that are not updated after a renewal term has expired run the risk of not having the latest negotiated terms. An auto renewal term is only as good as the terms in the SOW.
The Importance of a Good Template
The advantages of using a professionally crafted managed IT services agreement template are numerous and far-reaching. It saves the business time and money while at the same time ensuring that they are protected legally in the agreement that they forge with a third-party managed IT services company.
One of the key things that many business people are unaware of is that the use of a managed IT services agreement template actually saves them time and money. This is because the process of developing the agreement has already been done and the terms and conditions have been carefully crafted by experts in the industry. Therefore, the business person does not have to spend their valuable time doing the research and crafting the terms for their agreement.
A managed IT services agreement template also ensures legal protection. Savvy business people know that protecting themselves legally through the managed IT services agreement is possibly the most important feature of this process. Therefore, many will rely on a professional managed IT services agreement template to help them learn the terms of their agreement with the managed IT service provider as well as how they can be legally protected.
There is no more vital aspect of business than having a legal ally during the process of entering into a managed IT services agreement than simply ensuring that the terms and conditions are laid out specifically for everyone involved. This is accomplished by using a managed IT services agreement template.
By laying out the terms and conditions clearly, all parties involved will fully understand what is being agreed to and they will also be able to avoid misunderstandings over the nature of the services and ownership of the equipment.
Making Changes to Your IT Services Agreement
Just because you have created a managed IT services agreement template, you should not think you are done. You should review and update your managed IT services agreement template on a regular basis to ensure that the agreement reflects the latest technological developments and the latest developments in the law. As recently as October of 2011, a court held that a non-tech-savvy customer of an IT service provider was entitled to have the very same services and service level agreement terms that the IT service provider provided to its corporate customers . A revised managed IT services agreement template would be needed to address that legal ruling.
Many changes in the latest case law are based on the fact that technology changes so rapidly. For example, only a few years ago, backup solutions were primarily hardware based. Today, many of the most popular backup solutions are based on cloud technology.
Laidlaw Solutions is ready to help you to prepare a premier managed IT services agreement template. Call today to see how we can help your organization!