What Is a Managed Services Agreement Contract?

Managed services are services that allow an organization to outsource tasks concerning the maintenance and monitoring of information technology-related business systems. As a result, a managed services agreement is a contract for the provision of managed information technology services. Management services providers are companies that specialize in the provision of certain types of products and services.

Other templates are available on our website, and you can use them whenever you need them. They are as follows:  basic service contract, cleaning service contract, labor contract, position agreement, legal contract, IT contract, work agreement, business contract, contractor agreement, disclosure agreement, and other similar templates are available. This post will not only provide you with templates but will also provide you with important information that you need to know in order to complete your template.

Why Do I Need a Managed Services Agreement Contract?

Whatever your role as a business owner or as a managed service provider, you must ensure that your interests are protected by signing a managed services agreement (MSA). If you are a business owner, consider going through the hassle of searching for a new provider while you are in the midst of resolving a dispute with your present provider. That is exactly what you would be doing. You would not want to be expected to undertake more work than you had originally promised to do, even if you were working with the Commonwealth, because scope creep is a serious problem when working with the Commonwealth. It is essential that everything is mentioned clearly in the written agreement so that both parties are aware of what is expected of them.

How Are IT Support and Managed Services Different?

Information technology support does not typically include preventative or proactive maintenance or administration; rather, it is typically given as a reactionary service when something goes wrong. Managing IT services, on the other hand, is typically a proactive and preventative approach in which the provider monitors diagnostic information in the hopes of preventing IT issues from occurring.

What Are the Benefits of Having a Managed Services Agreement Contract?

In spite of the fact that developing a managed services contract is not the most straightforward task, it does have certain advantages. Here are a few illustrations:

What Are the Key Clauses of a Managed Services Agreement?

Creating a managed services contract is usually the first step taken by the provider (MSP) to draft the agreement for a new customer, which includes the services as well as the terms and conditions of the agreement.

1. Services

Not every company has the same requirements. As a result, it is important to spell out exactly what services will be delivered and what services will not be covered by the agreement. The supplier must be aware of the services that are anticipated of them, and the business owner must be aware of the level of support that can be expected of him or her. Aside from the work itself, other elements such as how the work will be executed, as well as deliverables and reports, should be put down in detail if the parties believe it is necessary.

2. System and Network Access

Access is required because the supplier will be monitoring and maintaining the business owner’s information technology systems. The agreement must specify the level of access the provider has to the business’s systems, as well as the constraints on what they can and cannot do within the business’ systems.

3. The Amount of Time

Because most businesses rely on their information technology systems for their day-to-day operations, the length of time it will take for the provider to reply should be specified in the contract. This may be determined by the level of urgency assigned to each sort of requirement. Managed services providers should avoid making a commitment to a response time that they are unable to meet. In accordance with the level of priority, they should be able to give what is within their capabilities.

4. Liability in Certain Circumstances

The inclusion of a liability limitation clause is advantageous to the provider, particularly in situations when the provider causes some form of damage to the business proprietor. It is at this point that competing tensions occur. The business owner is unlikely to agree to a liability cap, but the service provider is unlikely to sign a contract to supply services under which they will be liable in an unlimited or open-ended manner if they cause damage to a third party. While balancing these two considerations can be difficult, the most straightforward approach to do so is to have the risk reflected in the pricing – so that the price decreases if the risk profile of the service provider changes.

5. Confidentiality

This is one of the most crucial elements in a managed services agreement, and it should not be overlooked. As a result of the fact that providers will have access to sensitive information, some business owners are apprehensive to engage them. Having a written agreement in place where the supplier is expected to maintain confidentiality will reassure the business owner that it is OK to grant the access requested.

6. Payments

The conditions and methods of payment for this service contract must be disclosed in writing, just as they are for any other service contract. The majority of managed services providers are compensated on a recurring basis, typically on a monthly basis. Whatever payment schedule the parties determine is most appropriate for their circumstances must be documented in writing.

7. Dispute Resolution

The only person who lives in a perfect world is Peter Pan, who is the only person who lives a perfect world. As a result, it is usually advisable for the agreement to include a process for the resolution of disagreements between the parties, in the event that this becomes necessary. Using this method, you can compel the parties to attempt and resolve their disagreements through discussion rather than immediately resorting to the courts.

8. Termination and Expiration

Because most managed services agreements are for an indefinite period of time, a language in the agreement that specifies how long the services will be provided and how the agreement will be terminated must be included. The Commonwealth always has the option to discontinue a transaction for the sake of convenience while dealing with the Commonwealth. Don’t put up any resistance. Just accept it and go on.

Elements of a Managed Services Agreement Contract

In order to create a Managed Service Agreement Contract, many procedures must be taken. While we won’t go into detail about every section, we will go through some of the most significant portions and conditions to include in your contract.

Define Your Products and Services: This is the introductory part. It details each service your business is capable of providing and is prepared to give. You will not find detailed information on each service here. You detail them further in the remainder of the contract.Defining Your Agreement’s Terms: These are the contract’s fundamental terms, including the start date, duration, and termination date. Take your time reading over this section of the Managed Service Agreement. Include a variety of circumstances and utilize definitive language in your payment strategy. In this manner, you will avoid being underpaid for your services or becoming embroiled in contentious payment issues. Indicate the date payment is due and that it is to be made in full unless otherwise specified or previously discussed. Indicate the late payment penalties incurred, including interest rates and attorney fees. Additionally, mention that all services supplied may be suspended until payment is received.Standards Minimum: This portion of the agreement establishes the basic criteria you expect and need of a customer in order for them to offer your service. It may contain standards for operating systems, applications, patch and update levels, and the status of equipment and hardware.Users and Equipment Protected: You would specify who within a corporation is entitled to your services in this section. Additionally, you should identify any equipment that the company may require and any products that you are ready to provide. Consider all essential services and vendors and include them in this area.Excessive Force: This section of the Managed Service Agreement is for describing any damages or losses that may arise due to circumstances beyond your control. Consider any potential problem that could have an effect on your ability to work. Pandemic rules, for example, are a wonderful supplement to the Force Majeure. Define precisely the response you want your client to take in the event of a crisis in order to maintain a healthy working relationship and safeguard your business in the event of unanticipated situations.Responsibilities and Confidentiality: Here, you want to be very specific about the level of liability you are willing to take in the event of an error. Utilize succinct, lawful language here to avoid being caught on a technicality. Additionally, you should include a confidentiality agreement between you and your client to safeguard any sensitive information you communicate.Specifications for Remote Access: Remote access is both convenient and frequently required. Ensure that you clearly communicate to your clients in the contract that remote work entails security and expense concerns.

How to Write a Managed Services Agreement Contract

Remember that the purpose of this contract is to define what the managed services provider will do for the client and how the client will pay for the service. The agreement should include priorities, response timeframes, termination clauses, liability limitations, and more. Your labor rates or prices for requested services outside of flat-fee support should be included. So long as the paper provides all necessary information, you shouldn’t have to worry about it not expressing the intended message to readers. So, here are the steps to build a managed services agreement contract:

  • Step 1: Who Belongs to Which Role

    The first stage in any contract is to establish who is the customer and who is the Contractor. This is vital information for people analyzing the document for legal purposes. Identifying who plays what role also shows what each of them must do for the other.

  • Step 2: Services to be Provided

    After determining the roles, specify the services the contractor is willing to deliver to the client. A contract is legally binding, therefore you don’t want to leave anything out to ensure the client gets what they anticipate. This section of the contract must be quite specific. That implies you must clearly state what services will be covered and how. For example, the contract may stipulate that the managed service provider is responsible for overall network security. This simply means that the service provider will handle all network security issues. As well as what the managed service provider would not perform for the client. So that there are no misunderstandings about what needs to be done.

  • Step 3: The Duty

    Aside from the services, the contract must specify each party’s responsibilities. This ensures that both can contribute to a smooth service. For example, the contract may say that the client must provide the managed service provider with the necessary resources. The managed service provider will only use these resources for their intended objectives, it states. The responsibilities fundamentally dictate what each party member should do for the other, as well as what they should not do.

  • Step 4: Termination Procedures

    The client may no longer require the services or may have done anything to warrant the termination of the services. In this part, you must state the terms under which the contract can be ended. You must be extremely explicit about what can cause the contract to be canceled, voluntarily or involuntarily.

  • Step 5: Handling of Confidential Information

    Given that the managed service provider will be traversing several systems within an organization, it is likely that they will come across or be required to work with secret information. In that case, the customer will want to ensure that the confidential data is not mistreated. You need to include this clause in the contract to make sure the managed services provider only utilizes the data for its intended purpose.

  • Step 6: How the Client Will Pay

    The section of the contract that outlines how the client will pay for the service supplied is crucial for the managed service provider. This section of the agreement will discuss how the payment will be handled. So it must first state the total sum due for the services given. There must be information on what has contributed to the total, i.e. the specific services that explain why everything costs so much. Assume that the client will only pay what he or she owes. Then you must present payment options for the client. It is usually ideal to provide many options to ensure that the client pays on time. You state that payment can be made by credit card, check, or cash.

    The managed services agreement contract can assess the potential client’s environment and build a framework for the services in order to assure profitability for the managed services provider by taking this first step. The potential client is also made more comfortable by giving him or her an easy-to-understand Service Level Agreement that covers both the managed services agreement contract and the client’s requirements.


When to terminate a managed service provider contract?

You must be very explicit about the circumstances under which the contract may be ended, whether voluntarily or against the client’s will.

What does a managed services agreement entail?

A managed services agreement (MSA) is a contract between a provider and a client that details the level of service that the provider will provide.

What to cover in a managed service agreement?

It assists you in determining which hardware, users, providers, and services are protected and which are not.

When a managed services agreement contract takes on a new client, one of the most significant things it must take is to draft a contract for the managed services agreement contract. It is not something that can be done in a hurry. Take your time, and be concise and clear in your language choice. Once you have a draft, you should seek the advice of a legal specialist who will proofread the document and make any necessary adjustments. Finally, your managed services agreement contract is a legally binding contract that should be considered as such at all times.