Managed Services Agreements

Managed Services Agreements are becoming the norm as more and more businesses move to outsource their technology operations to IT companies. If your business is responsible for managing and maintaining the IT systems of other businesses, you need to ensure that your business and its interests are adequately protected by a Managed Services Agreement.

What is a Managed Services Agreement?

A Managed Services Agreement is an agreement between a consumer and a supplier of services. These types of agreements are commonly used by businesses who supply services such as telecommunications, software, IT, and industrial equipment. They are often necessary for such businesses because the maintenance and operations of such services often require specialist care and assistance.

What should be included in a Managed Services Agreement?

As with most agreements between a consumer and a supplier, you will need to ensure that there are appropriate protections for both parties. Managed Services Agreements are a bit different in the sense that they are often drafted in favour of the supplier. This is because it is on the supplier to set realistic expectations for consumers receiving their services.

Depending on your business, the terms and conditions of your Managed Services Agreement will need to be changed and adapted to reflect the type of services you provide and the capacity that your business has in supplying those services. For example, a larger IT company with more labour resources may be able to offer faster turnaround times on the supply of their services than a smaller IT company.

Despite the potential variations you may need to consider for your Managed Services Agreement, you should ensure that your agreement has, at a minimum, the following standard terms.

How your services will be supplied

This may seem like a no-brainer, but it is important that your Managed Services Agreement clearly outlines how services will be supplied. It is particularly more important nowadays as some services are able to be supplied externally through technology. This means that an IT company who can access your computer off-site will have a vastly different agreement to an elevator company who has to attend onsite to supply its services.

Some considerations you may want to consider in order to set realistic expectations for the consumers include:

  • Whether your services are strictly supplied externally or if you have the capacity to attend onsite.
  • The turnaround times for the supply of your services – will you attend to issues instantly or would they need to book in to receive your services?
  • Whether certain issues from other clients your business supplies to will take priority – for example, an elevator technician may be called out to another building if people are stuck in the elevator
  • Whether your services will be available 24/7

 

Payment and subscription terms

You will need to clearly outline how you will receive payment for your services and this will differ depending on the services you are providing. For example, software companies may choose to include an opt-in subscription pertaining to assistance services provided to manage the software they are supplying. Generally, there will be no extra cost when services are supplied in this type of arrangement.

On the other hand, IT companies tend to adopt a specific term for the agreement, outlining the monthly payments for the engagement of their services. This type of arrangement often includes further payments for when services are actually supplied to the consumer. For example, a business may engage an IT company to manage their computer systems for $1,000.00 per month. If the systems stop working and the business requires to log a ‘call-out’ to the IT company, the business will usually incur a ‘call-out’ fee for the additional services supplied.

Limiting your liability

Whenever you have obligations to fulfil, you need to ensure that your liability to limited to those obligations. As you will be an external party coming into a business to manage their operations, you need to clearly outline what parts of those operations you will be managing. If you fail to outline this, you could potentially become liable for something that has occurred that is beyond the scope of your services.

Certain factors that you may want to consider when drafting your liability clause include:

  • The services you are supplying
  • Specific services you are not supplying – you will need to do this in cases where there may be confusion with a service you are supplying and a service you are not supplying
  • Circumstances that are beyond your control that may affect your ability to provide services
  • Circumstances where the business you are trying to supply to is not being cooperative, limiting your ability to provide your services

Conclusion

Managed Services Agreements require careful consideration on the capabilities of your business in supplying services, the services you provide, and the types of issues or businesses you may be attending to. Consumers receiving these services also need to be aware of the agreement they are entering into and the realities of the services they will be receiving from the supplier.

Whether your business is supplying services through a Managed Services Agreement or if you are a business looking to engage a supplier through a Managed Services Agreement, we highly recommend that you seek out the advice from one of our experienced lawyers in this area who will be able to offer you legal advice unique to your business needs.