Managed Services Agreements and Master Services Agreements

Managed Services Agreements
A managed IT service usually relates to the situation where a supplier will provide a service consisting of the integrated management of any combination of equipment, materials, software and telecoms services. Managed IT services usually work on a subscription-style model where customers pay a monthly fee for such services.

There are various types of managed IT services and the purpose of such a service is for a managed service provider to maintain and be responsible for its customer’s IT service and infrastructure, whether this be real or virtual. Services are often cloud- based and often include support and security services, monitoring, VOIP, back-up and disaster recovery.

There are many advantages of managed IT services, particularly for small businesses who do not have the expertise, knowledge or financial resources to have such services in-house.

In respect of any managed service, the parties should put together a well written managed services agreement which documents and records the services, equipment/software applications to be provided, responsibilities, availability, performance, service levels and any resolution processes agreed between the parties.

We routinely assist our clients with drafting and negotiation of such Managed Services Agreements.

Where there is a wide range of services and not all necessarily contemporaneous or coterminous, it may make sense to structure the provision using a Master Services Agreement and specific Statements of Work, separately covering each type of service being provided. See below for more information on that scenario.

Master Services Agreements
When a service provider is expecting to provide a range of different services to the same client but such services will not necessarily be agreed at the same time or be contemporaneous, it often makes sense at the outset of the relationship to put in place a Master Services Agreement (MSA). This MSA will then govern a series of Statements of Work (SOW) or Work Orders, each one of which will set out the technical and commercial specifics for a particular service provision.

The advantages of this approach are myriad when contrasted with the need to draft separate service agreements for each service provided.

The key advantages are:

  1. The MSA will contain provisions which are relevant to and govern each of the different services so there will be no need to duplicate these when negotiating each service provision. This should make negotiation faster and more efficient;
  2. Statements of Work should largely comprise just contain the technical and commercial details specifying the scope and details a particular service provision. This will often mean that the customer’s legal advisors can be by-passed when agreeing SOW, making agreement faster and more probable;
  3. Flexibility – when the parties enter into an agreement, it will be unclear how successful the engagement will be and it will often be limited to a narrow band of services. The MSA and SOW model enable fast scaling with minimal additional documentation and negotiation. Likewise, different services covered by separate SOW can be terminated or come to a natural end without impact on other SOWs. This is, of course, different from a general services agreement under which termination will usually bring the entire relationship to an end.

The range of services which can be covered under the different SOW is almost unlimited. However, when focusing on the technology sector, key services tend to include:

  • Hosting
  • Software development
  • Managed services
  • Disaster recovery
  • Back-up
  • Maintenance and support
  • Data services
  • Connectivity

For further information on Managed Services Agreements and Master Services Agreements, please contact Simon Halberstam at [email protected]