Following a poor experience with another I.T. service provider, businesses are often hesitant to sign a formal contract with a new provider. Knowing this, some service providers at a less mature stage in their business promote “no contracts” or “no commitments.” While this does seem appealing to the customer at first, it consequently limits the customer’s options for recourse in the event something goes sideways with the service provider. Contracts are necessary, and good legal contracts are mutually beneficial. For this reason, mature managed I.T. service providers (“MSPs”), such as Digital Boardwalk, invest heavily in the development and maintenance of their service agreements, focusing on providing transparency, clarity, and protection for their customers.
Here are just a few of the many benefits of an MSP service agreement:
1. Scope of Engagement
I.T. management is no longer limited to just maintaining computers and networks. Technology has exploded into this borderless ecosystem of hardware, software, cloud technologies, cybersecurity, and more. While an MSP will likely offer to help their customers with all aspects of their technology, realistically there is a specific scope of technologies and services the MSP will be focused on. A detailed scope of engagement affirms what the MSP is and is not delivering as part of its services. This clarity allows the customer to avoid gaps or overlaps in coverage, reducing unnecessary expenses over time.
For example, many MSPs do not manage or secure the customer’s website as part of a typical service agreement. Websites do need, however, ongoing maintenance and security as part of a well-rounded cybersecurity strategy. With this clearly defined in the service agreement, the customer can ensure that they have adequate protection of their website.
2. Responsibilities (of both parties)
Managing technology takes a team including both the MSP and the customer. While there are many tasks the MSP can perform solo, there are still various tasks that require the participation and cooperation of the customer. Clearly defining these responsibilities is critical to the efficacy of the MSP’s service delivery.
For example, many technologies have a specific lifecycle after which the manufacturer will no longer support the technology. The MSP will assume the responsibility of preparing the customer for these lifecycles and required purchases, but the customer has an equally important responsibility of following thru with these purchases so the MSP can continue supporting the technology effectively.
3. Nondisclosure, Intellectual Property, and Customer Data
MSPs have access to and control of all sorts of customer data, intellectual property, and sensitive information for businesses they manage. It goes without saying that it’s critical to legally define how the MSP is going to handle and protect this information. Without this legal protection in place for the customer, MSPs can (and have) held customer data hostage, exfiltrate data to outside systems without the customer’s approval, share data with the customer’s competitors, and more. It sounds scary and unlikely, but it happens far more often than businesses assume. A thorough contract will clearly define this data, the customer’s rights to the data, and the MSP’s responsibilities for protecting the data.
4. Recourse for Nonperformance
Good and fair legal contracts provide recourse for both parties in the event one party fails to deliver on its obligations. This is typically where most businesses object to term commitments in contracts. But a fair contract will allow for a customer to terminate the contract early without penalty if the MSP can’t meet its obligations. Outside of nonperformance, these contract terms also define what protections the customer has in the event the MSP makes an error or omission that negatively impacts the customer. Without this important language in a service agreement, businesses face an uphill battle if an MSP causes them harm.
5. Commitment Terms
Lastly, most importantly, and often misunderstood are commitment terms. MSPs that offer month-to-month agreements preach the fact that customers have no commitment or obligation to the MSP. Sounds great, right? Not so much. This lack of commitment also means that the MSP has no obligation or commitment to the customer. MSPs with month-to-month agreements find it more difficult to predict what future revenues will be since customers are constantly coming and going. As a result, they often can’t invest in or retain talent, invest in research and development, or deliver consistency in their service delivery. When a customer agrees to commit to an MSP, the MSP also agrees to commit to the customer in a long-term, mutually beneficial business relationship. And as long as the service agreement is fair and includes clear recourse for nonperformance, long-term commitments offer far more advantages than disadvantages.
Conclusion
While many businesses may be hesitant to sign long-term contracts, fair and well-written service agreements provide businesses with the necessary safeguards, expectations, and definitions needed to establish and maintain a long-term, mutually beneficial business relationship with a service provider. Businesses should be wary of conducting business with a service provider that does not require a signed service agreement, has a very basic service agreement, or does not ask the business to make any sort of formal commitment. These features are often advertised as benefits but consequently result in less protection and a poor service experience for the customer.
