Managed Services Agreement: Everything you need to know
Table of contents
Quick Access
In today's business world, technology is the heart that keeps everything moving: from email to the critical applications we use to sell, produce, and serve customers.
But let's be honest, keeping that IT infrastructure running smoothly can be a headache—and very expensive if not managed well.
That's why more and more companies are signing a managed services agreement with a managed services provider. This type of agreement is like a rulebook: it clarifies what services your company will receive, how their quality will be measured, how much it will cost, and what to do if something goes wrong. It's the most efficient way to ensure that your managed IT services are reliable, predictable, and truly add value to your business.
What is a managed services agreement?
A managed services agreement is a formal contract between a company and a provider that offers managed IT services, such as network monitoring, technical support, cybersecurity, server maintenance, and data backup.
Its main objective is to establish a long-term collaborative framework, in which the provider handles technical tasks while the client focuses on their core business. This agreement typically includes details such as:
- Scope of services (e.g., 24/7 help desk, proactive infrastructure monitoring, software updates).
- Provider and client responsibilities.
- Response times and incident resolution.
- Pricing and billing structure.
- Expected service levels (SLAs).
Differences between MSA, SOW, and SLA
When referring to a managed services agreement, it is common to confuse it with other contractual documents such as the Master Services Agreement (MSA), the Statement of Work (SOW), or the Service Level Agreement (SLA). Each serves a different purpose:
MSA (Master Services Agreement): is a framework contract that establishes the general terms of the relationship between client and provider, applicable to multiple projects.
SOW (Statement of Work): is a supplementary document that describes specific tasks, deliverables, and deadlines within a particular project.
SLA (Service Level Agreement): This focuses exclusively on the service levels the provider agrees to meet, such as uptime or incident response times.
A managed services agreement can include an SLA and often functions as a specialized MSA for recurring IT services.
Purpose of a managed services agreement
The purpose of this agreement is to minimize ambiguity and protect both parties. From the customer's perspective, it helps ensure that managed IT services are delivered in a consistent, measurable, and predictable manner.
From the supplier's perspective, it allows for clear definition of the limits of their responsibility, avoiding unrealistic expectations and facilitating a long-term relationship. It is also a crucial tool for:
- Mitigating risks: by defining security, backup, and data recovery protocols.
- Optimizing costs: by establishing fixed rates or predictable pricing models.
- Measuring performance: by detailing metrics and KPIs that must be met.
What should a managed services agreement include?
Although each company can tailor its contract to its needs, a standard managed services agreement structure should include:
1. Definition of the parties: Name of the client and the managed service provider.
2. Scope of services: Detailed description of what is included (and what is not).
3. Service level agreements (SLAs): Response times, guaranteed availability, quality metrics.
4. Roles and responsibilities: To avoid duplication or misunderstandings.
5. Pricing Model: Monthly, per-user, per-device, or per-service rates.
6. Term and Renewal: Term of the agreement and renewal conditions.
7. Support and Escalation Process:How incidents will be handled.
8. Intellectual Property and Confidentiality:Data protection and regulatory compliance.
9. Termination Clauses:Conditions under which either party may terminate the agreement.
10. Review and Update: It is recommended to review the agreement every 6 to 12 months to adjust it to technological or business changes.
How to price a managed services agreement
Pricing is a critical point in any managed services agreement. The most common models include:
- Flat monthly fee: ideal for companies that want predictability in their costs.
- Pay per user or device: suitable for growing companies that require scalability.
- Outcome-based: payment based on the achievement of certain KPIs or metrics.
It's a good idea to review the contract periodically to adjust prices based on business growth or the complexity of your IT infrastructure.
The importance of reviewing the agreement periodically
A managed services agreement isn't a static document. It should be reviewed at least once a year to ensure it remains aligned with business goals, technological evolution, and client needs.
Updating the contract may include:
- New services (e.g., cloud migration, advanced cybersecurity).
- SLA changes based on the criticality of operations.
- Price or package adjustments based on business growth.
Rootstack: Your partner in managed IT services
At Rootstack, we understand that every company is unique and needs a managed services agreement that reflects its priorities and technological risks. As a managed services provider, we have helped companies across a variety of industries optimize their IT infrastructure, reduce disruptions, and ensure business continuity.
If you are considering implementing managed IT services, we invite you to download our managed services agreement template.
This document will serve as a starting point for defining your contractual relationship with a provider and ensuring that you cover all critical aspects of your operation.
We recommend this video
