With only a few weeks left in 2016, it’s the perfect time to start thinking about plans for the upcoming year. One of the more actionable ways you may be able to adapt your operations in 2017 is to revisit your Master Services Agreements, or MSAs, to make sure you have the most relevant—and profitable—contracts in place for the months and years ahead.
On a recent episode of MSP Radio, Co-Founder of Virtus Law Tom Fafinski, who has years of experience advising MSPs on a variety of business and legal matters, sat down to discuss this interesting and always-important topic.
Tom covers a lot during his episode, starting off on why you shouldn't leave anything vague in your MSA, because it can lead to confusion and a bad experience—especially when it comes down to billing clients.
"To give you an example of a common area where my clients have said ‘Can we leave that a little vague,’ it would be the costs associated with out-of-business-hours-service or weekend service calls. But the problem with leaving that sort of area vague, especially when you’re discussing cost, is that it’s the most frequent and largest dispute an MSP is likely to run into with their clients. It accounts for well over 50 percent—in my experience—of the disputes that my clients could have with their customers. So, if you can take that many disputes off the table by having such matters clearly written out in a document from the outset, then it’s going to be a great start."
Later, Tom discussed one of the differences between SLAs and MSAs, why he believes it’s important to leave these two agreements distinct, and how to present both to your client.
"You can structure your MSAs so that it’s almost a summary of the relationship. You can break it out and say, ‘Here is a summary of the important terms,’ but then service level agreements should be treated as an addendum to the MSA, so that there is a description of the effort that’s going to be made with respect to response time and uptime, etc., and that is something that is separate and apart from the negotiated MSA. The biggest difference between the MSA and the SLA is that we rarely allow a customer to change a term in an SLA—that’s how we build our businesses as MSPs; we have certain protocols and certain systems and we can’t say we’re going to use one system for client A and another for client B. You don’t want to change your SLA; you don’t want to movie it around or modify that. But if it’s inside your MSA—in a description of effort or a level of performance or the manner in which the services will be provided or your response time or service credits or monitoring, overtime provisions—if that’s buried inside your Master Services Agreement, it can be negotiated on both sides, by clients and even MSPs.
It just doesn’t work that way when building a business and scaling it. So, having the service level agreement being an exhibit to the master services agreement is just a wonderful way to treat that."
To hear more of Tom’s thoughts and experience with MSAs, listen to the full episode here!
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