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Managed Services Agreement
I need a managed services agreement for a small business seeking IT support services, including network management, cybersecurity, and helpdesk support. The agreement should outline service level expectations, a 12-month term with a 30-day termination notice, and provisions for monthly performance reviews and adjustments.
What is a Managed Services Agreement?
A Managed Services Agreement sets out how an external provider will handle specific business operations or IT services for your organization. It's commonly used when Kiwi businesses outsource things like network monitoring, cloud services, or technical support to specialized companies who manage these functions day-to-day.
The agreement spells out service levels, response times, and performance standards the provider must meet under NZ contract law. It covers key details like data security requirements, dispute resolution processes, and what happens if systems go down. Most importantly, it protects both parties by clearly defining who's responsible for what, pricing structures, and conditions for ending the arrangement.
When should you use a Managed Services Agreement?
Consider putting a Managed Services Agreement in place when outsourcing critical business functions like IT infrastructure, cybersecurity, or cloud services to external providers. This becomes especially important for NZ businesses handling sensitive customer data or operating in regulated sectors like healthcare or financial services.
The agreement provides essential protection when relying on third parties for day-to-day operations. It's particularly valuable when scaling up operations, implementing new technology systems, or when internal teams lack specialized expertise. Having clear terms around service levels, security standards, and liability helps prevent disputes and ensures compliance with Privacy Act requirements.
What are the different types of Managed Services Agreement?
- IT-focused MSAs: Cover software, network management, and cybersecurity services with detailed uptime guarantees and incident response protocols
- Business Process MSAs: Handle outsourced administrative functions, often including strict data handling and Privacy Act compliance requirements
- Infrastructure MSAs: Focus on physical asset management, maintenance schedules, and health and safety obligations
- Comprehensive MSAs: Combine multiple service areas under one agreement, with modular sections that can be activated as needed
- Industry-Specific MSAs: Tailored for sectors like healthcare or finance, incorporating specific regulatory compliance and reporting requirements
Who should typically use a Managed Services Agreement?
- Service Providers: IT companies, business consultants, or specialized contractors who deliver the managed services and must meet agreed performance standards
- Client Organizations: NZ businesses that outsource functions, ranging from small enterprises to large corporations seeking external expertise
- Legal Teams: Internal counsel or external law firms who draft and review agreements to ensure compliance with NZ contract law
- IT Managers: Oversee technical requirements, service level specifications, and monitor provider performance
- Executive Leaders: Make final decisions on service arrangements and sign agreements on behalf of their organizations
How do you write a Managed Services Agreement?
- Service Scope: List all specific services, performance targets, and expected outcomes you need the provider to deliver
- Technical Requirements: Document your IT infrastructure, security needs, and compliance obligations under NZ privacy laws
- Performance Metrics: Define measurable service levels, response times, and quality standards
- Cost Structure: Outline pricing models, payment terms, and any variable costs or additional service charges
- Risk Management: Identify critical operations, backup requirements, and disaster recovery expectations
- Exit Strategy: Plan transition arrangements, data handover processes, and termination conditions
What should be included in a Managed Services Agreement?
- Service Description: Detailed scope of services, deliverables, and performance standards
- Term and Termination: Contract duration, renewal options, and conditions for ending the agreement
- Payment Terms: Fee structure, invoicing schedule, and payment conditions
- Service Levels: Specific performance metrics, response times, and remedies for breaches
- Data Protection: Privacy Act compliance measures and data handling protocols
- Liability Limits: Risk allocation, insurance requirements, and indemnification provisions
- Dispute Resolution: Process for handling disagreements under NZ jurisdiction
What's the difference between a Managed Services Agreement and a Supply of services agreement?
A Managed Services Agreement differs significantly from a Supply of services agreement in several key aspects, though both involve service provision. The main distinction lies in the ongoing nature and comprehensive scope of managed services versus discrete or project-based service delivery.
- Service Duration: Managed Services Agreements typically establish long-term relationships with continuous oversight, while Supply of Services Agreements often cover specific, time-bound deliverables
- Operational Control: Managed services providers take fuller responsibility for day-to-day operations and strategic decisions within their domain, whereas service suppliers usually work under direct client supervision
- Performance Metrics: MSAs include detailed service level agreements (SLAs) and ongoing performance monitoring, while service agreements focus more on specific outcome-based deliverables
- Risk Allocation: MSAs typically transfer more operational risk to the provider, including systems maintenance and upgrade responsibilities
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