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The Key Elements of an Effective MSP SLA That Ensure Success

March 23, 2023

SLAs for MSPs

A service level agreement (SLA) isn't just a list of services, metrics, and penalties.

It's a crucial part of your managed services agreement (MSA). Managed services provider (MSP) SLAs help determine expectations and how to measure them, so you can keep clients satisfied and eliminate potential disputes.

An SLA might not be the most exciting part of MSP work, but it's essential for building solid client relations. A well-crafted service-level agreement is an integral part of MSP's daily negotiation. However, a rock-solid base makes your business truly successful and profitable.

What is a service level agreement (SLA)? 

A service level agreement is a contract that specifies the description of expected services, the required level of those services, the expected response times for support requests, and the hours of operation for support. An SLA is usually part of a managed services agreement. 

An SLA also defines the steps the managed services providers take to resolve any issues and the compensation the client receives if the MSP fails to meet the agreed-upon service level targets. This provides clients with a clear understanding of the services they can expect to receive and the level of support they can expect from the MSP.

Why do MSPs need an SLA?

Now that we have defined SLA, it's time to talk about why an MSP business needs one.

Clarify areas of responsibility

Your client should clearly understand where your responsibility begins and ends. Specifying the issues outside your control ensures expectations are set, responsibilities are clearly understood, and accountability is clear for different aspects of the services provided.

MSPs typically provide technical support, monitor and maintain equipment, and ensure the availability of systems and applications. They may also be responsible for backup plans, disaster recovery, security, and software updates and patches.

It's crucial that the SLA clearly outlines the areas of responsibility of both the MSP and the client to ensure clarity and understanding. It helps ensure that the services are delivered as expected and that both parties know their obligations and responsibilities.

Formalize communication

Formalizing communication streamlines the SLA between an MSP and its clients. It sets a clear and consistent line of communication between the two parties, and any issues or concerns can be addressed promptly and efficiently.

The SLA should outline the methods of communication, such as email, phone, or ticketing systems. It should also specify the response times for support requests and the hours of operation for support, so clients know when to expect a response from the MSP.

An MSP SLA helps avoid unrealistic expectations and determine the exact procedure to follow when any issue occurs. In addition, the MSP and the clients get clear descriptions of priorities, escalation processes, and resolution times. It also defines a clear schedule for the MSP technicians and saves time. 

Minimize disputes

Avoiding disagreements is nearly impossible, but a detailed SLA contract can help resolve disputes more efficiently. Your response time should correspond to the SLA timeframes to avoid any conflicts. The more detailed your SLA, the fewer questions and unnecessary disputes arise.

Every SLA should specify the process for reporting incidents or problems, including how to log a support request, the expected response time, and the steps the MSP will take to resolve the issue. With the terms set in stone, issues are addressed quickly and effectively, and clients are informed of their support requests' progress.

Additionally, the SLA should specify any compensation the client may be entitled to if the MSP fails to meet the agreed-upon service level targets. Clear expectations and responsibilities must be defined, and effective communication and dispute-resolution processes must be set up to minimize disputes.

Protect both parties 

A well-crafted SLA ensures that both parties know their rights and responsibilities and that any issues or concerns can be addressed promptly. The risk of disputes can be reduced, and both parties can benefit from a positive and productive relationship.

Lay out consequences for unmet expectations

The SLA document offers transparency in terms of standards and obligations. If either party fails to meet the requirements, the MSP SLA contract helps resolve most issues without leaving space for doubt. Knowing what happens when things don't go as planned gives peace of mind to both parties.

What should MSPs include in an SLA?

The SLA should cover two primary areas for MSPs: services and their management. Here are other crucial terms to include in an SLA.

  • Provided services: An overview of solutions and products a client can expect from their MSP, including the scope of the services, the hours of operation, and any limitations. If needed, it can also cover the excluded services.
  • Performance: A list of MSP KPIs, reporting procedures, and expected performance measurements. It should be based on a mutual agreement between the MSP and the client.  
  • Troubleshooting and problem management: The SLA should define what constitutes a problem and the process for escalating the issue to the MSP. To prevent the issue from happening again, the SLA should specify that the MSP will conduct a root cause analysis after the problem has been resolved to determine the underlying cause of the issue and prevent it from happening again.
  • Responsibilities: Each party's area of responsibility, including any hardware, software, or infrastructure the client is responsible for maintaining and any services the MSP provides.
  • Escalation: An established order of operation for different types of emergencies. Each party knows what to expect and how to act, which determines the workflow and facilitates communication.
  • Reporting: An accurate and transparent reporting process is fundamental for effective collaboration between the MSP and the client.
  • Resolution: The time it takes to resolve different issues. Include the information about working outside your typical business hours. 
  • Availability: The uptime hours, contact details in case of downtime, extra charges related to downtimes, and any specific times when services aren't available for any technical or other reasons. Be clear and realistic because miscommunication and vague terms can easily lead to disputes.
  • Scalability: Determine scalability and integration to avoid unnecessary changes to your MSP SLAs.
  • Termination: Terminating conditions will prevent potential future disagreements and protect both MSPs and their clients. 
  • Pricing and billing: Outline of the pricing and billing structure for the services provided, including any discounts, fees, or charges that may apply and any payment terms and conditions.
  • Service level targets: Targets the MSP is expected to meet, including response times, availability, and security measures, such as a disaster recovery plan, security audits, and virus and malware protection.

SLA best practices for MSPs

Once you know what to include in an agreement, follow these best practices to align your services and goals.

Set realistic and achievable goals

It's better to stay on the safe side and opt for an offer you can manage than to inaccurately represent your business' abilities. You can potentially win new clients with promising resolution times, but you risk your reputation, which is hard to recover if anything goes wrong. Ultimately, the promises you can't keep make you look worse. 

When setting goals, you must consider your resources and capabilities and ensure that the goals align with the client's needs and expectations. If the goals are too ambitious, it can lead to frustration and disappointment for both parties and result in disputes.

On the other hand, if the goals are too modest, the clients may not receive the level of service they require, and the MSP may not meet their business objectives.

Track response times properly

Ensure that your SLA document excludes the time your customers take to respond. An IT department must effectively measure response time to provide the best service.

A slow-responding client can make your response times look worse than they are in reality. Measuring MSP SLAs might get complicated. However, ensure that your service desk team is tracked according to performance. 

Be specific and accurate

Uncertainty is one of the worst enemies of your SLA. Both parties should clearly understand each procedure, service, and metric. This creates realistic expectations that facilitate the working process. The MSP and the client have to understand the area of their responsibility to avoid unnecessary disputes. There is no such thing as too much detail in an SLA.

Avoid complex SLAs

A complex SLA contains multiple clauses, technical language, and complex metrics difficult for both the MSP and its clients to understand. Determining what services are being provided, what is expected of each party, and how disputes will be resolved is challenging.

Breaking up large SLAs into smaller ones is a great practice that simplifies the measurement and reporting processes. In addition, updating MSP SLAs gets less complicated.

Train your team

Your employees need thorough training on MSP SLA protocols to minimize potential miscommunication. They must clearly understand what issues are within their responsibility and beyond their reach. They should also know the disaster recovery protocol to prioritize and deal with issues accordingly.

Include compensation for your clients

Show that you care about your clients by including compensation terms in your SLAs. Include penalties for any SLA contract violations and specify accountability to assure the client. An MSP SLA often incorporates a money-back guarantee. For instance, some violations might result in a specific discount for the next month's service.

Specify the timing

Some services should keep running 24/7, while others have to be restricted to regular business hours. It's nearly impossible to provide 24/7 support for every offered service. Some issues require instant attention, while others can wait for a weekday response. It’s about setting the right priorities, so clarify this in the SLA.

Incorporate a hold harmless clause

Given that MSPs work with various autonomous environments, including a hold harmless clause in your SLA can be highly beneficial. Your business could be at risk because it's exposed to different things, especially in today's world of remote work. Hold harmless clauses in your SLA can protect you from unforeseeable risks beyond your control.

Common SLA errors MSPs make

Despite setting clear terms, MSPs may end up making some common mistakes.

Lack of clarity

Not defining clear goals, objectives, and metrics can lead to confusion and misunderstandings between the MSP and its client. The SLA should clearly define the MSPs and the client's services and responsibilities. It's open to interpretation and disagreements without clear definitions. 

Turning SLAs into marketing materials

Putting your best foot forward in your SLA contract is a good idea, but don't try to make conditions look better. Quite often, MSPs tend to add large chunks of marketing text. However, an SLA isn't the right place to describe your services like you're trying to sell them. Instead, focus on the services offered and how to measure performance while avoiding unnecessary information.

Shifting focus mainly to your needs forgetting about those of your clients

An SLA is a document mainly centered on the services you provide. However, it's essential to take both parties into account. An MSP SLA has to clearly state your clients' responsibilities, ways to report issues, and measurement techniques. A clear data management protocol is also essential to creating a collaborative working environment. 

Promising the five nines approach

Five nines (99.999%) availability is one of the most popular promises in an SLA document. It means you will not have more than 5.26 minutes of downtime per year. Even this time can be too much for some businesses.

However, think well before actually offering this level of availability. The five-nine's promise might sound appealing, but remember that any system failure takes considerable recovery time. And hoping that nothing will occur isn't the best solution in the long run.

Aiming for absolute perfection

This includes both unrealistic high-performance levels and drafting your contract to perfection. Setting unrealistic expectations for performance, response times, and resolution times can lead to disappointment and mistrust.

Do your best, but don't concentrate on reaching ideal standards. The best thing to do would be to direct your attention toward building a long-lasting and mutually beneficial relationship.

Not reassessing your SLA regularly

After crafting your SLA, don't forget to reassess it regularly. It's natural that, over time, services change. You should revise your MSP SLA to match regulatory requirements and industry-standard changes. The MSP should update the SLA to include the latest security measures and protocols. 

Neglecting security measures

The SLA should include security measures to protect the client's data and systems. The client's data and systems may be vulnerable to security breaches if the SLA doesn't include specific security protocols, such as encryption and firewalls. If the SLA doesn't include backup services, the client may risk losing vital data in the event of a disaster or system failure. 

The client's data not adequately protected is vulnerable to theft or misuse, leading to financial losses for both parties. In case of a security breach, the MSP may suffer reputational damage, negatively impacting its ability to attract new clients and maintain existing relationships.

Practicality is key to creating effective SLAs

Producing a robust service level agreement begins with a practical approach that can protect both customers and the MSP. A well-written SLA will help you build a strong, long-lasting relationship with your clients.

Clear expectations from both sides will improve the workflow and let you concentrate on providing great services. Following the SLA best practices above can help you become a reliable commercial partner.

Gaining a competitive edge in a crowded MSP market can be challenging. Learn more about ways to future-proof your MSP business and stay relevant.

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MSPs to the rescue

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MSP software
MSPs to the rescue

Take the stress out of managing networks, services, applications, and devices while streamlining your operations with MSP software.

The Key Elements of an Effective MSP SLA That Ensure Success Learn how MSPs can create a thorough service-level agreement for long-term, mutually beneficial client relationships. https://learn.g2.com/hubfs/SLAs%20for%20MSPs.jpg
Alex Tray Alex Tray is a cybersecurity consultant with ten years of experience in the IT field. Alex currently works as a system administrator at a tech company in Texas. He’s an expert in Windows Server and Desktop Administration. Alex often writes articles about data security for NAKIVO Backup & Replication, a full-featured backup and recovery software made with MSPs in mind. https://learn.g2.com/hubfs/Alex%20Tray.jpeg https://www.linkedin.com/in/alex-tray-775581234/

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