September 17, 2018
What to Assess in a Managed Services Proposal and Agreement
As more IT systems are outsourced, the more important it becomes to select the right managed service provider. You finally found the right service provider with end-to-end capabilities that perfectly suit your needs. Now comes time to review the proposal and sign the service agreement. The specifics outlined in the proposal and service agreement can sometimes be a deal breaker. In this post, we will demystify some of the elements commonly cited in a managed cloud services proposals and agreements so you will be prepared when it comes time to make a decision on selecting a partner.
When reviewing a managed service provider’s proposal, start with the problem statement. The problem statement should always start with a demonstrated understanding of the client’s challenges. If they don’t understand the innate challenges facing an organization, then how could they possibly alleviate those challenges? The problem statement should highlight the client needs (what problems do you want to solve?), client objectives (why and how do you want to solve these problems?) and client goals (how will you know if the service provider succeeded?).
The best problem statements will utilize the client’s own verbiage and phrases in the problem statement. This demonstrates the service provider is listening and is truly invested in tailoring services to your needs.
Following the problem statement is the recommended solution. First, it should reiterate the goals and objectives and follow with how each specific resolution will resolve them. Each solution needs to detail how they will be implemented and demonstrably measured. The client will need to clearly understand how they will know if the solutions succeed or fail.
The best-recommended solutions will also illustrate how the client’s world will look once the solutions succeed. Even better, quantify those wins in terms of cost or time savings.
Pricing Models and Budget
Obtaining a clear understanding of pricing prior to signing an agreement with a cloud services provider is paramount. First, ensure your managed services will fit both your budget and objectives accordingly. The most common forms of managed services pricing include per-device monitoring, per-user pricing and tiered pricing.
Estimated Project Schedule
Like any project, finishing on time and in budget is imperative. Make sure to set realistic timescales with your service provider and to review them again in the proposal. Does the service provider offer any concessions for missing deadlines? Conversely, the service provider shouldn’t be pressured into rushing timescales. Make sure both sides come to an agreement based on the time it takes to produce quality work while fitting into an acceptable schedule for the customer.
One of the primary aspects to assess in a new cloud services partnership is the terms of service. Cloud Standards Customer Council outlines the critical sections of most managed services customer agreements. A standard managed services agreement will include the processes and procedures of the managed services provider, specific definitions of roles as well as the responsibilities and execution formally agreed upon.
Indemnification: This holds waives the provider of accountability for various claims, damages and loss. It’s imperative to understand what your managed services provider is exactly liable for.
Temporary Suspension: A provider may pause or cut services due to security issues, delinquent payments or abnormal use.
Termination: This section of the terms outlines the requirements for closing an account.
Disclaimers: The disclaimers section will explicitly list elements not covered by the agreement. Pay close attention to disclaimers and address any that may be important to your organization.
Service Level Agreement (SLA)
Service level agreements are commonplace in almost any business relationship. These are formal documents agreed upon by both parties defining a set of service level objectives. Unfortunately, the industry still lacks standards for SLAs making it a complex part of the proposal and agreement. According to the Cloud Standards Customer Council, SLAs typically encompass availability, performance, security and compliance/privacy. Typically, these SLAs across all three cloud models, SaaS, PaaS and IaaS focus primarily on availability and remedies for failing to meet agreed upon availability levels.
According to Cloud Industry Forum, customers should always challenge providers who offer flexible SLAs to provide details on how they plan to support variations, who is responsible for overseeing those variations and what processes are used to govern those variations.
Data Policies and Protections
Your data is precious and you need to protect it. Make sure to assess the service provider’s data management policies specifically relating to data privacy. It’s important to ensure there are guarantees regarding confidentiality, data access, data jurisdiction and if data is transferable if you decide to end your relationship. This may extend to legal protections regarding intellectual property rights, indemnification or specific liabilities.
When assessing proposals and agreements with managed service providers, make sure to avoid skimming over both the hard and soft factors imperative to your cloud IT infrastructure. Think in the long-term to avoid lock-in, but also to develop a long-lasting, value-based partnership with your managed services provider.