What is an MSP SLA? Everything You Need to Know

In the dynamic world of IT, an MSP SLA isn’t just a buzzword—it’s a critical contract that sets the stage for success.

These Managed Service Provider Service Level Agreements are often the missing piece in many IT puzzles. Without a clear-cut MSP SLA, you’re navigating the vast IT landscape without a map, leading to potential misunderstandings about the scope of services, response times, and support availability. But with an SLA in place, these aspects become a lot clearer.

Let’s imagine an MSP named TechGuard. They offer an array of services, from network management to cybersecurity. However, without an MSP SLA, their clients are left in the dark about what exactly is included in their service package. What happens when the network goes down at 2 am? Or they’re having WiFi issues during peak hours? How quickly can they expect a response?

If the client learn the answers to these questions in the moment of crisis, that can strain the working relationship with your staff, drive them to a competitor and potentially lead to reputational damage.

But having an SLA would answer these questions for both parties, providing clarity and managing expectations in advance of any issues.

In this article, we’ll guide you through understanding the ins and outs of an MSP SLA, starting from its definition, its use, to creating a template, and more. Ready to unravel the complexities of an MSP SLA? Let’s dive in!

What is an SLA?

A service level agreement (SLA) is a formal document defining the level of service a customer can expect from a vendor. It lays out all the metrics used to measure the service, along with solutions and penalties if the service doesn’t meet the agreed-upon levels. An SLA should be clear and concise, so there’s no room for interpretation.

Internal IT teams also use SLAs to ensure alignment and set expectations within the company. Both have similar goals but a slightly different process when it comes to SLA management.

How are SLAs used by managed service providers?

Service level agreements can be legally binding documents or more informal agreements between an MSP and its customer. In the case of an informal agreement, SLAs are often drafted as an addendum to the contract.

SLAs can also be used internally, such as between departments in a company. In this case, the SLA is more of a guideline than a legally binding document. The advantage of using an SLA internally is that it can help to improve communication and collaboration between departments.

Why would an MSP want to use an SLA?

• Improves client perception. An SLA will set your company apart from the competition by communicating to your clients that you’re a professional organization that’s serious about meeting their needs. It’s a great way to grow MSP revenue by impressing potential clients and winning their business.
• Defines MSP obligations. While you might handle all of a client’s hardware and software, there is a chance that some systems won’t be your responsibility. With an SLA in place, you can avoid misunderstandings about what you’re responsible for.
• Tempers client expectations. An SLA can mitigate some of the more common issues between IT and end-users as it clearly lays out a user’s obligations. This can cover everything from not installing unauthorized software to providing sufficient and accurate information when requesting a fix.
• Provides protection. An SLA can protect your MSP from being held liable if something goes wrong. For example, if someone on the client’s end changes settings they shouldn’t, an SLA can help prove you avoid that blame.
• Helps resolve disputes. If there’s a disagreement, a detailed SLA with supporting evidence can help to resolve the issue. If, say, someone complains that you didn’t meet the agreed-upon response time, your SLA can be used as the adjudicator to prove what agreements are in place.

When would an MSP want to avoid using an SLA?

After touting the benefits of using an MSP SLA, it might seem odd to say there are situations when you shouldn’t use one. However, there are some cases when an MSP should avoid using an SLA. These include:

• Clients with unstable networks. If you’re inheriting a client with an unstable network, it might not be worth your while to draw up an SLA. At least, not in the beginning. Getting the network on track will be difficult enough without worrying about being held liable for not meeting the terms of an agreement.
• One-time projects. You might not need the time commitment and the hassle of drawing up an SLA if you’re only working on a one-time project. For example, if you’re hired to set up a new network for a client, you’re not likely to have any issues that would need to be addressed in an SLA.
• Informal relationships. If you’re providing your services informally, such as managing your landlord’s network in exchange for a discount on your rent, there’s probably no need for an SLA. That’s not to say that any agreement shouldn’t be documented in some way.

How to build an MSP SLA template

With SLAs, it’s vital that you build your own template instead of copying and pasting a generic one. An MSP SLA template tailored to your particular business will ensure that your document is airtight.

Remember, the more details you include in your SLA, the better. This way, there will be no room for interpretation, and you can avoid any misunderstandings down the road.

The general components of an MSP SLA include:

Scope of services

You should be as specific as possible when outlining the scope of services. This way, there can be no misunderstanding about what is included in your agreement. Make sure to cover all your services, such as MSP network management and security. It’s also important to specify the hardware and software you will be responsible for, and importantly, what systems and duties are not under your purview.

Service availability

Make sure to define how service outages will be managed during unforeseen circumstances and scheduled maintenance. You also want to include the expected response time for each situation and the system uptime goals.

Key performance indicators

Including a set of clear KPIs will allow you to determine how well you’re doing and protect you from potentially unreasonable expectations from your client. These metrics can include anything from MOS scores to downed devices to network errors.

Problem reporting and escalation procedures

You need to establish a process for how problems will be reported and how they will be escalated if they’re not resolved promptly. This way, everyone will be on the same page about how issues will be handled.

Problem response times

Response times will vary depending on the severity of the issue. For example, a system-wide outage will obviously require a quicker response than a single user being unable to log in.

Your SLA should include response times for critical and non-critical issues. Critical issues are those that have a significant impact on the client’s business, such as an outage. Non-critical matters are those that don’t have a significant impact, such as a user being unable to log in.

Problem resolution times

In addition to response times, you also need to establish resolution times. This is the amount of time it should take to fix the issue. As with response times, the resolution time will depend on the issue’s severity and complexity. You must be realistic when setting these times to avoid any unpleasant situations down the road.

Support limitations

Specify what happens if you cannot fulfill any of your obligations due to the customer. For example, if a problem occurs and you have no access to the location because the building is closed on the weekends, you need to include a modified response/resolution time in the SLA.

Client/User obligations

The SLA should also detail what obligations the customer has. It could be anything from providing access to the premises to offering detailed information promptly to the types of programs they can install on their hardware. Again, it’s essential that you’re clear about what is expected of the customer to avoid any misunderstandings.

Data protection and confidential information

Including a section on data protection and confidential information is crucial if you’re handling sensitive data. This way, both parties are clear on how the data will be protected and what will happen if there is a breach.

Changes to the agreement

Outline the process for making changes to the agreement. This way, there can be no confusion about how modifications will be made and who needs to sign off on them. This is essential as an SLA should be a living document that evolves as your relationship with your customer changes.

Legal issues

Be sure to address aspects such as indemnification policies and third-party claims in your agreement, as they might be required for any legal disputes that arise.

Termination

Include a termination section specifying the conditions under which either party can terminate the agreement. This could be anything from a breach of contract to a change in the scope of services.

While this is not an exhaustive list, it covers the most important elements that should be included in your MSP service level agreement template. By taking the time to create a well-thought-out agreement, you can avoid many potential problems down the road.

Extra: Tips for Managed Service Providers to consider

When it comes to crafting an MSP service level agreement, there are some important factors to keep in mind, in order to reflect the work in detail:

• The scope of services. As an MSP, you typically offer a higher level of service than many other types of vendors because you’re responsible for the 24/7 monitoring and maintenance of your customers’ IT systems. This means that your customers expect a higher level of service from you, and your SLA should set firm boundaries to avoid scope creep.
• Response time. A critical aspect of an MSP SLA is the response time— how long it takes you to respond to a service request or alert. It’s essential to set realistic response times in your SLA so that your customers know what to expect. For example, response times must be much faster for companies in manufacturing, and MSPs must take that into account to minimize production downtime.
• Uptime. Another important metric in an MSP SLA is uptime, which represents the percentage of time that your customers’ systems are up and running. Again, you have to be realistic here. You might be tempted to promise “five 9s”, but that’s often not possible and will get you into trouble. It’s better to set a realistic goal that you can actually achieve.
• Security. As an MSP, you frequently deal with sensitive data and critical systems, so your customers will likely be highly risk-averse. As a result, they may require a higher level of security and compliance from you. Be sure to address these concerns in your SLA.
• Data Loss. Another concern for MSPs is data loss. Since you might be responsible for backing up and disaster recovery, your customers will expect a very high level of protection from you. Detail what steps you’ll take to protect their data in your SLA.
• Hold Harmless. It’s usually a good idea to include a hold harmless clause (indemnity) in your MSP SLA to avoid surprises. With this clause in place, your customers agree to hold you harmless if something goes wrong that is beyond your control (like a natural disaster or a power outage damaging their infrastructure).

With a well-crafted agreement in place, you can avoid many potential problems and build a strong, lasting relationship with your customer.