Here's the issue: Is there ever a scenario in which managed service providers would not use a service agreement for one of their customers? I ask this question because I recently read a blog that suggested there were some situations where it would be better for the MSP to not have an agreement in place. I would like to explore this question and suggest why this may not be a good idea.
First, let's look at the scenarios where the use of a service agreement might be inadvisable (please note that this list is taken from the original article)
Dangerous networks - where the network is in such a bad state the MSP finds managing it too risky.
Problem clients exist in many managed services relationships and can create any number of problems, including lower profits, poor customer satisfaction, disruption of your service delivery process, and other negative effects.
Casual relationships with customers might lead an MSP to think that putting a formalized agreement in place would not be necessary. These situations might include where certain clients feel that a handshake is sufficient. Other scenarios might include small projects that do not seem monumental to the customer.
There are probably other scenarios where a MSP might believe that use of a service agreement is not advisable. However, I look at the above mentioned situations and see examples of bad customers or bad customer relationships. In these situations, not doing business with the customer would be safer for the MSP than working in a risky manner AND not using a service agreement in addition.
SLAs have come in and out of vogue over the last two decades. Situations where revenue can be generated only if an agreement is not used is an understandably difficult position for many MSPs. But, instead of giving in to the desire for such revenue, think of the tremendous risk you take on, especially if you carry cloud or managed services insurance. Not having a signed service agreement with your customers can actually negate your insurance (claims arising from that customer would be denied due to the lack of SLA).
For those of you who accept these arguments but are left with the problem of convincing reluctant clients that they should sign your agreement, here is a simple yet effective way to sell them on the idea. By signing your service agreement, you can bring the protections you enjoy as a result of your cloud/MSP insurance to that customer. Only when they sign your agreement do the coverages begin to apply to your clients.
