Legal Tips to Help Avoid MSP Pitfalls

Computerworld - Experts agree that the first person to consult before negotiating a managed service provider (MSP) deal is a lawyer. We've gathered some of the best legal minds on the topic and asked them to hand out some tips. The following essays should be required reading before you step into an MSP deal.

The MSP Contract: Work Visually

By Robert Zahler
A typical outsourcing contract is likely to be four to six inches thick. This heft of paper consists of legal terms and conditions and schedules describing the scope of services, the various service-level agreements, the price and pricing algorithms and a mix of another dozen or so schedules. Given all this paper, one is tempted to ask: For what purpose?

The outsourcing market is somewhat unique because there is very little litigation. There is, however, plenty of ongoing informal dispute resolution with constant renegotiation and restructuring of the outsourcing relationship. This would tend to indicate that detailed and voluminous contracts aren't actually necessary.

However, the outsourcing contract wasn't designed to be totally ignored. Rather, it was intended to be used daily to guide the ongoing nature of the relationship, much like a constitution specifying broad principles to be observed by all parties. We know from experience, however, that our clients hardly ever use the contract for this purpose because they find it too long and complex.

As a result, we have rethought the structure of our outsourcing contracts and how we can make them more useful to our clients. There are many things that can be done to improve the usefulness of the contract, but the one I want to highlight is the benefits from thinking and working visually. A key contact schedule that should get daily use is the scope of work. But because it is lengthy and not especially user-friendly, our clients routinely ignore it. In response, we have taken to depicting the schedule in pictorial form as a matrix, with:

The left-hand row headings specifying industry standard processes that describe what functions need to be performed (by both customer and supplier). The verbs in the scope of work.

The top column headings specifying, by geography, business unit and element, the things to which the various processes are applied. For example, computers, networks, hubs and routers, software and so on. The nouns in the scope of work.

At each intersection of a process and element, a color-coded box is used to describe which entity (customer or supplier) is responsible for performing that function. This scope model provides a clear, easily understandable picture of the entire outsourcing relationship in a form that is practical and useful to clients and suppliers. Behind the picture, short, unambiguous written narratives describe both the processes and the elements. If scope is changed, either by adding a new technology or location or by removing responsibility for a certain function at a specific location, the change can easily be reflected by adding or removing a column or by recoloring one or more intersections of process and element.