How To: Breaking up with Your Managed Service Provider

How to leave a contract with a managed service provider

A Managed Service Provider should be an extension of your organization, helping your business grow and keeping your business secure. Unfortunately, some organizations land themselves in a long-term contract with a Managed Service Provider that they are unhappy with.

Some MSPs sign their customers to 2-5-year contracts that lock customers in in order to generate a predictable recurring revenue stream. These types of contracts aren’t always a red flag, and some MSPs continuously deliver on great service and support.

However, some companies discover they chose the wrong MSP only after they’ve signed on the dotted line. Long-term contracts can make you feel trapped, and some more questionable MSPs might even threaten legal action if you try to opt out.

Before we go down the road of analyzing legal loopholes, let’s talk about how you know it’s time to move on.

How Do You Know it’s Time to Leave Your Managed Services Provider?

Strong MSPs are adaptable and built to scale with their clients. If you’re stuck in a partnership that no longer fits your business model, it’s time to switch. Here are other signs it’s time to break up with your Managed Service Provider:

Service Breakdown

If the services your MSP provides are no longer (or never were) satisfactory for your business, then it’s time to move on. One concerning drop in service is when the support you’re receiving no longer abides by the MSP’s established Service Level Agreements (SLA). Even worse, when you experience a major outage (or multiple) that your MSP is unaware of or should have prevented.

Your MSP’s SLAs should clearly indicate the uptime standard as well as repercussions to any breaches in the contract. If you feel there has been a service breakdown, revisit your contract to understand the deliverables and determine if your MSP has violated them.

This is the most obvious sign it’s time to change MSPs, but it’s often only apparent after many other warning signs. Don’t wait until there’s serious harm to your business before you consider switching. Read on for some less obvious signs you may be in a bad relationship with your MSP.

Communication Breakdown

The key to any relationship—business or personal—is effective communication. A good MSP will ensure there are multiple avenues of communication that run both ways and that your needs are always top of mind.

Whether you are reaching out to the Help Desk to open tickets, your Account Manager to discuss expanding (or reducing) your footprint, or your Client Manager to better understand what options you have to improve business processes—it’s important that they are all accessible. Your MSP should have regularly scheduled calls to discuss their service delivery and reporting as well as Quarterly Business Reviews to discuss the overall health of your organization and potential decisions that could help move your company forward.

The best MSPs go even further, with systems in place that allow you to provide feedback about your experiences to ensure you are happy with your service and your business is operating at full potential. If you feel like the communication between you and your MSP is lacking, that could be a sign that it’s time to move on.

Lacking Cybersecurity & Backup Plans

System security and data backup are primary concerns for every type of organization in the modern business landscape. An MSP sincerely looking to help your organization succeed will have a clear plan for keeping your data secure and ensuring backups are in place.

Security breaches are becoming more and more common as attackers grow more advanced with 67% of SMBs experiencing a cyberattack in 2017 according to the 2018 State of Cybersecurity in Small and Medium Size Businesses report conducted by the Ponemon Institute.

The best-case scenario for a breach is that it’s expensive to remediate. The worst-case scenario is it puts you out of business.

Top Managed Service Providers know that a comprehensive security plan is vital to a thriving business, even offering end-user training on cybersecurity to help your employees recognize potential threats. Security threats have become increasingly advanced, and your MSP should be leading the charge on protecting your organization. If your MSP has not discussed an internal plan of security as well as their own security practices, it’s time to find another provider.

You’ve Outgrown Them

Sometimes your MSP just isn’t ready to scale with your organization. If your organization is growing or evolving and your MSP doesn’t have the bandwidth to handle the changes or the internal resources to help your growth, it’s your business that will feel the harmful effects of this in the long run.

This is a common problem: some MSPs provide great service for companies of a certain size or industry type but aren’t capable of scaling up their services or providing expertise to the extent a growing company requires. The best MSPs not only scale with your growth, but act as an extension of your organization—helping you make decisions that support and enhance this growth.

Has your MSP spoken to you about the direction your organization is going and built a business plan for using your technology environment to support these goals over the next 3-5 years? If not, it’s time to change.

How to get out of your Managed Service Provider Contract

While deciding it’s time to make a change is an important part of the equation, it can be even more daunting figuring out how you might actually enact this change. Breaking up with your MSP can not only be challenging, but costly.

It’s wise to revisit your original contract and determine if your Managed Service Provider is living up to their contractual obligations. If they aren’t, start this process by demanding an improvement of service.

It is possible there is a resolvable miscommunication leading to the disconnect. Also, there may be a breakdown in communication among parties in your own organization that make it hard to evaluate objectively how the MSP is performing.

If you come to the decision that it’s time to move on from your MSP, the real question remains: How?

Step 1: Have a Discussion with Your Managed Service Provider

We are always surprised when we speak to customers unhappy with their MSP who have not discussed their issues with their provider. Some MSPs will work with you to let you out of a contract that no longer works for either of you. There is no real benefit (aside from the money) that a MSP gains from forcing an unhappy client to stay.

The reputation of a Managed Service Provider is extremely important due to market saturation—the last thing they want is an unhappy client bashing their services and business practices online, where many new potential clients may become turned off. Many MSPs have a cancelation policy that allow clients to opt-out with 30/60/90 day notice. These options may not always be fee-free, so it’s important to discuss your options thoroughly before making any decision.

In some cases, the feeling may even be mutual. If you are unhappy, it’s possible your MSP is as well and would be willing to waive the fee to ensure a smoother transition for both of you.

Step 2: Contract Review – What are your exit clauses?

After having a conversation with your Managed Service Provider, if you are unhappy with the resolution—or there is no resolution—it is time to review your contract with a fine-toothed comb.

It’s important to understand the financial and legal implications of early termination, especially mid-contract. Most often, you’ll be subject to an early termination penalty—typically a percentage of the remaining contract. As mentioned above, some MSPs have an exit clause that allows unhappy customers out of a contract with a notice of termination (usually 90 days).

Think of these 90 days as an opportunity to research a new Managed Service Provider that will be a better fit for your organization. Before signing a contract with a new MSP, termination/exit clauses as well as terms for moving providers should be negotiated up front to ensure a seamless transition.

Is there a Breach of Contract?

If your MSP still refuses to release you from your agreement, review your contract carefully to ensure you understand the deliverables promised by your MSP.

Most Managed Services Providers have SLAs, quarterly business reviews, patching timelines, scheduled reports, and other deliverables worked into the agreement. If they are not meeting these terms, they are in breach of contract. Once you’ve established that a breach has been made, you can inform your MSP that they are in breach of their contract and you will no longer be paying the remainder.

Depending on the MSP you’re working with, this method might require you to get a Technology Attorney involved to negotiate the terms of your release if the MSP is still threatening legal action.

Key Takeaways on Leaving Your MSP

Your first step is understanding the warning signs. It’s easy to decide it’s time to switch when your business suffers a major outage or breach, but often there are red flags you can catch if you’re vigilant.

There’s also the possibility that opening a candid line of communication with your MSP might reveal a breakdown in your own organization’s communication that’s causing you to doubt your services. Many times, we see owners who do not know whether their contract is being fulfilled because of inefficient communication between management and other employees. While it’s the MSP’s duty to involve the owners and decision makers on larger discussions—ask your users or sys admins to get a clearer picture of the situation.

Second, it is vital to carefully research, vet, and select a new MSP before cancelling your current Managed Services contract. Moving vendors can be time consuming and interrupt your business if you are not careful—this could end up costing you more money than the contract remainder.

Adam Lee, PEI

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