Working with your dream MSP client isn’t just about getting paid.
It’s also about agreeing on specific services, timelines, deliverables, and other crucial details regarding your engagement with the client.
For this, you’ll need an MSP Statement of Work (SOW) outlining the project terms and conditions.
That said, understanding the ins and outs of the SOW can make a big difference in how smoothly your projects run and how satisfied your clients are.
In this blog post, I’ll dive into the nitty-gritty of the Statement of Work for MSPs, why it matters, and what it should include.
You can also watch the quick video below if you're in a hurry.
What is a Statement of Work (SOW)?
A Statement of Work is a document that explains the tasks, responsibilities, and expectations for a specific project or service.
It outlines the work that will be done, the timeline for completion, and any deliverables or milestones.
The primary function of a SOW is to provide clarity and direction to both the MSP and the client, ensuring that everyone is on the same page regarding the scope of work.
What’s the Difference Between a Statement of Work Service Level Agreement
While both the SOW and Service Level Agreement (SLA) are important documents for MSP businesses, they serve different purposes.
The SOW focuses on the specific details of a project or service, such as what tasks will be performed and when they will be completed. On the other hand, the SLA outlines the agreed-upon levels of service and support that the MSP will provide to the client on an ongoing basis.
That said, the SOW is typically used for one-off projects or services, while SLA focuses on the overall relationship between the MSP and the client.
When Do You Need a Statement of Work for an MSP?
The SOW comes in whenever a client requests a specific project or service that falls outside the scope of the regular services covered by the SLA.
This could include tasks such as server migrations, hardware upgrades, or other major projects that require dedicated time and resources from the MSP.
Essentially, any time the scope of work extends beyond the routine services outlined in the SLA, the SOW is necessary to define the details of the project, clarify expectations, and ensure that both parties agree on the scope, timeline, and deliverables.
Importance of a Statement of Work
An MSP Statement of Work is vital to the success of your projects. At the same time, there are certain "negatives" you should be aware of when creating an SOW, as summarized below.
The Positives
It Clarifies the Scope of Work: The SOW clearly outlines the tasks you need to do, avoiding confusion and ensuring everyone knows what to expect.
It Sets Expectations for Both Parties: By detailing the project, the SOW helps align the expectations of the MSP and the client, reducing the likelihood of misunderstandings.
It Is a Basis for Agreement and Risk Management: The SOW is a formal agreement between your MSP and the client. It helps mitigate risks since every party knows their responsibilities and what to deliver.
It Helps Measure Performance: With a clear outline of the scope of work, the MSP can track progress and evaluate performance more effectively.
The Negatives
Complexity and Legal Implications: Crafting a comprehensive SOW can be complex, with legal implications to consider. It's important, therefore, to ensure the document is as comprehensive as possible and legally sound.
You Need to Be Thorough: A poorly written or vague SOW can lead to misunderstandings, disputes, and potential legal issues. You, therefore, want to pay attention to details to avoid common pitfall.
Key Components of a Statement of Work
A good MSP Statement of Work should include the following five parts.
Scope of Services
This section defines the IT services, projects, and deliverables the MSP will provide, such as network monitoring, help desk support, cloud migrations, etc. It also outlines the clients' and MSPs' response times, coverage hours, and responsibilities.
Timeline
This section contains a schedule for all services, projects, milestones, and deliverables the MSP will provide over the contract term.
It includes start and end dates, frequency/intervals for ongoing services, service rollout plans, and project timelines.
Setting clear expectations upfront ensures proper planning and resource allocation on both sides.
Fees and Payment Terms
KThis section specifies the fees, rates, and payment terms for all MSP services and projects detailed in the scope.
Fees may include project implementation costs, per-user or asset pricing, etc. Payment terms define invoicing frequency, payment methods, late fees if applicable, and service cancellation policies.
Defining these terms upfront helps prevent disputes and ensures transparency in the financial arrangement.
Performance Standards
Performance standards set measurable targets for critical MSP services like uptime guarantees, resolution times, system availability, reporting requirements, etc.
Outlining these KPIs in the statement of work provides transparency around expected service levels and gives clients objective metrics to evaluate the MSP's services.
Acceptance Criteria
The acceptance criteria specify the conditions under which the client will accept the deliverables as completed. This may include criteria such as functionality, performance, and compliance with specifications.
Agreeing on acceptance criteria upfront helps ensure that both parties are aligned on the project's completion.
Best Practices for Creating a Statement of Work for MSPs
Taking time to create a statement of work can save you from a world of trouble.
Here’s what you should do to ensure your MSP SOW is comprehensive and well-polished before any party signs on the dotted line.
Clear and Well-thought-out Terms
When your SOW is straightforward and comprehensive, it leaves no room for ambiguity or misinterpretation.
All parties clearly understand their roles and responsibilities by explicitly outlining the scope of work and highlighting what’s included and excluded from the project in your MSP statement of work.
This transparency ensures trust and minimizes the likelihood of disputes arising throughout the project lifecycle.
Differentiate Between General and Project-Specific SOWs
Distinguishing between a general SOW for routine services and a project-specific one for unique projects is critical for effective MSP project management.
While a general SOW may suffice for recurring or standard services, a project-specific SOW is essential for addressing each project's unique requirements and intricacies.
You'll, therefore, want your SOW to address the specific needs and objectives of the project. That way, you can ensure that all stakeholders are aligned and that the project is executed efficiently and effectively.
In addition, this differentiation helps optimize resource allocation, mitigate risks, and ultimately contributes to the project's success.
Involve All Key Stakeholders
Your MSP and the client's active participation of key stakeholders is integral to creating a robust SOW.
In addition, it ensures that you can consider diverse perspectives, needs, and expectations.
Furthermore, this collaborative approach encourages a deeper understanding of the project requirements and promotes consensus-building.
What's more, it facilitates the creation of a mutually agreeable and effective SOW that lays the foundation for successful project execution and client satisfaction.
Regularly Review and Update Your SOW
Regularly reviewing and updating your MSP Statement of Work is crucial to maintaining relevance.
Periodic reviews allow you to adjust changes in project scope, timelines, or requirements. That way, your SOW accurately reflects the current state of the project.
In addition, this proactive approach helps prevent discrepancies and enables stakeholders to stay informed about any modifications or developments.
An up-to-date SOW serves as a reliable guide for project execution while facilitating smooth communication and efficient collaboration among all parties involved.
Leverage an MSP Statement of Work to Avoid Confusion
Creating an MSP Statement of Work can be a powerful strategy to minimize misunderstandings and ensure project success. As a rule of thumb, emphasize clarity, involve all the parties, and ensure your SOW is up-to-date.
A well-crafted SOW is your roadmap, guiding the project from inception to completion while achieving optimal outcomes for everyone involved.
Operating a successful and profitable MSP requires more than creating a good Statement Of Work. You need to get your pricing, marketing, and client acquisition right.
Luckily, you can get expert tips on how to run and scale your MSP in my FREE masterclass, which is downloadable through the link below.