One of the usual discussions our channel partners have with their end customers is the terms of their managed print services (MPS) agreement. These contracts are generally very specific in terms of the service and the price attached to it, but in a market where services through the channel are converging fast, these agreements can limit partners in their ability to take customers on a journey beyond a core service. It is for this reason that Josh Watts, Principal at Watts Commercial Lawyers, argues in favour of a Master Service Agreement (MSA) instead.

MSAs, said Josh Watts at our recent Digital Transformation workshop, are a natural fit for managed print service channel partners, whose margins for their core product have been squeezed over recent years as a way to diversify their business. They offer great opportunities for cross-selling to existing and future customers and the flexibility to do so quickly. Adopting these contracts, which broaden the scope of what’s allowed for a reseller to provide, also allow channel partners to take advantage of their position in the marketplace, which is the proximity to the end-users. According to Forrester’s research 64% of all the indirect IT spending is done via channel partners.

Josh advised MSAs required a bit more work upfront but after this initial hurdle, MSAs create certainty for customers, allow for evolving product and service offering and provide a clear path to sell for the sales force.

“Master Service Agreements are akin to government panels, where there are some processes to go through at first, but once you’re on you are seen as having that commercial and legal relationship already ticked off. So, it does open doors and speed in terms of the way you can then contract, add services and grow and diversify your business,” said Josh at our recent online workshop with channel partners.

Contract pitfalls

As IT resellers add more licenses to their offerings, more terms from vendors will be added to a service package, and consequently, contracts with end customers will become more complex. As this process occurs, Josh urged channel partners to strongly consider protection terms for themselves in the same vein vendors have them.

“Vendor licenses will usually have end-user terms that protect the vendor very nicely, but they will rarely have anything to do with looking after the interests and the rights of the reseller, who are actually the parties that are selling the products to the customer. So, for resellers is very important to make sure that they are covered,” Josh said.

In addition, Josh suggested channel partners attending our workshop consider other terms to specifically protect resellers' margins. These include updating CPI clauses (as inflation can have a significant impact on business profitability), the ability to pass on vendor increases to customers, and adding FX true-ups for any exposure to foreign currency.

Finally, Josh stressed that the Australian Consumer Law was recently updated. Starting from July this year, businesses contracting with resellers for less than $100,000 (previously, it was less than $40,000) are now considered to be dealing with consumers under the legislation. “This means resellers will need to give consumer guarantees whether they like it or not. Not providing these can carry serious penalties.”

In our next blog, we’ll cover the insights from Quocirca market analyst Louella Fernandes, who dissected the latest global trends in the print industry.

 

Anthony Toope is the Channel Marketing Manager for Australia and New Zealand at Lexmark. With over 20 years’ experience marketing technology products across Consumer Electronics, IT and Print he has a wealth of knowledge and expertise. At Lexmark, Anthony supports Channel partners and their ability to market products and services to small and medium-sized businesses. In addition, he is an expert in cloud-based managed print services (MPS) and thrives in helping partners understand the current demands and dynamics in the market.