As a thin guy, I used to subscribe to the philosophy of wearing large clothes to look bigger than I was. What I actually looked like was a scrawny guy in ill-fitting clothes that were not overly comfortable.
Sourcing of IT and associated services may be falling into a similar trap. Rather than using agreements that are the right shape or size, purchasing organizations are developing and rolling out standard templates that are supposedly broad enough to cover everything–unfortunately, they often do not cover any particularly purchase properly. Specifically, we are seeing a proliferation of master service agreements (MSAs) that, largely speaking, come from an IT development context. These are then begin applied to software licensing, professional services; and cloud services agreements–all of which are different transactions with different needs.
To illustrate, let’s review the application of an MSA to a Software as a Service (SAAS) offering. As a threshold, the MSA contemplates project style initiatives, whereas the SAAS offering is by its nature on ongoing, recurring offering over a specified term. Under an MSA, the buyer typically attempts to assert ownership of all developments; this is antithetical to the SAAS model where the supplier contributes IP to continually improve its offering. Under the MSA, the buyer heavily negotiates the service levels; in SAAS, the service levels are the same for all like buyers–without such consistency, there is no shared offering and no cost benefit of the SAAS model. We could go on, but the point is clear–a customer MSA is not likely to be a good fit for a SAAS offering.
The MSA is not a bad document and it may well be suited for certain purchase. In addition, there are many ways in which a template MSA may be used to the benefit of other types of purchases. In fact, it may well be advised to review an MSA to identify gaps in another form of agreement, as long as one does so with an eye toward keeping out elements that do not really apply (I now have relatively broad shoulders, so shoulder pads are no longer a good fit). That said, there are also strong benefits to using a properly tailored contract; not only will it streamline negotiation, it may actually much better fit the specific needs of the transaction at hand.