MSA vs. SOW for SaaS and IT Companies: What Each Agreement Does and How They Work Together

Growing SaaS, software and IT companies often reach a point where one customer agreement is no longer enough.

A business may begin with a relatively simple software or SaaS agreement. As it grows, however, customers begin purchasing different products, implementation becomes more complex, professional services are added, enterprise procurement becomes more demanding and new projects are added after the original contract has already been signed.

At that stage, many SaaS, software and technology companies move toward a more structured contracting model built around a Master Services Agreement, or MSA, together with one or more Statements of Work, or SOWs.

An MSA and SOW are related, but they perform different functions.

Understanding the difference is important when drafting or reviewing software and IT contracts because poorly coordinated documents can create conflicting obligations, scope disputes, pricing issues and uncertainty about which terms actually govern the relationship.

What Is a Master Services Agreement?

A Master Services Agreement, commonly called an MSA, establishes the overarching legal framework between two businesses.

Rather than renegotiating the same legal provisions every time the parties purchase additional software or begin a new project, the MSA establishes the legal terms once.

Future transactions can then be documented through order forms, Statements of Work or other schedules.

For a SaaS, software or IT company, an MSA commonly addresses matters such as:

• intellectual property;

• confidentiality;

• customer data;

• privacy and cybersecurity;

• warranties;

• indemnification;

• limitation of liability;

• payment obligations;

• suspension rights;

• term and termination;

• dispute resolution;

• assignment; and

• governing law.

The MSA therefore establishes the legal rules that generally apply across the customer relationship.

For companies that regularly enter into technology contracts, a properly drafted MSA can create a more consistent and scalable contracting process.

What Is a Statement of Work?

A Statement of Work, or SOW, generally addresses a particular project, implementation or professional service.

It is typically more operational and project-specific than the MSA.

A software or IT company might use an SOW for:

• software implementation;

• onboarding;

• data migration;

• configuration;

• system integrations;

• custom development;

• consulting;

• training;

• technical services; or

• other professional services.

An SOW may identify:

• the scope of services;

• deliverables;

• milestones;

• timelines;

• assumptions;

• customer responsibilities;

• fees;

• payment milestones;

• acceptance requirements; and

• change-control procedures.

In simple terms:

The MSA establishes the legal relationship. The SOW establishes the work being performed.

MSA vs. SOW: What Is the Difference?

Although the two documents work together, they should not perform the same function.

Master Services Agreement	Statement of Work
Establishes overarching legal terms	Defines a particular project or service
Intended to govern the broader relationship	Usually applies to a specific engagement
Addresses liability and indemnification	Addresses scope and deliverables
Addresses intellectual property and confidentiality	Addresses milestones and timelines
Establishes general payment principles	Establishes project-specific fees
Contains broader termination provisions	May address project completion or cancellation
Usually negotiated less frequently	Multiple SOWs may be entered into over time

A well-structured MSA and SOW should complement one another rather than repeat or contradict each other.

This is why companies seeking MSA drafting, SOW drafting or technology contract review should consider the documents as part of one coordinated contracting framework.

Why SaaS and IT Companies Use an MSA and SOW Together

The primary advantage is scalability.

Suppose a software company signs a new enterprise customer.

The customer initially purchases a SaaS subscription and implementation services.

Six months later, it requests a new integration.

Later, it adds consulting services.

If every new project requires the parties to renegotiate confidentiality, intellectual property, indemnification, limitation of liability and dispute resolution, the contracting process can become unnecessarily slow.

Instead, the parties might use:

MSA → Order Form → SOW

The MSA establishes the overarching legal terms.

The order form identifies the subscription and customer-specific commercial terms.

The SOW describes implementation or professional services.

Additional SOWs can then be entered into as the relationship develops.

For software and IT companies selling multiple services to the same customer, this structure can make contract management considerably more efficient.

Where Does the SaaS Agreement Fit?

There is no universal contract structure for SaaS companies.

Some businesses use a standalone SaaS agreement.

Others incorporate their SaaS provisions directly into an MSA.

More sophisticated technology businesses may use a modular structure such as:

Master Services Agreement↓Order Form↓SaaS or Software Terms↓Statement of Work↓Service Level Agreement

The correct structure depends on how the business sells and delivers its technology.

A company selling one standardized subscription may not require multiple agreements.

A business selling software together with implementation, professional services, integrations and enterprise support may benefit from separating different aspects of the transaction.

An experienced SaaS lawyer or IT contract lawyer can help determine which structure is appropriate and whether existing agreements should be revised or replaced.

What Should an MSA Include?

An MSA should generally contain provisions the parties do not intend to renegotiate every time a new project begins.

Intellectual Property

Technology contracts should clearly distinguish between the provider's technology and any customer-owned materials.

Depending on the transaction, the MSA may address:

• existing software;

• platform technology;

• methodologies;

• tools;

• documentation;

• configurations;

• improvements;

• custom developments; and

• other pre-existing or newly created intellectual property.

This becomes particularly important where the technology provider also performs implementation or development work.

Confidentiality

The MSA can create a confidentiality framework that applies throughout the relationship rather than requiring each SOW to contain a separate confidentiality agreement.

Customer Data

Where the software or services involve customer data, the MSA can establish the parties' general rights and responsibilities regarding access, use, processing, security, return and deletion.

Privacy and Cybersecurity

Privacy and cybersecurity provisions are increasingly important in software and IT contracts.

Enterprise customers may request detailed commitments regarding security measures, incident response, subprocessors, access controls and data handling.

These provisions should reflect what the technology provider can actually operationally support.

Fees and Payment

Individual order forms or SOWs may contain specific pricing, but the MSA can establish general rules concerning:

• invoices;

• payment deadlines;

• taxes;

• disputed amounts;

• late payments; and

• suspension for non-payment.

Warranties

The MSA may establish warranties that apply across the relationship.

Those warranties should be coordinated with any more specific service commitments contained in an SOW or SLA.

Indemnification

Indemnification clauses can create significant exposure and are frequently negotiated in SaaS and IT contracts.

Depending on the transaction, they may address third-party intellectual property

claims, customer content, misuse of the technology or other specified risks.

Limitation of Liability

The limitation of liability clause is often one of the most heavily negotiated provisions in an MSA.

It should establish:

• the general liability cap;

• excluded damages;

• any higher or separate caps;

• liabilities excluded from the cap; and

• how the cap applies where multiple SOWs exist.

For example, does the liability cap apply separately to each SOW?

Does it apply across all services provided under the MSA?

Is it calculated by reference to fees paid during a particular period?

The wording can materially change the company's potential exposure.

Term and Termination

The MSA should address how the broader contractual relationship can be terminated.

It should also explain what happens to existing SOWs and subscriptions if the MSA ends.

What Should an SOW Include?

An SOW should generally focus on the specific project or services being purchased.

Scope of Services

The scope should clearly describe what the technology provider is expected to do.

Vague descriptions such as "implementation support as required" can create uncertainty regarding what is included within the agreed price.

Deliverables

Where there are identifiable deliverables, they should be described.

The SOW should also distinguish deliverables from general activities or support services where appropriate.

Milestones and Timelines

Project timelines should identify important dates as well as dependencies that could affect them.

Where completion depends on information, access or approvals from the customer, the agreement should account for that dependency.

Customer Responsibilities

Many technology projects cannot be completed without customer cooperation.

Customer responsibilities may include:

• providing data;

• providing access to systems;

• making personnel available;

• reviewing deliverables;

• making timely decisions;

• testing systems; and

• obtaining required third-party permissions.

Documenting these responsibilities can reduce disputes over delays.

Fees

An SOW may provide for:

• fixed fees;

• hourly fees;

• milestone payments;

• retainers;

• usage-based pricing; or

• another agreed pricing structure.

The pricing mechanism should align with the scope of work.

Assumptions

Project pricing and timelines often depend on assumptions.

For example, an integration project may assume a particular number of systems, data sources or users.

If those assumptions change, there should be a mechanism for adjusting the scope, fees or timeline.

Acceptance

Where the project involves identifiable deliverables, the parties may require an acceptance process.

The SOW should make clear:

• what is subject to acceptance;

• how long the customer has to review it;

• what constitutes a valid rejection;

• how deficiencies will be corrected; and

• when acceptance is deemed to occur.

Change Control

Technology projects frequently evolve after work begins.

A customer may request new functionality.

Technical assumptions may prove inaccurate.

A third-party integration may require additional work.

Without a clear change-control procedure, the provider can end up performing substantially more work without corresponding adjustments to pricing or timelines.

A properly drafted SOW should establish how changes are identified, approved and documented.

Which Agreement Controls if the MSA and SOW Conflict?

This is one of the most important drafting issues in an MSA and SOW structure.

The contracts should contain a clear order-of-precedence clause.

Without one, the parties may be left arguing about which provision governs when the documents contain inconsistent language.

For example:

The MSA limits the provider's liability.

The SOW contains language requiring the provider to compensate the customer for all losses arising from a missed implementation date.

Which provision applies?

That issue should be resolved when the contracts are drafted, not after a dispute begins.

Should the MSA or SOW Take Priority?

In many technology contracts, the MSA provides that it takes priority over the SOW.

This prevents a project-specific document from unintentionally changing legal protections negotiated in the master agreement.

However, there may be situations where the parties intentionally want an SOW to modify a particular provision.

A controlled approach is to require the SOW to expressly identify:

• that it is modifying the MSA; and

• the particular provision being modified.

This helps prevent accidental changes to important provisions concerning intellectual property, indemnification or limitation of liability.

Can an SOW Amend an MSA?

Yes, if the contracts permit it.

The more important question is whether an SOW should be able to change the MSA simply because inconsistent language appears in it.

That can create risk where SOWs are prepared by sales or operational teams.

A more structured contracting process may provide that the MSA controls unless a change is expressly identified and approved.

This helps protect the integrity of the master agreement.

What Happens When an SOW Ends?

Completion of an SOW does not necessarily terminate the MSA.

That distinction is one of the main benefits of using separate documents.

The parties can complete one project while keeping the overall contractual relationship in place for future services.

Similarly, a SaaS subscription may continue after implementation services have been completed.

The agreements should therefore distinguish between:

• completion of an SOW;

• termination of an SOW;

• termination of a SaaS subscription; and

• termination of the MSA.

What Happens to Existing SOWs if the MSA Is Terminated?

The contracts should address this expressly.

One approach is for termination of the MSA to terminate all existing SOWs.

Another is for active SOWs to continue until completion, with relevant provisions of the MSA continuing to govern them.

The appropriate approach depends on the commercial relationship.

An IT company should not discover after sending a termination notice that it has inadvertently cancelled multiple active projects.

MSA vs. Order Form

An MSA and an order form are not the same thing.

The MSA establishes the legal framework.

The order form typically captures transaction-specific commercial information.

For a SaaS company, an order form may identify:

• the software being purchased;

• subscription fees;

• number of users;

• usage limits;

• subscription term;

• renewal provisions; and

• billing information.

Keeping these commercial terms outside the MSA can make future transactions easier to document.

SOW vs. Order Form

An order form usually records the purchase of standardized products or subscriptions.

An SOW generally describes project-specific services.

For example:

• Order Form: Customer purchases 500 SaaS licences for a three-year subscription.

• SOW: Provider will perform implementation, data migration and integration services.

The same customer may therefore sign both documents.

Where Does the SLA Fit?

A Service Level Agreement addresses measurable service commitments.

Depending on the product, this might include:

• uptime;

• availability calculations;

• maintenance periods;

• technical support;

• response times;

• severity levels;

• service credits; and

• remedies for service failures.

The SLA may form part of the MSA, appear as a schedule or exist as a separate agreement.

What matters is that the documents work together clearly.

When Does an IT or SaaS Company Need an MSA and SOW?

An MSA and SOW structure may be particularly useful where the business:

• provides software implementation;

• performs recurring professional services;

• expects multiple projects with the same customer;

• sells several technology products;

• performs custom integrations;

• negotiates enterprise contracts;

• regularly changes project scope;

• adds services after a customer initially signs; or

• wants to separate legal terms from commercial and project terms.

A simpler business may still be better served by one properly drafted SaaS agreement.

The contract structure should follow the business model.

When Should an MSA or SOW Be Reviewed by an IT Lawyer?

Companies often seek an IT lawyer, SaaS lawyer or software contract lawyer when preparing a new agreement.

Legal review can also be particularly useful when an existing MSA or SOW:

• was prepared several years ago;

• no longer reflects the services being provided;

• contains inconsistent provisions;

• creates recurring customer redlines;

• does not adequately address implementation services;

• lacks a clear change-control process;

• contains unclear intellectual property provisions;

• creates excessive or uncertain liability;

• does not align with current data or cybersecurity practices; or

• has become difficult for sales and operations teams to use.

An IT contract review should look beyond individual clauses.

It should consider how the MSA, SOW, order form, SLA and other agreements operate together.

For companies whose agreements no longer reflect their current operations, a broader SaaS and IT contract modernization project may be appropriate.

MSA and SOW Drafting for SaaS and IT Companies

When an MSA and SOW are intended to work together, there can be a significant advantage to having them drafted or reviewed as a coordinated contract suite.

An MSA drafted without considering the company's SOW process may leave operational gaps.

An SOW developed separately may inadvertently override important legal protections.

A software or IT company should also consider which provisions belong in the MSA and which belong in the SOW, order form or SLA.

When reviewing what a SaaS agreement should include, the broader contract architecture matters just as much as the wording of an individual clause.

IT Contract Drafting and Review for Software and SaaS Companies

Delta Law advises SaaS, software and technology companies on the drafting, review and negotiation of technology and commercial contracts.

Our software and IT contract services include:

• SaaS agreement drafting and review;

• Master Services Agreement drafting;

• MSA review and negotiation;

• Statement of Work drafting;

• SOW review;

• software licensing agreements;

• Service Level Agreements;

• professional services agreements;

• customer and vendor technology contracts; and

• contract modernization.

For technology businesses dealing with customer, procurement and vendor contracts on a recurring basis, Delta Law also provides ongoing legal support.

Whether a company requires a new agreement or a review of an existing contract, the objective is to create legal documents that reflect how the business actually sells, delivers and supports its technology.

Looking for an IT Lawyer to Draft or Review an MSA or SOW?

Delta Law assists SaaS, software and technology companies with IT contract drafting, contract review, negotiation and modernization.

If your company is preparing a new MSA or SOW, negotiating an enterprise technology contract or reviewing agreements that no longer reflect the way the business operates, we can help assess the appropriate contractual structure.

Book a Consultation

Frequently Asked Questions About MSAs and SOWs

What is an MSA in a software contract?

MSA stands for Master Services Agreement. It generally establishes the overarching legal terms governing the relationship between a software or IT provider and its customer.

What is an SOW in an IT contract?

SOW stands for Statement of Work. It typically establishes the scope, deliverables, responsibilities, fees and timelines for a specific technology project or service.

What is the difference between an MSA and an SOW?

An MSA establishes the broader legal framework between the parties. An SOW generally describes the specific work being performed under that framework.

Does a SaaS company need both an MSA and an SOW?

Not necessarily. A SaaS company providing only a standardized subscription may not require an SOW. An SOW becomes particularly useful when the provider also performs implementation, consulting, development, integrations or other project-specific services.

Can multiple SOWs operate under one MSA?

Yes. That is one of the principal benefits of an MSA structure. The parties can use one overarching MSA while entering into multiple SOWs for different projects.

Does an SOW override an MSA?

It depends on the wording of the contracts. The agreements should expressly establish which document takes priority when provisions conflict.

Should an IT lawyer review an MSA?

Legal review may be useful where the MSA governs a material technology relationship, contains significant intellectual property or liability provisions, will be used repeatedly with customers, or has been heavily revised by another party.

Can an IT lawyer draft both the MSA and SOW?

Yes. Drafting the documents together can help ensure consistent terminology, clear document hierarchy and appropriate allocation of legal and commercial provisions.

Can a software contract lawyer review a customer's MSA?

Yes. Technology companies frequently receive customer or procurement agreements rather than contracting on their own paper. A software contract lawyer can review and negotiate those agreements from the technology provider's perspective.

How much does it cost to have an MSA or SOW reviewed?

The cost will depend on the length and complexity of the agreement, the nature of the transaction and the extent of negotiation required. A lawyer can generally determine the appropriate scope after reviewing the agreement and understanding the transaction.