How Can the FTE Model Compete with the MSP Model?
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@dashrender said in How Can the FTE Model Compete with the MSP Model?:
I know our bookkeeper isn't paid based upon the number of employees we have. If we have 90 employees, she gets the same pay as if there were 100 employees. This becomes an issue when the bookkeeper hits the time limit to get things done, normally they can add 10 employees without running out of time to get their jobs done.. but say add another 100 employees, that might be another story.. now they need OT, or a second bookkeeper, etc.
MSPs can work the same way. There is no possibility of giving an example of an FTE having a unique situation because literally ANY situation with an FTE an MSP can do, too, but with more options.
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@dashrender said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@dashrender said in How Can the FTE Model Compete with the MSP Model?:
As an FTE, that stuff is handled by the person who does it for all FTEs, but if you have a MSP that has nothing but placed personal, the MSP still needs their own accounting people, etc to handle that, meaning the MSP is now loosing money.
No, where in that is there money lost? Nowhere. Because the cost of all of that is moved equally from one entity to the other.
This only seems like lost money if you don't do apples to apples and ignore the actual cost of an employee to the company and only look at the received salary. If an employee costs the client $50K to employ, they will cost the MSP $50K to employ. It's that simple.
Sure, but see my answer above about the bookkeeper.
You're bookkeeper answer has nothing to do with it and doesn't tell us anything. I'm not even sure how you are picturing that they relate.
If your bookkeeper was moved to an "FTE-equivalent" outsourced service they would remain identical. That's how it works. Same costs, same limitations, but with more options.
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@dashrender said in How Can the FTE Model Compete with the MSP Model?:
Never said there was - but in the case where the MSP's only business is planting butts in chairs at a customer, and then charging the exact cost of that employee to the customer - how does the MSP do billing? The MSP now needs an employee who's job it is to do payroll, etc. Where does that money come from in a company that has zero actual income because they are only deploying butts to seats for actual cost - granted not a real situation, but you stated an MSP could be this way, so I'm trying to see it fully.
All of those costs, like billing, payroll, etc. already exist for the FTE. They are simple shifted to the MSP. I don't know where you think that one employer gets these things for free and another has to pay for them. The client and the MSP have equal costs here, that's why shifting the person from one entity to the other is a break even. There is nowhere for "additional cost" to be incurred.
The extra cost that you are insisting on simply doesn't exist. MSPs only incur new overhead when doing things FTEs can't do. But they never have to do those things so there is no necessity for that overhead. That overhead only gets injected when it proves to be advantageous (which is almost always.) But that proves the point - that MSPs bring advantages.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@dashrender said in How Can the FTE Model Compete with the MSP Model?:
Never said there was - but in the case where the MSP's only business is planting butts in chairs at a customer, and then charging the exact cost of that employee to the customer - how does the MSP do billing? The MSP now needs an employee who's job it is to do payroll, etc. Where does that money come from in a company that has zero actual income because they are only deploying butts to seats for actual cost - granted not a real situation, but you stated an MSP could be this way, so I'm trying to see it fully.
All of those costs, like billing, payroll, etc. already exist for the FTE. They are simple shifted to the MSP. I don't know where you think that one employer gets these things for free and another has to pay for them. The client and the MSP have equal costs here, that's why shifting the person from one entity to the other is a break even. There is nowhere for "additional cost" to be incurred.
The extra cost that you are insisting on simply doesn't exist. MSPs only incur new overhead when doing things FTEs can't do. But they never have to do those things so there is no necessity for that overhead. That overhead only gets injected when it proves to be advantageous (which is almost always.) But that proves the point - that MSPs bring advantages.
They only shift to the MSP the bookkeeper stuff of the now gone IT FTE, but the bookkeeper doesn't make less money because they are taking care of one less person - that's my point.
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As I've read through this thread it seems as though you're taking many things as a given @scottalanmiller. Perhaps you have the data to back up your assertions, but we do not. We are not starting from the same point as you are because the data you are basing your conclusions on is not available to us. We also cannot simply trust your assumptions if we're to properly discuss the topic. Otherwise we just become an echo chamber and nothing of value is created. Is there some resource (outside of your own articles) that gives empirical credence to your conclusions?
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
As I've read through this thread it seems as though you're taking many things as a given @scottalanmiller.
I think that this isn't true. What I'm discussing is the models, and what I'm not doing is taking anything as a given.
It's pointing out that the assumptions from anecdotes are not givens is my whole point. It's the givens that are what I'm trying to remove.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Perhaps you have the data to back up your assertions, but we do not.
I'm not sure how this is possible. The givens are logical facts, easily proved. Enough proof has been given that everyone in the thread does indeed have these facts. They are what they are.
What type of assertion do you feel I've not backed up that isn't so clearly logically true that it could not need to be proved?
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Perhaps you have the data to back up your assertions, but we do not.
I'm not sure how this is possible. The givens are logical facts, easily proved. Enough proof has been given that everyone in the thread does indeed have these facts. They are what they are.
What type of assertion do you feel I've not backed up that isn't so clearly logically true that it could not need to be proved?
Pretty much all of them. Let's take your first one: "MSPs will always have equal or greater scale than FTE." Why is that? Particularly in an apples to apples comparison liked you asked for where the MSP is on site full time and has a one to one relationship with that customer, how does that hold true?
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
We also cannot simply trust your assumptions if we're to properly discuss the topic. Otherwise we just become an echo chamber and nothing of value is created. Is there some resource (outside of your own articles) that gives empirical credence to your conclusions?
I'm not asking anyone to trust my "assumptions". I'm asking if anyone has any logical or empirical reason that my logic and information is wrong to provide it, but no one has.
I've provided logic and proofs. There are arguments against them, but so far, go check them, they are all based on demonstrably false pretenses. Once you remove the provably false bits, there hasn't been a single bit of logic, reason, or proof that my original assertion wasn't 100% accurate.
I'm not asking anyone to simply take what I say. I'm asking that if people doubt it, tell me why. Show me where the logic is wrong, because I see no possibility of there being a chink in the armor.
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
Based on that "assumption" which I believe has been proved already, the logic then says that it is impossible for an FTE to be advantageous.
Is my assumption wrong? If so, how? If the assumption is not wrong, if the logic wrong? If so, how?
No one has come up with how either thing is not true. So there is no echo chamber, right now, no one has challenged the original thought.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Perhaps you have the data to back up your assertions, but we do not.
I'm not sure how this is possible. The givens are logical facts, easily proved. Enough proof has been given that everyone in the thread does indeed have these facts. They are what they are.
What type of assertion do you feel I've not backed up that isn't so clearly logically true that it could not need to be proved?
Pretty much all of them. Let's take your first one: "MSPs will always have equal or greater scale than FTE."
I proved this. Because an MSP always has the option to act identically to FTEs in the role, but has other options too. So at a minimum, an MSP has identical scale in an apples to apples situation. But in some (nearly all) cases, they have more than that.
Equal or better. How can this not be true without breaking the apples to apples.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
We also cannot simply trust your assumptions if we're to properly discuss the topic. Otherwise we just become an echo chamber and nothing of value is created. Is there some resource (outside of your own articles) that gives empirical credence to your conclusions?
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
Ok, why do they have that flexibility and an FTE does not?
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Particularly in an apples to apples comparison liked you asked for where the MSP is on site full time and has a one to one relationship with that customer, how does that hold true?
What do you mean? By definition, this has to be true. Apples to apples, acting as FTE, it is identical. Therefore perfectly meeting the equal or better point.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
We also cannot simply trust your assumptions if we're to properly discuss the topic. Otherwise we just become an echo chamber and nothing of value is created. Is there some resource (outside of your own articles) that gives empirical credence to your conclusions?
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
Ok, why do they have that flexibility and an FTE does not?
Because an FTE cannot scale to other customers to bring the benefits of "pool resources".
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
We also cannot simply trust your assumptions if we're to properly discuss the topic. Otherwise we just become an echo chamber and nothing of value is created. Is there some resource (outside of your own articles) that gives empirical credence to your conclusions?
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
Ok, why do they have that flexibility and an FTE does not?
Because an FTE cannot scale to other customers to bring the benefits of "pool resources".
But our apples to apples comparison requires an equal labor time, presence, and attention. How does the MSP provide pool resources?
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I'm not saying you're wrong. I'm trying to understand your basis for conclusion because it doesn't make sense to me, and it appears to be the same for others participating in this thread based on their responses.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
We also cannot simply trust your assumptions if we're to properly discuss the topic. Otherwise we just become an echo chamber and nothing of value is created. Is there some resource (outside of your own articles) that gives empirical credence to your conclusions?
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
Ok, why do they have that flexibility and an FTE does not?
Because an FTE cannot scale to other customers to bring the benefits of "pool resources".
But our apples to apples comparison requires an equal labor time, presence, and attention. How does the MSP provide pool resources?
You have to break down "equal or better." If you are checking to see if it can be equal, you can prove that with the "acts as an FTE" case. The pool is an option, only to be used when it is beneficial over the "acts as an FTE" case. Since it is optional only, and the other case is equal, you guarantee equal or better because we can prove the ability to always be equal.
You can't do the "equal" and the pool at the same time, obviously. But you have the option to do either.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
I'm not saying you're wrong. I'm trying to understand your basis for conclusion because it doesn't make sense to me, and it appears to be the same for others participating in this thread based on their responses.
Which part does not make sense? I think it just comes down to the two pieces.
An MSP can act identically to an FTE. So as a worst case scenario, it can be "equal". This is always a guaranteed option within the model no matter what the business scenario is. So we prove from this, that "equal" is available, this alone proves "equal or better" because you don't ever need better to be true with an "or".
That there are other options that are not equal, that are there even if never used (but in reality are used almost 100% of the time because they are that good) offers the potential of "better". This isn't needed to prove the point, as the first equal portion proved that already. But this shows the logical value as to why there is a huge value in the real world, not just a theoretical case.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
We also cannot simply trust your assumptions if we're to properly discuss the topic. Otherwise we just become an echo chamber and nothing of value is created. Is there some resource (outside of your own articles) that gives empirical credence to your conclusions?
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
Ok, why do they have that flexibility and an FTE does not?
Because an FTE cannot scale to other customers to bring the benefits of "pool resources".
But our apples to apples comparison requires an equal labor time, presence, and attention. How does the MSP provide pool resources?
You have to break down "equal or better." If you are checking to see if it can be equal, you can prove that with the "acts as an FTE" case. The pool is an option, only to be used when it is beneficial over the "acts as an FTE" case. Since it is optional only, and the other case is equal, you guarantee equal or better because we can prove the ability to always be equal.
You can't do the "equal" and the pool at the same time, obviously. But you have the option to do either.
So the only way in which an MSP is better than an FTE is that it can easily switch between "equal" and "pool'? Is that correct?
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
We also cannot simply trust your assumptions if we're to properly discuss the topic. Otherwise we just become an echo chamber and nothing of value is created. Is there some resource (outside of your own articles) that gives empirical credence to your conclusions?
Here is the basis of my logic, this is an assumption so this is where I think you have to prove me wrong: An MSP staffer can act identically to an FTE in price, capability, and function making them identical in all ways to an FTE, but also has the flexibility to do other things that an FTE cannot.
Ok, why do they have that flexibility and an FTE does not?
Because an FTE cannot scale to other customers to bring the benefits of "pool resources".
But our apples to apples comparison requires an equal labor time, presence, and attention. How does the MSP provide pool resources?
You have to break down "equal or better." If you are checking to see if it can be equal, you can prove that with the "acts as an FTE" case. The pool is an option, only to be used when it is beneficial over the "acts as an FTE" case. Since it is optional only, and the other case is equal, you guarantee equal or better because we can prove the ability to always be equal.
You can't do the "equal" and the pool at the same time, obviously. But you have the option to do either.
So the only way in which an MSP is better than an FTE is that it can easily switch between "equal" and "pool'? Is that correct?
Sort of, but it isn't the switching itself that makes it better, it's the larger range of options. MSPs fully encompass all options of the FTE, but then add more. For 99.9999% of businesses, they will never switch or ever consider the FTE style option because it is so dramatically poorer in the real world.
The reason for the "proof" is to show the impossibility of FTE being better. But to do so requires showing MSPs in their worst case scenario, one that effectively will never happen because something else is "always" better for their customers.
It's to show that even at an extreme point, with an MSP being as silly as it can be, it never gets below equal to an FTE. But it's theory only to make an MSP act that way because no one ever finds a business that needs exactly one FTE, never anything more or less, only a single person, never coverage, skills, or anything beyond them.
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I think the most important thing for people to understand here is that we are talking about a model of engagement, not different people.
No one should feel defensive or that the discussion is person because they are an MSP or are an FTE or whatever. It's not about the people, it's about better ways that companies can engage the same people. How to make business, and therefore IT, better for everyone.
Better models mean better results, better careers, better salaries for everyone.
