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?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
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.
I can only give you this in a greenfield situation. I.e. the client is greenfield regarding all staff.
But consider this.
Company Acme today has 100 employees, one of which is payroll/accounting, Sue. They handle all 100 people worth payroll/accounting. Bob works for Acme, and he costs the company after all benefits, etc $100K/yr, additionally he adds, let's say 20 mins of work/week to Sue. Sue is paid $60K/yr.
So Bob leaves and joins a brand new MSP, There's the owner (Joe) and now Bob. That MSP pays Bob $100K/yr after all benefits. This cost is passed directly back to Acme (caveat to come) with no upcharge, and Bob goes back to work at his old desk at Acme.
My question is - Who submits the bills for Bob's time to Acme? How is that person paid for that work? Now the answer seems obvious to me - The owner (Joe) does. But Joe does deserve to get paid for that work, doesn't he? And therefore wouldn't he normally charge say $40-50 per week for that thing that has to be done? If so, then now Acme is paying more for Bob.
Now - if you tell me that Sue, that accounting person, is now getting paid $40-50 less a week because she is not doing the work on Bob's account, then fine, it becomes a wash - but I can tell you, my accounting person here is not paid on the job, she's paid a flat hourly rate, and she's expected to be able to handle an influx of 2-10 people with no actual extra spent clock time - and well, and they succeed at it. So, since Sue likely isn't getting paid less, the Acme will be paying more - basically because they are now over paying Sue.
See the problem there? You have FTEs where you should have outsourcers in other departmetns. Again, one mistake to justify another.
But in reality, the "cost" to process a person is trivial on both sides. Sue now has time to do more other work. Are you telling me she's idle anyway and they have idle FTEs with nothing to do and no value for them to add? I think that proves the point more than anything. Or is she actually worked right to the limit? That seems like a risk, one sneeze and she can't get payroll done that month.
Either Sue is probably not an effective FTE, or she's a risk. There is a reason that accounting is very much like MSPs, that it should always be outsourced.
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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?:
Your original postulation appears to be that the FTE model cannot compete with the MSP model. If the value is the same there is no compelling reason to switch.
The value is always the same or better. I think you are working from a stance of "To not use an FTE you must not just make something else equal or better, but always much better" and that's flawed decision making.
In a case like this, you can't choose a de factor answer and an arbitrary "improvement over it" for something else to be better.
The value could be equal or better. There are bad MSPs just like there are bad FTEs.
That's why I explain the apples to apples. The MSP model is better, period. Not "could be".
A specific MSP might be better or worse than a specific employee. But the same people are better under MSP than under FTE. The model is without exception better.
I am not necessarily arguing the validity of the model, but rather the applicability.
It's always applicable because of this "fact"...
- There are good MSPs out there.
- There are bad MSPs out there.
- There are good FTEs out there.
- There are bad FTEs out there.
It comes down to good hiring in all cases equally. The ability to find a good MSP is much higher than to find a good FTE because of many factors. But everything that goes into finding a good FTE is available for MSPs and more. Everyone has the option of looking for a good MSP and getting one, it takes work but no more work than finding a good employee.
So I would say it is universally applicable.
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There isn't so much demand for good IT people, no matter how you hire them, that any company that cares can't have them. Every company has the option of looking for and finding a good MSP. Most want something else, like a local one, or one run by a buddy, or only want ones that send salesmen in their front door, and they prioritize those things over reputation, skill set, etc. That's fine, but it doesn't tell us that those companies struggle to find a good MSP, it tells us that they struggle to prioritize their business.
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@obsolesce 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?:
@obsolesce said in How Can the FTE Model Compete with the MSP Model?:
Could be better doesn't mean IS better.
I'm not seeing the true value of MSP over FTE, especially if costs to the company are identical.
well, from a company POV, one way an MSP is better is because the client can fire the MSP at will (baring contracts) and no deal with post employee costs - Cobra, Unemployment, etc.
This isn't true everywhere, so can't be used. Depends on the state, company, etc... Many companies in many states can fire FTEs at will too, without consequence.
Not really, no. There is essentially no state that allows that. "At will" states still have discrimination laws, wrong termination suits, unemployment costs, etc.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
more work, a bigger pool of resources, more variety, more advancement, more opportunity, more growth
...of what exactly? What exactly is an example of one of those put into practice as an MSP, that you can't get from a FTE?
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@obsolesce said in How Can the FTE Model Compete with the MSP Model?:
if FTE = MSP, and MSP can be >= FTE, then yes it makes sense that MSP is the better option.
The problem here, and why this is now 100+ posts, is because there has been zero examples of what could potentially make the MSP > FTE.
There have been tons. The whole 100 posts has been trying to explain why an MSP can always be equal at least. No one has questions the "or better."
But you want, or better... it's as simple as "every MSP scenario." No real world use of MSPs is done in the "equal" mode, never, because it is so absurdly bad (being only equal to FTEs) when MSP offers so much more to 99.9999% of companies.
Pooled resources, less than full time, more than full time, flexible, on call, etc. No one is talking about the or better bit, because it's obvious enough that no one thought about it. It's the equal part that can be confusing - that you can prove that there is always a worst case option of "equal" that is so silly that it's theoretical only.
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@obsolesce 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?:
more work, a bigger pool of resources, more variety, more advancement, more opportunity, more growth
...of what exactly? What exactly is an example of one of those put into practice as an MSP, that you can't get from a FTE?
All of them. I'm not clear what you are asking.
FTEs don't work floating hours, can't be shared with other companies, you can't get 10 people at 4 hours a week each instead of one at 40. You need one FTE for every "need" rather than the amount that you need for each task.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
All of them. I'm not clear what you are asking.
I think this is what we were all asking for:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
FTEs don't work floating hours, can't be shared with other companies, you can't get 10 people at 4 hours a week each instead of one at 40. You need one FTE for every "need" rather than the amount that you need for each task.
Some solid ACTUAL examples taking the MSP from = to >.
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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?:
Your original postulation appears to be that the FTE model cannot compete with the MSP model. If the value is the same there is no compelling reason to switch.
The value is always the same or better. I think you are working from a stance of "To not use an FTE you must not just make something else equal or better, but always much better" and that's flawed decision making.
In a case like this, you can't choose a de factor answer and an arbitrary "improvement over it" for something else to be better.
The value could be equal or better. There are bad MSPs just like there are bad FTEs.
That's why I explain the apples to apples. The MSP model is better, period. Not "could be".
A specific MSP might be better or worse than a specific employee. But the same people are better under MSP than under FTE. The model is without exception better.
I am not necessarily arguing the validity of the model, but rather the applicability.
It's always applicable because of this "fact"...
- There are good MSPs out there.
- There are bad MSPs out there.
- There are good FTEs out there.
- There are bad FTEs out there.
It comes down to good hiring in all cases equally. The ability to find a good MSP is much higher than to find a good FTE because of many factors. But everything that goes into finding a good FTE is available for MSPs and more. Everyone has the option of looking for a good MSP and getting one, it takes work but no more work than finding a good employee.
So I would say it is universally applicable.
Your model is reliant upon comparing an equal quality FTE to an equal quality MSP. The comparison breaks down if this cannot be obtained. You state in another post that hiring locally is a poor reason to choose a particular FTE or MSP. I strongly disagree with this. Relationships are key to IT, and the difference between in person interactions compared to over the phone or via email/chat is marked. If all things are equal I would argue that a local FTE (able to get face to face with stakeholders without additional cost) is superior to a remote MSP.
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@obsolesce 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?:
All of them. I'm not clear what you are asking.
I think this is what we were all asking for:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
FTEs don't work floating hours, can't be shared with other companies, you can't get 10 people at 4 hours a week each instead of one at 40. You need one FTE for every "need" rather than the amount that you need for each task.
Some solid ACTUAL examples taking the MSP from = to >.
But it breaks the apples to apples comparison.
Basically, what I have gleaned from this thread that if all things are equal the value that an MSP brings over an FTE, if all things are equal, is ease of firing and greater potential for having a pool of knowledge to drawn on.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@obsolesce 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?:
All of them. I'm not clear what you are asking.
I think this is what we were all asking for:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
FTEs don't work floating hours, can't be shared with other companies, you can't get 10 people at 4 hours a week each instead of one at 40. You need one FTE for every "need" rather than the amount that you need for each task.
Some solid ACTUAL examples taking the MSP from = to >.
But it breaks the apples to apples comparison.
Basically, what I have gleaned from this thread that if all things are equal the value that an MSP brings over an FTE, if all things are equal, is ease of firing and greater potential for having a pool of knowledge to drawn on.
If all things are equal, then you are placing a restriction upon the MSP so that is is not allowed to be > an FTE. In that case, there is no difference what so ever in choosing one or the other.
But this is never the case. No company would ever restrict something from being better if it's possible without negative consequence.
So, MSP >= FTE... you choose the MSP every time .
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I'm going to call it the fruit bowl effect. Your fruit bowl might be just apples, not apples, or other things plus apples. FTE is just apples, nothing else. MSPs offer the range of fruit options.
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@obsolesce 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?:
@obsolesce 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?:
All of them. I'm not clear what you are asking.
I think this is what we were all asking for:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
FTEs don't work floating hours, can't be shared with other companies, you can't get 10 people at 4 hours a week each instead of one at 40. You need one FTE for every "need" rather than the amount that you need for each task.
Some solid ACTUAL examples taking the MSP from = to >.
But it breaks the apples to apples comparison.
Basically, what I have gleaned from this thread that if all things are equal the value that an MSP brings over an FTE, if all things are equal, is ease of firing and greater potential for having a pool of knowledge to drawn on.
If all things are equal, then you are placing a restriction upon the MSP so that is is not allowed to be > an FTE. In that case, there is no difference what so ever in choosing one or the other.
But this is never the case. No company would ever restrict something from being better if it's possible without negative consequence.
So, MSP >= FTE... you choose the MSP every time .
Exactly.
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@obsolesce 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?:
@obsolesce 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?:
All of them. I'm not clear what you are asking.
I think this is what we were all asking for:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
FTEs don't work floating hours, can't be shared with other companies, you can't get 10 people at 4 hours a week each instead of one at 40. You need one FTE for every "need" rather than the amount that you need for each task.
Some solid ACTUAL examples taking the MSP from = to >.
But it breaks the apples to apples comparison.
Basically, what I have gleaned from this thread that if all things are equal the value that an MSP brings over an FTE, if all things are equal, is ease of firing and greater potential for having a pool of knowledge to drawn on.
If all things are equal, then you are placing a restriction upon the MSP so that is is not allowed to be > an FTE. In that case, there is no difference what so ever in choosing one or the other.
But this is never the case. No company would ever restrict something from being better if it's possible without negative consequence.
So, MSP >= FTE... you choose the MSP every time .
@scottalanmiller is the one who requested the apples to apples comparison. I have been engaging him on his assumptions. However, the listing of benefits does not account for the negatives. There is a switching cost involved when you're utilizing a part time MSP, both in attention and response time. There is a variability to the quality of the work. As Scott stated earlier, having the rates equal for the MSP employee to their salary means no profit, so that is not equal in the majority of scenarios, etc.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Basically, what I have gleaned from this thread that if all things are equal the value that an MSP brings over an FTE, if all things are equal, is ease of firing and greater potential for having a pool of knowledge to drawn on.
Ease of firing I will call an ancillary benefit. It's pretty universal, but is dependent on local employment laws. I can hire staff in places where they are just as easy to fire and it doesn't disrupt the rule, I don't think. But in the US, certainly it's a benefit.
It's really flexibility or "insurance against the unknown." I compare MSPs to virtualization, almost exactly.
In fact, damn, let's call MPSs "Virtual IT". Hold on... brainstorming.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@obsolesce 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?:
@obsolesce 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?:
All of them. I'm not clear what you are asking.
I think this is what we were all asking for:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
FTEs don't work floating hours, can't be shared with other companies, you can't get 10 people at 4 hours a week each instead of one at 40. You need one FTE for every "need" rather than the amount that you need for each task.
Some solid ACTUAL examples taking the MSP from = to >.
But it breaks the apples to apples comparison.
Basically, what I have gleaned from this thread that if all things are equal the value that an MSP brings over an FTE, if all things are equal, is ease of firing and greater potential for having a pool of knowledge to drawn on.
If all things are equal, then you are placing a restriction upon the MSP so that is is not allowed to be > an FTE. In that case, there is no difference what so ever in choosing one or the other.
But this is never the case. No company would ever restrict something from being better if it's possible without negative consequence.
So, MSP >= FTE... you choose the MSP every time .
@scottalanmiller is the one who requested the apples to apples comparison. I have been engaging him on his assumptions. However, the listing of benefits does not account for the negatives. There is a switching cost involved when you're utilizing a part time MSP, both in attention and response time. There is a variability to the quality of the work. As Scott stated earlier, having the rates equal for the MSP employee to their salary means no profit, so that is not equal in the majority of scenarios, etc.
Now I'm not saying that SWITCHING is worthwhile. That's not the same as saying that the grass isn't greener.
It's TOTALLY possible that the grass is greener on the MSP side, but only by the tiniest amount and not at all worth climbing the fence for.
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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?:
Your original postulation appears to be that the FTE model cannot compete with the MSP model. If the value is the same there is no compelling reason to switch.
The value is always the same or better. I think you are working from a stance of "To not use an FTE you must not just make something else equal or better, but always much better" and that's flawed decision making.
In a case like this, you can't choose a de factor answer and an arbitrary "improvement over it" for something else to be better.
The value could be equal or better. There are bad MSPs just like there are bad FTEs.
That's why I explain the apples to apples. The MSP model is better, period. Not "could be".
A specific MSP might be better or worse than a specific employee. But the same people are better under MSP than under FTE. The model is without exception better.
I am not necessarily arguing the validity of the model, but rather the applicability.
It's always applicable because of this "fact"...
- There are good MSPs out there.
- There are bad MSPs out there.
- There are good FTEs out there.
- There are bad FTEs out there.
It comes down to good hiring in all cases equally. The ability to find a good MSP is much higher than to find a good FTE because of many factors. But everything that goes into finding a good FTE is available for MSPs and more. Everyone has the option of looking for a good MSP and getting one, it takes work but no more work than finding a good employee.
So I would say it is universally applicable.
Your model is reliant upon comparing an equal quality FTE to an equal quality MSP. The comparison breaks down if this cannot be obtained.
Well, for all intents and purposes, you can always get the same people. Not equal people alone, but the actual same people, either way.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Relationships are key to IT, and the difference between in person interactions compared to over the phone or via email/chat is marked. If all things are equal I would argue that a local FTE (able to get face to face with stakeholders without additional cost) is superior to a remote MSP.
I'll flip flop here.
I agree that relationships are key.
I'll disagree that local is better than remote all things equal.But key here is you are saying the local FTE is better than the remote MSP. Why did you choose that scenario, though? Why not state that a local MSP is better than a remote FTE? I feel like you are keeping the association of FTEs being also local, and MSPs always being remote.
In the case of an MSP, what does remote even mean?
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When is an MSP remote?
What makes you consider someone remote?
Is it where their mail goes?
Is it where their office is?
Which office, HQ or another one?
Is it where they are familiar with the territory?
Is it where they have staff?
Is it how far their staff is from you?
Is it if they can work inside your walls?Consider the same things for an FTE. What makes you define someone as local or not local? It's not as easy as you think.
