The MSP Model fails more often than not.
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@Dashrender said in The MSP Model fails more often than not.:
Our Payroll is handled by a third party, but it's service we pay for, it's flat rate.
I'm a fan of outsourcing wherever possible and payroll is often a great case for it. It's fairly straightforward, and easily understood by the non-HR people (eg the Finance Director). IT is way more complex, more flexible, constantly changing, and is usually a key part of a business's strategy plan.
Outsourcing IT can work in a large organisation, because the organisation is big enough to justify employing an internal IT expert purely to manage the MSPs, set budgets and define strategy. It can work in a small organisation because, well, small organisations often aren't big enough to justify a full-time IT employee ( there simply isn't enough work to do) and usually don't have complex IT requirements. But in medium sized organisations, outsourcing is likely to suck, for all the reasons I've outlined - mainly conflicts of interest. I've eaten the onion rings, and the fries, and they don't taste good.
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@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
e MSP's job. So while the MSP has a little extra in the middle, the employee being there to look out for themselves while
This is good in theory, but as @Carnival-Boy said, it can pit them at odds with one another... the MSP is a money making venture, it wants to bill as much as it can to the company, and the company wants to pay as little as it can to the MSP... how do you resolve this conflict?
You can't, BUT you can't isolate it. This is the SAME conflict that every business has with every employee. MSPs make this better through better structure - MSP reputation matters where employee reputation does not. MSPs have a longevity which is the only significant mediation factor. How do you resolve this with normal IT staff?
Well, the recent move of IT from salaried - exempt to salaried - non exempt or pure hourly has definitely changed the landscape (though it hasn't changed for me) making it more inline with the MSP.
Many discussions around here, @scottalanmiller have indicated that MSPs bill hourly, not a flat rate. So, if the MSP is billing a flat rate to compare against the salaried internal, then the conflict is resolved.
NTG is an ITSP and typically bill hourly. Customers like this because it costs less than flat rates. But we offer flat rates.
Both have conflicts, just different ones. Hourly workers (internal or ITSP) have a motivation to increase the hours worked. Salaried workers (internal or MSP) have a motivation to do less work overall.
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@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
@Carnival-Boy said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
Experience should play no part, this is architecture that we are discussing. Unless you work with companies doing A/B with the same staff or roles (I have) you'd never even have an opportunity to test this. Looking at internal vs. external means nothing unless there is a control method for only testing the structural differences. Does that make sense? Otherwise it's like saying that McDonald's is better than Burger King because you tried McD's fries but BK's onion rings. You need to compare the same things to get a good feel, maybe you just don't like onion rings.
No, it's like trying McDonald's burgers and BK's burgers and thinking you prefer McDonald's, then asking every person you know what they prefer and having them all tell you they prefer McDonald's burgers, but then going and buying BK burgers because you believe that in theory, and logically speaking, BK burgers should be better and you don't want experience to play any part.
Okay, have you actually done A/B testing of staff internal and external? Same staff, handled both ways? I've literally found no one that has ever said that internal IT worked well that didn't only test "specific internal people" to "specific external people" and not compared the structures (burgers) at all.
The idea of doing this test just seems odd, but would really only seem to work if the MSP already existed with a full breath of staff that the new MSP members (aka old internal staff) suddenly have as a resource for their use.
Yes, starting a new MSP just to do this would not be a useful test. Yes, it is pulling in internal staff and then comparing - something that I see constantly on the MSP side of things. We see companies move from internal to external but keep staff on a regular basis, and they are pretty happy in general. Cost less, get more, same people. Everyone wins. And the other way, doing one to one replacements of a position that was vacated but keeping them full time on site.
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@Carnival-Boy said in The MSP Model fails more often than not.:
@Dashrender said in The MSP Model fails more often than not.:
Our Payroll is handled by a third party, but it's service we pay for, it's flat rate.
I'm a fan of outsourcing wherever possible and payroll is often a great case for it. It's fairly straightforward, and easily understood by the non-HR people (eg the Finance Director). IT is way more complex, more flexible, constantly changing, and is usually a key part of a business's strategy plan.
True, for sure, but I'd argue that the more complex it is, the more having good structure and support is important.
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@Carnival-Boy said in The MSP Model fails more often than not.:
But in medium sized organisations, outsourcing is likely to suck, for all the reasons I've outlined - mainly conflicts of interest. I've eaten the onion rings, and the fries, and they don't taste good.
It would be a very odd business algorithm that said that outsourcing was smart on the small end and smart on the big end but not in the middle. It CAN happen, but it is rare. Like going to hosted email, it gets better with size, there isn't an inflection point where it starts getting worse again after some scale or factor.
There is no need for good MSP management beyond the base level. I think that's the myth. On the small scale you need one MSP that you trust. Same on the big end. Same in the middle. The factors don't change. You always need one good MSP/ITSP but once you have that, the rest is handled by them regardless of your scale. My guess is that in the middle you get more companies that attempt to take on too much and cause issues by getting to "hands on" outside of their expertise.
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@scottalanmiller said in The MSP Model fails more often than not.:
I'd argue that the more complex it is, the more having good structure and support is important.
I agree and that's where I think internal IT wins. MSPs tend to be very good at IT, but lack the business understanding, because they don't work in the business, they work in IT. Good internal IT staff have both IT and business expertise.
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@Carnival-Boy said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
I'd argue that the more complex it is, the more having good structure and support is important.
I agree and that's where I think internal IT wins. MSPs tend to be very good at IT, but lack the business understanding, because they don't work in the business, they work in IT. Good internal IT staff have both IT and business expertise.
I totally agree that IT is all about business. But I don't agree that MSPs lack the business knowledge. I'm stating that they always have as much or more. Literally, anything that internal staff can and does do, an MSP can if the business wants. Anything. So any argument like this for why the internal staff is good, also makes the MSP good or better.
How does the internal IT people get that knowledge in a way that the MSP would not do identically? Two people, same role, same seat, same business - they'll get the same business knowledge.
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The only times that I see the MSPs not having the same knowledge that internal IT does is not MSP vs. Internal but always a business that keeps the MSPs at arm's length and doesn't bring them full time in house like they would with internal staff. By treating them differently (french fries vs. onion rings) they force them to be different. But when treated the same, the same benefits apply.
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@scottalanmiller said in The MSP Model fails more often than not.:
@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
@Carnival-Boy said in The MSP Model fails more often than not.:
Where I think that an MSP can work is as an additional resource for the internal IT department. We employ different IT companies to assist us, either when we don't have time to do the work ourselves, or where we lack the skills required for specific tasks and projects.
In most cases, I don't agree with the concept of replacing an internal IT department with an MSP, but utilising one (or more) to work alongside an IT department is great. You get the best of both worlds.
So what is the specific value of having an internal person in that (or any) case? You say the best of both worlds, but in all my years of IT, I've never seen any upside to internal IT (as a structure, the people themselves can be great.) The MSP can have the same on site presence, the same full time focus, more concern and ties to the business success... I'm not aware of any benefits to being paid by the business as an IT pro, only negatives. What benefits do you see from the payroll and management not being IT?
Our Payroll is handled by a third party, but it's service we pay for, it's flat rate. Of course if we want more services, we just make a call and they are instantly higher than they were before - perhaps that is what @scottalanmiller is saying, the MSP is sending the employee back to the company at a flat rate, granted it's a flat rate that is probably higher than if the employee was internal, but that extra money pays for a different person to come onsite when the main guy is on vacation, etc.
The term MSP indicates flat rate. We are using it loosely here to mean "any service provider", so flat rate is not the only option. But the MSP portion of the SP spectrum is flat rate.
Flat rate as in hourly based on the number of hours worked? or flat rate as in - salaried - exempt?
Flat rate, period. Meaning the contract is for $100/month, every month, regardless of service. There would always be something that designates when that would change. Most commonly it is based on number of employees.
I guess I have worked for an MSP that did that in the past - though I wasn't part of that assigned to a single customer, I was a consultant, dancing from client to client as needed.
The others (most of whom were AS/400 developers) did work at single clients, and as far as I know, they rarely if ever talked to any of the other MSP employees - instead the only difference they saw was that their paycheck was signed by the MSP, and the other internal staff at the client was signed by the client. Oh, Also, when the MSP employee took vacation, the MSP did not replace them with someone else, I'm guessing instead the client just didn't pay the MSP for that time. Is this a sign of a poorly setup/run MSP? i.e. not letting their employees know of the other uses so they could use them as a resource?
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@scottalanmiller said in The MSP Model fails more often than not.:
How does the internal IT people get that knowledge in a way that the MSP would not do identically? Two people, same role, same seat, same business - they'll get the same business knowledge.
And why wouldn't internal IT get the same IT knowledge that the MSP would - two people, same role, same access to MSPs for advice, help and training. You just seem to keep going round and round saying MSPs are better but not really explaining how. On the one hand you say MSPs are different (and so better), on the other hand you say MSPs are exactly the same (as so no worse). It's like having your cake and eating it. If you can only see upsides to MSPs and no downsides, then I can't really say anything else, I'm afraid.
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I would argue that it's possible that the MSP know more about business than internal IT. Think about it - the owner of the MSP knows tech and knows how to run a business because they are running one. The MSP also has the advantage of knowing what other companies are using and what's working and what's not. The internal guy has to work really hard to find that information out, but at the end of the day since the internal guy doesn't run a business, they may not know what the MSP owner does.
Another issue is that when people specialize, costs go down. The internal guy can never specialize because they have to be the jack of all trades. Just think of the time you invested learning about something like deploying a RDP server. The MSP has that same time investment once, but then can deploy it a number of times. That knowledge and experience saves time and money.
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@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
@Carnival-Boy said in The MSP Model fails more often than not.:
Where I think that an MSP can work is as an additional resource for the internal IT department. We employ different IT companies to assist us, either when we don't have time to do the work ourselves, or where we lack the skills required for specific tasks and projects.
In most cases, I don't agree with the concept of replacing an internal IT department with an MSP, but utilising one (or more) to work alongside an IT department is great. You get the best of both worlds.
So what is the specific value of having an internal person in that (or any) case? You say the best of both worlds, but in all my years of IT, I've never seen any upside to internal IT (as a structure, the people themselves can be great.) The MSP can have the same on site presence, the same full time focus, more concern and ties to the business success... I'm not aware of any benefits to being paid by the business as an IT pro, only negatives. What benefits do you see from the payroll and management not being IT?
Our Payroll is handled by a third party, but it's service we pay for, it's flat rate. Of course if we want more services, we just make a call and they are instantly higher than they were before - perhaps that is what @scottalanmiller is saying, the MSP is sending the employee back to the company at a flat rate, granted it's a flat rate that is probably higher than if the employee was internal, but that extra money pays for a different person to come onsite when the main guy is on vacation, etc.
The term MSP indicates flat rate. We are using it loosely here to mean "any service provider", so flat rate is not the only option. But the MSP portion of the SP spectrum is flat rate.
Flat rate as in hourly based on the number of hours worked? or flat rate as in - salaried - exempt?
Flat rate, period. Meaning the contract is for $100/month, every month, regardless of service. There would always be something that designates when that would change. Most commonly it is based on number of employees.
I guess I have worked for an MSP that did that in the past - though I wasn't part of that assigned to a single customer, I was a consultant, dancing from client to client as needed.
The others (most of whom were AS/400 developers) did work at single clients, and as far as I know, they rarely if ever talked to any of the other MSP employees - instead the only difference they saw was that their paycheck was signed by the MSP, and the other internal staff at the client was signed by the client. Oh, Also, when the MSP employee took vacation, the MSP did not replace them with someone else, I'm guessing instead the client just didn't pay the MSP for that time. Is this a sign of a poorly setup/run MSP? i.e. not letting their employees know of the other uses so they could use them as a resource?
All depends on what the customer wants. Lots of customers want named consultants. The bottom line is the customer, not the MSP, defines nearly all these things. That the MSP could have filled in that role is unknown, only that they did not. Why? Presumably because they weren't supposed to. At some point the MSP is turning into a staffing agency, which is fine, but the benefits dwindle (as does normally the cost.)
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@Carnival-Boy said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
How does the internal IT people get that knowledge in a way that the MSP would not do identically? Two people, same role, same seat, same business - they'll get the same business knowledge.
And why wouldn't internal IT get the same IT knowledge that the MSP would - two people, same role, same access to MSPs for advice, help and training. You just seem to keep going round and round saying MSPs are better but not really explaining how. On the one hand you say MSPs are different (and so better), on the other hand you say MSPs are exactly the same (as so no worse). It's like having your cake and eating it. If you can only see upsides to MSPs and no downsides, then I can't really say anything else, I'm afraid.
Yes, that's how MSPs are. It's like having your cake and eating it, too. That's the benefits of improving architecture, you often get nothing but benefits.
Yes, I only see upsides. Every downside you mention seems to be contrived, not a downside of MSPs. You mention one thing after another that I don't believe are true. I truly believe that the MSP model has no downsides compared to the internal staff model. Truly. And all of the points about where MSPs are negative are always based, I think, around assumptions like them being expensive, distant, shared or other thing that is not an artefact of the MSP model but a false assumption.
This is why I'm so adamant about the model, I truly believe it improves all aspects of the connection between IT staff and companies or, at worst, is a break even.
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@Carnival-Boy said in The MSP Model fails more often than not.:
And why wouldn't internal IT get the same IT knowledge that the MSP would - two people, same role, same access to MSPs for advice, help and training.
- Lack of motivation. Where would internal staff go with that extra knowledge? Only way to use it is to quit and move on.
- Cost. To get access to that at the MSP is billable, rather than intrinsic.
- Peers. The MSP is not a peer within the department. Peering would cost money as it is not staff development for the MSP.
- Access. MSP would have access to resources, like working on or viewing problems with other customers, that internal staff at a customer would not see.
- Management. Managed by IT rather than managed by non-IT. Different structure.
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@scottalanmiller said in The MSP Model fails more often than not.:
My guess is that in the middle you get more companies that attempt to take on too much and cause issues by getting to "hands on" outside of their expertise.
This is probably the whole issue in a nutshell.
To be really successful, and MSP probably needs to be pretty big, it probably won't do very well at only 2-4 people. But if you have say 20, where you have 2+ storage guys, and 2+ Windows server guys, and 2+ Windows workstation guys, and 2+ linux workstation guys, and 2+ infrastructure guys, etc, etc, etc... well then you probably really start seeing the benefits of the MSP. You pay a flat rate to the MSP, and you get access to all of those people... but as mentioned, that flat rate is going to be pretty huge. Definitely more than the cost of a single onsite IT server guy, but less than 10 specialists.
The rub is most SMBs are just cheap - aren't willing to put the expenses where perhaps they should be, and instead cheap out, hense so many of the posts we have at SW.
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@Carnival-Boy said in The MSP Model fails more often than not.:
And why wouldn't internal IT get the same IT knowledge that the MSP would - two people, same role, same access to MSPs for advice, help and training. You just seem to keep going round and round saying MSPs are better but not really explaining how. On the one hand you say MSPs are different (and so better), on the other hand you say MSPs are exactly the same (as so no worse).
But I keep saying how...
- Scope
- Focus
- Flexibility
- Longevity
- Cost
- Scale
- Training
- Management
Wait, I think I have the phrase that makes the difference....
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@Carnival-Boy said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
I'd argue that the more complex it is, the more having good structure and support is important.
I agree and that's where I think internal IT wins. MSPs tend to be very good at IT, but lack the business understanding, because they don't work in the business, they work in IT. Good internal IT staff have both IT and business expertise.
Sadly I completely disagree with this statement. Most IT guys at the small end don't know their business at all, they don't consider it their job - and worse, management at the company doesn't either, management considers it management's job, but they don't really do it either.. so it's never really done.
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Does this phrase help:
IT Service Providers can work, and do work, in every way identically to internal staff (with obvious exceptions of who writes the checks) and any and all deviations from this identical state is assumed to be done for the purpose of being additionally beneficial.
Does that make sense? MSPs can do literally anything internal staff can do. If there is something you think internal staff is good for, MSPs can match that, every time. I'm arguing that "physics" makes this happen, that MSPs staff are employees at that point, they are both. So that it's actually impossible to say that internal is better, because MSP can be internal.
But then, anytime that a business chooses to use an MSP in any way that is not identical to how they would have used internal staff, then that is a business believing that they have found a benefit to the model - which could be in any number of areas.
That's why I'm saying it is a "cake and eat it too" scenario. The MSP adds options while taking none away. But requires nothing. So any perceived negative aspect of an MSP can simply be avoided, any perceived benefit can be chosen.
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@Dashrender said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
My guess is that in the middle you get more companies that attempt to take on too much and cause issues by getting to "hands on" outside of their expertise.
This is probably the whole issue in a nutshell.
To be really successful, and MSP probably needs to be pretty big, it probably won't do very well at only 2-4 people. But if you have say 20, where you have 2+ storage guys, and 2+ Windows server guys, and 2+ Windows workstation guys, and 2+ linux workstation guys, and 2+ infrastructure guys, etc, etc, etc... well then you probably really start seeing the benefits of the MSP. You pay a flat rate to the MSP, and you get access to all of those people... but as mentioned, that flat rate is going to be pretty huge. Definitely more than the cost of a single onsite IT server guy, but less than 10 specialists.
Not true that you need more than the cost of one guy. Working for an MSP, I can tell you that if businesses didn't demand random costly things burning up their hours, they'd almost never need even a single full time person even in relatively large organizations. The idea that almost anyone needs a full time "equivalent" is normally untrue. It's a rare shop that can justify that much time.
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@Dashrender said in The MSP Model fails more often than not.:
@Carnival-Boy said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
I'd argue that the more complex it is, the more having good structure and support is important.
I agree and that's where I think internal IT wins. MSPs tend to be very good at IT, but lack the business understanding, because they don't work in the business, they work in IT. Good internal IT staff have both IT and business expertise.
Sadly I completely disagree with this statement. Most IT guys at the small end don't know their business at all, they don't consider it their job - and worse, management at the company doesn't either, management considers it management's job, but they don't really do it either.. so it's never really done.
That's what we see in SW non-stop. No one ever knows their business. The MSPs (and just some better IT people) in threads start to ask more about the business than the internal people have ever considered. It's crazy. They work internally and surprisingly often have zero idea about their business!
