How Can the FTE Model Compete with the MSP Model?
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My perspective on the battle you appear to be fighting (establishing the legitimacy and competitiveness of MSPs) is that you're not going to make much headway. For one thing, a true MSP (as you've defined it) is rare in my experience. I can't think of any in my area. All of them a mix of VAR and MSP on some level. Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor. In addition, there are so many variables that affect the calculation of whether or not an MSP can provide better value over an FTE that it is a case by case evaluation that is difficult to "rule of thumb" or "best practice".
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
No, the MSP would not be cheaper.
Why not? The company hiring the MSP doesn't have to pay the MSP guy 401k, medical benefits, insurances, etc... he gets that from HIS employer, who is the MSP.
So if a company has an employee for 50k/year, the company pays a LOT more than that besides just the salary of hte employee.
If a company hires an MSP, let's say for $50k/year... that's it.. nothing more.
So, yes... cheaper.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
My perspective on the battle you appear to be fighting (establishing the legitimacy and competitiveness of MSPs) is that you're not going to make much headway.
Is there headway to be made? There are a lot of questions and discussions, but is there actually any dissent to the logic?
I see that there is a lot of "not wanting to accept it", but I don't see any "where it might be wrong."
I think we've established that we all agree that the MSP Model has to be equal or better than the FTE model. I think the real issue might be that this is so insanely obvious that it is confusing people and they think that we are discussing something else. All of the "this isn't true" is about something other than the MSP vs FTE model thus far. Or is based around something that isn't an MSP.
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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?:
My perspective on the battle you appear to be fighting (establishing the legitimacy and competitiveness of MSPs) is that you're not going to make much headway.
Is there headway to be made? There are a lot of questions and discussions, but is there actually any dissent to the logic?
I see that there is a lot of "not wanting to accept it", but I don't see any "where it might be wrong."
I think we've established that we all agree that the MSP Model has to be equal or better than the FTE model. I think the real issue might be that this is so insanely obvious that it is confusing people and they think that we are discussing something else. All of the "this isn't true" is about something other than the MSP vs FTE model thus far. Or is based around something that isn't an MSP.
I'm not disputing the models necessarily. I'm stating that the models are difficult to apply in many markets, and thus make them irrelevant to business decisions.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
For one thing, a true MSP (as you've defined it) is rare in my experience. I can't think of any in my area.
I know two in this community that are national and real MSPs. So you definitely have the option.
If you talked to most companies, they'd say that even IT staff is rare and not available in their area, and they would be correct too, if they meant "is identified and standing within 100ft of me right now." But if there is IT staff and/or an MSP that services your area is without question, available.
Another point of the MSP model is that you don't need more than one. Of course there are hundreds of thousands, but because they are IT "groups" and not IT "people individually", the number of them is only relevant if it falls below one. As long as there is one, you have an MSP option.
There are likely no fewer than a thousand that service literally anyone.
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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?:
No, the MSP would not be cheaper.
Why not? The company hiring the MSP doesn't have to pay the MSP guy 401k, medical benefits, insurances, etc... he gets that from HIS employer, who is the MSP.
So if a company has an employee for 50k/year, the company pays a LOT more than that besides just the salary of hte employee.
If a company hires an MSP, let's say for $50k/year... that's it.. nothing more.
So, yes... cheaper.
In my experience in working with MSP/VAR technicians their hourly rate is significantly higher than the FTE. In my area you can expect to pay $150-200/hr for a mid level network admin. I don't know any that are getting that as their hourly rate.
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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?:
My perspective on the battle you appear to be fighting (establishing the legitimacy and competitiveness of MSPs) is that you're not going to make much headway.
Is there headway to be made? There are a lot of questions and discussions, but is there actually any dissent to the logic?
I see that there is a lot of "not wanting to accept it", but I don't see any "where it might be wrong."
I think we've established that we all agree that the MSP Model has to be equal or better than the FTE model. I think the real issue might be that this is so insanely obvious that it is confusing people and they think that we are discussing something else. All of the "this isn't true" is about something other than the MSP vs FTE model thus far. Or is based around something that isn't an MSP.
I'm not disputing the models necessarily. I'm stating that the models are difficult to apply in many markets, and thus make them irrelevant to business decisions.
Well that's different and I totally agree, to some degree. But trying to apply the value of models to deciding if you should use an MSP or not isn't good practice.
Let's switch to a similar thing... should you use open source software or closed source software for your business? It's a provable fact that open source is the better license for the customer, always, no exceptions. As a license goes, it's purely better, never worse.
But that's not relevant to the decision the business makes. The business needs to understand the value that the license brings (which is possibly approaching zero) and evaluate the products it is considering based on their value to the business as they stand. Windows (closed) remains an important tool regardless of the fact that it's license is not ideal. The idealness of the license is a near trivial factor in the grand scheme of software purchases.
Likewise, it's important for every business and every IT pro to understand that the MSP model is always the better approach. But then it is equally important, or moreso, for those same people to always understand that available resources must be evaluated in situ, not based on their model.
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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?:
For one thing, a true MSP (as you've defined it) is rare in my experience. I can't think of any in my area.
I know two in this community that are national and real MSPs. So you definitely have the option.
If you talked to most companies, they'd say that even IT staff is rare and not available in their area, and they would be correct too, if they meant "is identified and standing within 100ft of me right now." But if there is IT staff and/or an MSP that services your area is without question, available.
Another point of the MSP model is that you don't need more than one. Of course there are hundreds of thousands, but because they are IT "groups" and not IT "people individually", the number of them is only relevant if it falls below one. As long as there is one, you have an MSP option.
There are likely no fewer than a thousand that service literally anyone.
Yes, but many organizations want three things that affect how far afield they will willingly go for a consultant: business buy in, prompt access, and face to face communication. That is the larger issue that would need to be proven out to create a compelling argument that an MSP can provide equivalent value to an FTE.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
In my experience in working with MSP/VAR technicians their hourly rate is significantly higher than the FTE. In my area you can expect to pay $150-200/hr for a mid level network admin. I don't know any that are getting that as their hourly rate.
- I can guarantee you better rates in your area, right now.
- You aren't comparing to "by the hour" FTEs. You broke the apples to apples here. Explain below...
If you hired an FTE for one hour, they'd be obnoxiously expensive. It's not the MSP factor that makes it expensive, it is that you are using the MSP in a "by the hour" approach and the FTE is a "by the year" approach.
Flip that, hire an MSP for an annual contract, get dedicated full time resources and you can get in your market rates roughly identical to local FTEs. Try to hire an FTE for one or two hours at a time with no contract, and you'll be paying $150/hr too.
In this example, you aren't comparing the MSP vs. FTE model, but the hourly vs. indefinite rate models and associating them with the approach you took when choosing them.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Yes, but many organizations want three things that affect how far afield they will willingly go for a consultant: business buy in, prompt access, and face to face communication. That is the larger issue that would need to be proven out to create a compelling argument that an MSP can provide equivalent value to an FTE.
This is a bigger problem of "using one mistake to justify another mistake" or "the fallacy of false constraints."
What you have here is a desired result (to not hire an MSP) so artificial constraints that have no business benefit and actively hurt the business in fact are applied to alter the business case in order to get the desired outcome. This is needed because it means that the business has at the very least subconsciously realized that their emotionally desired outcome is not the one that is best for the business and must constrain the business decision to force less than ideal outcomes.
And again, you've mixed locality models with the staffing model - the MSP has nothing to prove here by definition that it can do anything the FTE can do. There is nothing with FTE that makes them more or less local than an MSP. An MSP has equal chances of being face to face than an FTE does. Prompt access, face to face time... those are real values, and values that we proved an MSP can provide equally to any FTE - guaranteed in the model. And I can prove it because I can do it and I'm not the only MSP here that can.
To say that it can't be done is the same as denying the offer. I'm able to offer that right now. So you can't say that you don't have that option where you are. Your company could get you, in an FTEquiv slot, from an MSP like us, right now, at the same cost.
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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?:
No, the MSP would not be cheaper.
Why not? The company hiring the MSP doesn't have to pay the MSP guy 401k, medical benefits, insurances, etc... he gets that from HIS employer, who is the MSP.
So if a company has an employee for 50k/year, the company pays a LOT more than that besides just the salary of hte employee.
If a company hires an MSP, let's say for $50k/year... that's it.. nothing more.
So, yes... cheaper.
No, because the MSP has to pay those things. Trust me, it's a wash. Every cost that the employer would have, the MSP has. It's not only the salary cost that shifts from the employer to the MSP, but all the soft costs too like healthcare, workman's comp, vacation, insurance, etc.
So in charging the employer, the MSP has to cover that stuff. but it is exactly the same as what the employer was paying (in apples to apples) so if it cost the employer $100K to have a $50K person, it'll cost the employer $100K to pay the MSP for the exact same person in the exact same role. Literally identical.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
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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?:
Yes, but many organizations want three things that affect how far afield they will willingly go for a consultant: business buy in, prompt access, and face to face communication. That is the larger issue that would need to be proven out to create a compelling argument that an MSP can provide equivalent value to an FTE.
This is a bigger problem of "using one mistake to justify another mistake" or "the fallacy of false constraints."
What you have here is a desired result (to not hire an MSP) so artificial constraints that have no business benefit and actively hurt the business in fact are applied to alter the business case in order to get the desired outcome. This is needed because it means that the business has at the very least subconsciously realized that their emotionally desired outcome is not the one that is best for the business and must constrain the business decision to force less than ideal outcomes.
Again with the assumptions... Why is a desire for the three things that I listed actively hurting the business? In my experience with the SMB (no enterprise experience, so take that as you will), the ways in which I have achieved better solutions faster has always been when I go face to face with a stakeholder. What do you do when you're half a country away when someone doesn't return your calls or reply to emails? An FTE, chosen based on the above constraints over the MSP, can just walk to their desk.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
In addition, there are so many variables that affect the calculation of whether or not an MSP can provide better value over an FTE that it is a case by case evaluation that is difficult to "rule of thumb" or "best practice".
This is only "sort of" true. Every FTE has the potential to be a better MSP. The comparison is of models or approaches, not of this employee vs. that MSP. For the apples to apples, we have to compare the same people. Not equivalent people, the literal same people.
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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?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
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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?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
No, they are idiots for using bad decision making on their part (hiring bad MSPs, managing them poorly) as a reason to make worse decisions. It's true that people who make bad decisions tend to keep making them in more and more places, so people who screw up their MSP situations will then react to that information incorrectly and make things even worse - but that doesn't make any of those mistakes "good".
Hiring outsourced staff is just like hiring insourced. If you are bad at one, you'll be bad at the other. And guess what, companies have terrible track records of hiring FTEs. Really, really bad.
The real problem here is perceiving a mistake (hiring the wrong firm) as being associated with something that it is not (the model rather than the firm.)
Imagine if you bought two cars, both didn't work, and you concluded that cars don't work rather than figuring out that you either got unlucky or possibly know very little about how to buy a car?
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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?:
In addition, there are so many variables that affect the calculation of whether or not an MSP can provide better value over an FTE that it is a case by case evaluation that is difficult to "rule of thumb" or "best practice".
This is only "sort of" true. Every FTE has the potential to be a better MSP. The comparison is of models or approaches, not of this employee vs. that MSP. For the apples to apples, we have to compare the same people. Not equivalent people, the literal same people.
So why choose the MSP then? 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. If I am working for <company>, and then get hired by NTG to continue working at <company> doing the same work for the same cost to <company>, why switch? There are scenarios where it would make sense, but it continues to be a case by case evaluation, not something that can be generalized.
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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?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
No, they are idiots for using bad decision making on their part (hiring bad MSPs, managing them poorly) as a reason to make worse decisions. It's true that people who make bad decisions tend to keep making them in more and more places, so people who screw up their MSP situations will then react to that information incorrectly and make things even worse - but that doesn't make any of those mistakes "good".
Hiring outsourced staff is just like hiring insourced. If you are bad at one, you'll be bad at the other. And guess what, companies have terrible track records of hiring FTEs. Really, really bad.
The real problem here is perceiving a mistake (hiring the wrong firm) as being associated with something that it is not (the model rather than the firm.)
Imagine if you bought two cars, both didn't work, and you concluded that cars don't work rather than figuring out that you either got unlucky or possibly know very little about how to buy a car?
No, this is more like getting a series of Uber rides that didn't work out and deciding to buy a car.
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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?:
In addition, there are so many variables that affect the calculation of whether or not an MSP can provide better value over an FTE that it is a case by case evaluation that is difficult to "rule of thumb" or "best practice".
This is only "sort of" true. Every FTE has the potential to be a better MSP. The comparison is of models or approaches, not of this employee vs. that MSP. For the apples to apples, we have to compare the same people. Not equivalent people, the literal same people.
So why choose the MSP then?
Because the model is always better. And in the real world, no one goes for the "equals" because the upside of the "better" is SO much better. I don't understand why anyone ever considers anything else, I think it's crazy.
You are asking the question in reverse. Try it this way...
"If you know the FTE is never the right decision ever no matter what, why ever choose it? Why is it even considered an option when it is known to not be the best choice?"
That FTE is even left in the decision pool is actually a problem. Once it can be ruled out, it should be. You choose the MSP approach because no matter who you want to hire, or how many people, the MSP approach always makes it equal or better.
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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?:
Given that, most organizations are going to have mixed experiences, at best, with outsourced IT labor.
This just suggests that most businesses are foolish and emotional and don't use business decision making processes - which is totally true in every sense - but is irrelevant. If we used the fact that "nearly all businesses are idiotic" as the basis for all learning and decision making, the only logical place to go is "never bother doing anything well or caring because most people are idiots and nothing matters."
That's not a good approach. And it's not taken universally, why would you apply it to staffing approaches but surely not keep it when talking about patching or passwords?
We know that understanding what is good is important, even if most people don't take good advice. That most people are idiots and don't listen to logic is never a dispute to logic.
The sky IS blue no matter how many people don't believe it. You can argue that knowing that the sky is blue is futile if no one will ever believe you. But you can't use people not believing you as a suggestion that the fact is wrong.
You're not wrong, but this seems irrelevant. If a company has worked with outsourced labor and had repeated poor experiences compared to FTE labor than they are not idiots for choosing the latter.
No, they are idiots for using bad decision making on their part (hiring bad MSPs, managing them poorly) as a reason to make worse decisions. It's true that people who make bad decisions tend to keep making them in more and more places, so people who screw up their MSP situations will then react to that information incorrectly and make things even worse - but that doesn't make any of those mistakes "good".
Hiring outsourced staff is just like hiring insourced. If you are bad at one, you'll be bad at the other. And guess what, companies have terrible track records of hiring FTEs. Really, really bad.
The real problem here is perceiving a mistake (hiring the wrong firm) as being associated with something that it is not (the model rather than the firm.)
Imagine if you bought two cars, both didn't work, and you concluded that cars don't work rather than figuring out that you either got unlucky or possibly know very little about how to buy a car?
No, this is more like getting a series of Uber rides that didn't work out and deciding to buy a car.
To hire a chauffeur, not to buy a car. But that's not quite right, because Uber is ONE vendor. It would be using many ride sharing services (well two or three) and then deciding that you can't pick a good one, so you feel you can hire drivers better than they can and hire a chauffeur yourself.
