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.:
@Breffni-Potter said in The MSP Model fails more often than not.:
- When an external is brought in, Often it is a deliberate decision to save costs by removing the internal team afterwards. Regardless of competence, performance or anything else, the decision just boils down to money saved, not what delivers the best return on investment.
This may be true, but not something I see in the real world. I'm not sure I've actually ever seen this first hand as an MSP, but I've seen it from internal IT people that think it is happening. I'm not totally sure that I know any internal people that were replaced with an MSP, but I'm certain it happens. But commonly? I'm not sure about that. It's repeated as a fear a lot, but of the MSPs and internal people here (which is everyone), how many of you had an MSP brought in and then had them replace you OR were brought in as an MSP and you replaced the people that were already there?
As an MSP, we've done attrition fill ins often (replacing people who leave) but not replacing people who still work there. Sometimes it's to let someone working in IT to move into management or something else, but that's IT attrition even if not corporate attrition.
I had a friend who worked for a large AIX based company. The company hired IBM global services to take over all IT - that would make them a MSP right?, And then laid everyone off.
So I know it happens.
So here is the big question.... was internal IT doing a good job? Because IGS is terrible. High cost, low competence. They are a joke inside of IBM. They are a VAR primarily, MSP is a tack on service. Hiring them violates the vendor rules.
It happens. We know it happens. But how often? IT people change jobs a lot. Even if every person in IT saw it happen to them once, would that be that often?
lol, well, I know a year later they fired IGS and rehired internal IT again.
That goes with hiring a VAR to replace IT. Sales people doing IT work, no way that that won't be a disaster. As examples go, this has a lot of points...
- It shows that IT jobs weren't lost to an outsourcer beyond a short period of time. IGS would use it as an example of internal IT replacing outsourced.
- Hiring a VAR is downright crazy, to run your IT.
- IGS has a terrible reputation, even their own company doesn't trust them!
It's not an example of MSPs doing anything, so misleading to include it here. But it is a good example of SMBs routinely confusing sales staff with IT staff. And that makes for a REALLY important point...
SMBs that don't have quality IT management at the top often cannot even identify what IT staff and IT companies look like! The important of having an MSP running IT is so much more dramatic when you talk about the SMB and are dealing with shops that have nearly zero capacity to hire, retain or even identify real IT or quality IT resources. Had there been a good MSP, or even good management, they would have known to protect the business from hiring a sales organization from an VAR to run their IT. The lack of MSP is easily a key reason that they made such a massive blunder. Of course, had they had excellent internal IT that would have protected them, too. Or if they had good management. But any of the three should have been enough to know how to go about having good IT in the first place.
-
I've worked on both sides of the MSP. There are internal 1 man shops that are bad for the business, and there are MSPs that are bad for the business. For small companies, I think a good MSP is a good fit.
Lets say you have a 100 employee company and they have 1 in house IT person. On one end they could hire the shipping guy that has a real interest in IT. He might be able to take care of a lot of the daily needs, but the lack of experience means either he will need to bring consultants in, or spend a lot of time learning something he is only going to do once, or something in between. At the other end of the spectrum, they could have the IT Pro that really knows what he is doing and makes a lot of good decisions. Since there is only one IT person, the same guy that now knows how to build virtual servers is still plugging in keyboards.
That same 100 person company can hire a MSP for half the salary of the IT Pro and have better coverage. The lone IT Pro will take vacations and other things. The MSP has a depth of experience levels that allow them to still make money at that price because they have an entry level guy doing entry level tasks and the Pro is doing Pro level tasks all day long and not getting interrupted with password resets.
-
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.
-
@Mike-Davis said in The MSP Model fails more often than not.:
That same 100 person company can hire a MSP for half the salary of the IT Pro and have better coverage. The lone IT Pro will take vacations and other things. The MSP has a depth of experience levels that allow them to still make money at that price because they have an entry level guy doing entry level tasks and the Pro is doing Pro level tasks all day long and not getting interrupted with password resets.
This is one of the things that I find surprising - that people think that one 50/hr per week steady rate internal person will work when IT is generally "zero needs for a month" then suddenly "need ten people at once" and the day to day skills are very unlike the "something has gone wrong" skills. And the design skills are very unlike the management skills. Very few SMBs need even a single full time person, rarely even half of one. But even if they only need a tenth of one, they always need several different skills sets.
-
@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?
-
What do you mean by an MSP has "more concern and ties to the business success...."? As an employee, my primary role is to make money for the business shareholders by adding value to the business. Similarly, an employee of an MSP's primary role is to make money for the MSP. So there is a conflict of interest here. It is in the MSP's interest to bill more, whilst the business will want to bill less. This conflict can be managed, but it requires skills and resources from the business to manage it - skills and resources which likely will not exist in an SMB.
I don't really see any benefits from not having an internal person in that (or any) case. In all my years of IT, I've never seen any upside to external IT (as a structure, the people themselves can be great). We're obviously poles apart in our experiences and so I doubt we'll ever agree.
-
@Carnival-Boy said in The MSP Model fails more often than not.:
As an employee, my primary role is to make money for the business shareholders by adding value to the business. Similarly, an employee of an MSP's primary role is to make money for the MSP.
Sort of, in both cases the employee is just at a job. In both cases the ultimate task is to make money for the business, that's the MSP's job. So while the MSP has a little extra in the middle, the employee being there to look out for themselves while ultimately there to service the business (the customer) is the same in both cases.
Or another way....
An MSP is an employee of the business and the IT guy at the MSP is like the MSP's "hand". Whatever motivation that a normal employee has of a business, an MSP has for that business as well. An MSP is just like an employee there.
-
@Carnival-Boy said in The MSP Model fails more often than not.:
. So there is a conflict of interest here. It is in the MSP's interest to bill more, whilst the business will want to bill less. This conflict can be managed, but it requires skills and resources from the business to manage it - skills and resources which likely will not exist in an SMB.
That's absolutely true. But what is missing is that the same conflicts exist with an in house IT department. To the business, in house IT and an MSP are identical (trust me, I've worked in non-IT management, to business people it's just one payroll or another, not an emotional or ethical tie like you feel from the IT side) - they are both external to the core business, both service organizations, both with the same conflicts of interest. Both suffer from wanting "more hours, better pay, to do less work" or whatever.
Internal IT can be capped to 40 hours a week to control this. So can an MSP. Anything you can use to control an employee you can with an MSP as well.
-
@Carnival-Boy said in The MSP Model fails more often than not.:
I don't really see any benefits from not having an internal person in that (or any) case. In all my years of IT, I've never seen any upside to external IT (as a structure, the people themselves can be great). We're obviously poles apart in our experiences and so I doubt we'll ever agree.
Even if observation doesn't show it, show it with logic. I'm arguing that professionals working in an professional structure have benefits. From everything I know in every field, this is considered common sense, common knowledge and basic business. Maybe I'm wrong, but I didn't think that this was an area to be disputed.
Your point, though, was that you were unaware of internal IT being worse, but don't propose that it is better. So my theory is that one has clear advantages with no negatives. Yours is that they are the possibly only the same.
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.
-
@scottalanmiller said in The MSP Model fails more often than not.:
An MSP is an employee of the business and the IT guy at the MSP is like the MSP's "hand". Whatever motivation that a normal employee has of a business, an MSP has for that business as well. An MSP is just like an employee there.
Except that as an employee of the business it is next to impossible for me to "bill more" to the business. I'm salaried, so the money I earn is fixed. I can't sell them a SAN and I get the same wage whether I do 40 hours or 60 hours of work a week. Also, if I make my staff redundant, business costs will fall, whereas if an MSP makes someone redundant (ie by suggesting to the business that they don't need as many on-site staff), then the MSP's revenues fall - they are worse off. In other words, internal IT may try and reduce the amount of IT done, whilst an MSP will naturally seek to increase it. So again, there is a conflict of interest.
-
@Carnival-Boy said in The MSP Model fails more often than not.:
@scottalanmiller said in The MSP Model fails more often than not.:
An MSP is an employee of the business and the IT guy at the MSP is like the MSP's "hand". Whatever motivation that a normal employee has of a business, an MSP has for that business as well. An MSP is just like an employee there.
Except that as an employee of the business it is next to impossible for me to "bill more" to the business.
I'm actually writing up a thing on that right now
Maybe in the UK it is hard, but in the US it is trivial for IT staff to bill more (look at @jason whose entire department is hourly giving them unlimited extra billing time) or to just do less work (the more common option, billing for idle time) and even on Wall St. with enormous salaries it is standard to bill 40-80% over your base hours.But any salary cap for a normal employee can be applied to an MSP. So if you feel that there are effective limitations to one, then you have created the answer for the other.
-
@Carnival-Boy said in The MSP Model fails more often than not.:
I can't sell them a SAN and I get the same wage whether I do 40 hours or 60 hours of work a week.
An MSP can't sell a SAN either, that's a VAR. And the standard MSP model is capped pay (essentially salary) so you are describing the MSP situation perfectly.
-
@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.
-
@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?
-
@Carnival-Boy said in The MSP Model fails more often than not.:
Also, if I make my staff redundant, business costs will fall, whereas if an MSP makes someone redundant (ie by suggesting to the business that they don't need as many on-site staff), then the MSP's revenues fall - they are worse off. In other words, internal IT may try and reduce the amount of IT done, whilst an MSP will naturally seek to increase it. So again, there is a conflict of interest.
If you make someone redundant internally you get less work done and the remaining people have more work to do - negative impact. The motivations to keep people around are still there internally and famously companies swell with internal staff because of pride or a motivation to "manage more people."
Let me ask you, how many SMBs have you seen with any internal staff? Since nearly all SMBs don't need even a single full time person, doesn't that completely refute that concept? In order to keep employed, the one IT person pushes for being kept on even though they aren't needed full time?
There is the same conflict on both sides. But I'd argue that the conflict is actually stronger on the employee side as there is more emotional ties and risk and in decades of observation, I'd say this is beyond proven. Internal staff swelling is so common and just look at SW, thousands and thousands of examples of overstaffed, underserved internal IT departments.
-
@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?
-
@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.
-
@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.
-
@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.
-
@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.
