When Is It Okay to Say You Are a System Administrator
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@scottalanmiller It's never cheaper to build a more expensive bridge unless there is an inequality of labor value. Again, a good MSP versus bad internal IT will naturally be in favor of the MSP. Likewise, good internal IT versus a bad MSP will favor the Internal IT. Just because you tag MSP onto the labor pool and add more tools doesn't mean they're superior in any way at all. It just means they have more tools that may or may not reduce any costs.. because if they must pay for tools while the Internal IT use free tools because those are sufficient for the needs to accomplish the same task.. not only did the MSP pay money for unnecessary tools, they also paid for more people to accomplish the same tasks that less people accomplished with cheaper tools.
Aggregation is irrelevant, because the cost is still higher in every respect for the MSP until/unless they can aggregate the costs enough to actually overcome their increased costs. As you said, if MSPs consolidated enough, that could and probably would happen. But until they do, it's just not how things are in the real world for the large part.
If an MSP has to pay me 65K including benefits to do the same job as I do for my organization, then they're going to have to split that for each and every single specialization they have to make up the cost difference of the SMB paying me. The whole reason we dropped our MSP from being our primary IT was because there were no MSP options available that could offer the services we required for less than it cost to pay me, and ultimately an additional IT staff member to do it. We also have less issues, because there's no such thing as the systems administrator you're talking about in the SMB world Scott, there is merely the IT admin who does the work of an systems admin, a network admin, a security admin, a systems engineer, a network engineer, any every other administrative or engineering roles that the MSP would have to pay no less than around $300K+ to employ for the same roles, and there's still no guarantee that even one of them will be any better than the SMB IT is. In my case, I'm also the Security Officer, which the SMB would be wise to have anyway.. so I'm really not sure how you can justify that through an MSP, without them having to pay the exact same money as the SMB, or even the SMB hiring an additional staff member to handle the security post.. that and MSP will be cheaper.
It's cheaper for the MSP, not for the SMB.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
Just because you tag MSP onto the labor pool and add more tools doesn't mean they're superior in any way at all.
It's not about adding tools. It's about providing a more powerful way to leverage the same talent pool. It's simply wastes fewer resources. Less waste means more work, less cost, more output.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
because if they must pay for tools while the Internal IT use free tools because those are sufficient for the needs to accomplish the same task.. not only did the MSP pay money for unnecessary tools, they also paid for more people to accomplish the same tasks that less people accomplished with cheaper tools.
There is nothing making an MSP pay for tools. What if I randomly said that SMB internal IT buys too many tools. What does tooling have to do with it? It's not a factor. Internal or MSP may or may not buy tools. The MSP does, however, have more scaling opportunities and more access to tools so has more options for lower cost or more effective tooling than does an SMB alone, but that is all. Your implication that MSPs having expensive tools is a false one. There is no such association.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
Aggregation is irrelevant...
It's very, very relevant. It's what makes the enterprise able to do what it does. It's a staggeringly large factor.
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@scottalanmiller said in When Is It Okay to Say You Are a System Administrator:
@tirendir said in When Is It Okay to Say You Are a System Administrator:
Just because you tag MSP onto the labor pool and add more tools doesn't mean they're superior in any way at all.
It's not about adding tools. It's about providing a more powerful way to leverage the same talent pool. It's simply wastes fewer resources. Less waste means more work, less cost, more output.
As I said before - if a server expert gets to spend all day working on servers, he will be more efficient than that same person working on servers for 2 hours, then changing to printers for an hour, then to email for 1 hour, then back to servers...
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
If an MSP has to pay me 65K including benefits to do the same job as I do for my organization, then they're going to have to split that for each and every single specialization they have to make up the cost difference of the SMB paying me.
No, they just split between the ones that use you. And that's where the cost savings is. You say this as if you are showing that MSPs are expensive. But you just demonstrated why they are cheaper.
Because instead of splitting you and keeping you busy, a single company has to pay for all of you whether there is work or not.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
The whole reason we dropped our MSP from being our primary IT was because there were no MSP options available that could offer the services we required for less than it cost to pay me, and ultimately an additional IT staff member to do it.
Then you hired the wrong MSP. That has nothing to do with it being MSP versus internal, you simply had the wrong MSP.
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Or, of course, you are personally underpaid and personally donating to the company.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
It's cheaper for the MSP, not for the SMB.
I've been in this business for 20 years. No one has ever produced an example of that. Show me your costs today, I'll get you an MSP to beat it. Every time. You can't just arbitrarily pick an MSP that is overpriced and claim it's too expensive. I'll show you an internal IT person even more expensive yet. That makes no sense. bottom line, you can't beat a good MSP, it's not possible. The logistics of it are simply not possible to overcome.
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@scottalanmiller said in When Is It Okay to Say You Are a System Administrator:
Or, of course, you are personally underpaid and personally donating to the company.
Which was already stated
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
We also have less issues, because there's no such thing as the systems administrator you're talking about in the SMB world Scott...
I've said this many times. Only enterprise and MSPs have them. That's a key reason why they are unbeatable. SMB IT staff is so insanely expensive. Easily 10x-100x the cost of enterprise staff for the same workload.
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@scottalanmiller said in When Is It Okay to Say You Are a System Administrator:
@tirendir said in When Is It Okay to Say You Are a System Administrator:
The whole reason we dropped our MSP from being our primary IT was because there were no MSP options available that could offer the services we required for less than it cost to pay me, and ultimately an additional IT staff member to do it.
Then you hired the wrong MSP. That has nothing to do with it being MSP versus internal, you simply had the wrong MSP.
Exactly, You need to find the correct MSP, the 1% that are good.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
... there is merely the IT admin who does the work of an systems admin, a network admin, a security admin, a systems engineer, a network engineer, any every other administrative or engineering roles that the MSP would have to pay no less than around $300K+ to employ for the same roles....
Right, and that is the value. They employ the experts and SMBs only pay for a tiny fraction of them at huge cost savings and get people with more experience and skills, less context switching, more insight and more career growth than any SMB could hire themselves. Again, you are making my point here.
MSPs do exactly this and this is how they are unbeatable. This is why the enterprsie is so cheap. That $300K of MSP staff can do the work of $3,000,000 SMB internal IT staff.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
...and there's still no guarantee that even one of them will be any better than the SMB IT is.
So fire the MSP. Easy peasy. There is no guarantee that the internal IT person is any good either. Same risks either way. but the MSP is easier to test and fire, way easier.
Like I said, same people, two models, MSP wins, no exceptions. It's basic logistics. It's impossible for IT internal staff to be competitive in that way. It's basically a management problem. In one case you are managing people efficiently, the other you are managing them inefficiently.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
In my case, I'm also the Security Officer, which the SMB would be wise to have anyway.
Only wise to have if the role is separate. Wearing all the hats, you are only securing yourself. How much time do you have to devote to security tasks?
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@scottalanmiller said in When Is It Okay to Say You Are a System Administrator:
@tirendir said in When Is It Okay to Say You Are a System Administrator:
In my case, I'm also the Security Officer, which the SMB would be wise to have anyway.
Only wise to have if the role is separate. Wearing all the hats, you are only securing yourself. How much time do you have to devote to security tasks?
And you're the fox in the hen house in this case as well.
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@tirendir said in When Is It Okay to Say You Are a System Administrator:
so I'm really not sure how you can justify that through an MSP, without them having to pay the exact same money as the SMB, or even the SMB hiring an additional staff member to handle the security post.. that and MSP will be cheaper.
It's easy, for all the reasons you mentioned. The MSP leverages scale and efficiencies, allows humans to focus on tasks and do less context switching and splits the resources between the customers. How can the MSP not be cheaper? It increases expertise and lowers overhead. It's just basic "leveraging scale" as all businesses want to do.
I'm not sure why you feel an MSP wouldn't be cheaper. If it isn't, you've got a salesman who really is trying to make a quick turn around. MSPs have so many places where they are more efficient and scale so much better.
Here is an example....
Old Way: Twenty SMBs with one IT person each. Each SMB pays $65K. Each IT person makes $65K
New Way: Sixty SMBs use one MSP. MSP employs the same twenty IT people from above but lets them specialize and stop task switching. Each SMB pays $50K. Each IT person makes $75K. MSP makes the profits.
Everyone wins. SMBs pay less but get more better resources. SMBs aren't depending on a single person. IT pros get to have peers to work with. IT pros earn more. MSP makes money.
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Another factor is the proximity network effect. This happens in all fields and isn't related to IT specifically. Having proximity to other professionals in your field increases your value and your compensation. This is why IT in NYC makes more than IT in Springfield doing the same jobs. You get more peer review, more peer interaction, less risk of being irreplaceable and so forth. You are worth more and able to grow more. MSPs create a similar effect that SMBs take away. The "bubble effect" of lone IT pros in an SMB makes them worth much less than if they were working around other IT people, at least from time to time.
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Help me with the math here
@scottalanmiller said in When Is It Okay to Say You Are a System Administrator:
Old Way: Twenty SMBs with one IT person each. Each SMB pays $65K. Each IT person makes $65K ** 20 x $65K = 1,300,000**
New Way: Six SMBs use one MSP. MSP employs the same twenty IT people from above but lets them specialize and stop task switching. Each SMB pays $50K. Each IT person makes $75K. MSP makes the profits.
6 x 50K = $300K
20 x 75K = 1,500,000 -
@dashrender said in When Is It Okay to Say You Are a System Administrator:
Help me with the math here
@scottalanmiller said in When Is It Okay to Say You Are a System Administrator:
Old Way: Twenty SMBs with one IT person each. Each SMB pays $65K. Each IT person makes $65K ** 20 x $65K = 1,300,000**
New Way: Six SMBs use one MSP. MSP employs the same twenty IT people from above but lets them specialize and stop task switching. Each SMB pays $50K. Each IT person makes $75K. MSP makes the profits.
6 x 50K = $300K
20 x 75K = 1,500,000Whoops, 6 was supposed to be 60
