One of the biggest criticisms I’ve seen of the MCM program, even when it first was announced, was the cost – at a list price of $18,500 for the actual MCM program, discounting the travel, lodging, food, and opportunity cost of lost revenue, a lot of people are firmly convinced that the program is way too expensive for anybody but the bigger shops.
This discussion has of course gone back and forth within the Exchange community. I think part of the pushback comes from the fact that MCM is the next evolution of the Exchange Ranger program, which felt very elitist and exclusive (and by many accounts was originally designed to be, back when it was only a Microsoft-only evolution designed to provide a higher degree of training for Microsoft consultants and engineers to better resolve their own customer issues). Starting off with that kind of background leaves a lot of lingering impressions, and the Exchange community has long memories. Paul has a great discussion of his point of view as a new MCM instructor and shares his take on the “is it worth it?” question.
Another reason for pushback is the economy. The typical argument is, “I can’t afford to take this time right now.” Let’s take a ballpark figure here, aimed at the coming May 4 rotation, just to have some idea of the kinds of numbers folks are thinking about:
- Imagine a consultant working a 40-hour week. Her bosses would like her to meet 90% (36 hours) billable. Given two weeks of vacation a year, that 50 weeks at 36 hours a week.
- We’ll also imagine that she’s able to bill out at $100/hour. This brings her minimum annual revenue to $180,000. They set her opportunity cost (lost revenue) at $3,600/week.
- We’ll assume she have the pre-requisites nailed (MCITP Enterprise Messaging, the additional AD exam for either Windows 2003 or Windows 2008, and the field experience). No extra cost there (otherwise it’s $150/test, or $600 total).
- Let’s say her plane tickets are $700 for round-trip to Redmond and back.
- And we’ll say that she needs to stay at a hotel, checking in Sunday May 3rd, checking out Sunday May 24th, at a daily rate of $200.
- Let’s also assume she’ll need $75 a day for meals.
That works out to $18,500 (class fee) + $700 (plane) + 21 x $275 (hotel + meals) + 3 x $3,600 (opportunity cost of work she won’t be doing) -- $18,500 + $700 + $5,775 + $10,800 = a whopping total of $35,775. That, many people argue, is far too much for what they get out of the course – it represents just over 10 weeks of her regular revenue, or approximately 1/5th of her year’s revenue.
If those numbers were the final answer, they’d be right.
However, Paul has some great talking points in his post; although he focuses on the non-economic piece, I’d like to tie some of those back in to hard numbers.
- The level of training. I don’t care how well you know Exchange. You will walk out of this class knowing a lot more and you will be immediately able to take advantage of that knowledge to the betterment of your customers. Plus, you will have ongoing access to some of the best Exchange people in the world. I don’t know a single consultant out there who can work on a problem that is stumping them for hours or days and be able to consistently bill every single hour they spend showing no results. Most of us end up eating time, which shows up in the bottom line. For the sake of argument, let’s say that our consultant ends up spending 30% instead of 10% of her time working on issues that she can’t directly bill for because of things like this. That drops her opportunity cost from $3,600/week to $2,520, or $7,560 for the three weeks (and it means she’s only got an annual revenue of $126,000). If she can reduce that non-billable time, she can increase my efficiency and get more real billable work done in the same calendar period. We’ll say she can gain back 10% of that lost time and get up to only 20% lost time, or 32 hours a week.
- The demonstration of competence. This is a huge competitive advantage for two reasons. First, it helps you land work you may not have been able to land before. This is great for keeping your pipeline full – always a major challenge in a rough economy. Second, it allows you to raise your billing rates. Okay, true, maybe you can’t raise your billing rates for all the work that you do for all of your customers, but even some work at a higher rate directly translates to your pocket book. Let’s say she can bill 25% of those 32 hours at $150/hour. That turns her week’s take into (8 x $150) + (24 x $100) = $1,200 + $2,400 = $3,600. That modest gain in billing rates right there compensates for the extra 10% loss of billing hours and pays for itself every 3-4 weeks.
Let’s take another look at those overall numbers again. This time, let’s change our ballpark with numbers more closely matching the reality of the students at the classes:
- There’s a 30% discount on the class, so she pays only $12,950 (not $18,500).
- We’ll keep the $700 for plane tickets.
- From above, we know that her real lost opportunity cost is more like $7,560 (3 x $2,520 and not the $10,800 worst case).
- She can get shared apartment housing with other students right close to campus for more like $67 a night (three bedrooms).
- Food expenses are more typically averaged out to $40 per day. You can, of course, break the bank on this during the weekends, but during the days you don’t really have time.
This puts the cost of her rotation at $12,950 + $700 + (21 x $107) + $7,560, or $23,457. That’s only 66% – two-thirds – of the worst-case cost we came up with above. With her adjusted annual revenue of $126,000, this is only 19%, or just less than 1/5th of her annual revenue.
And it doesn’t stop there. Armed with the data points I gave above, let’s see how this works out for the future and when the benefits from the rotation pay back.
Over the year, our hypothetical consultant, working only a 40-hour work week (I know, you can stop laughing at me now) brings in 50 x $2,520 = $126,000. The MCM rotation represents 19% of her revenue for the year before costs.
However, let’s figure out earning potential in that same year: (47 x $3,600) - ($13,650 + $700 + $2247) = $152,603. That’s a 20% increase.
Will these numbers make sense for everyone? No, and I’m not trying to argue that they do. What I am trying to point out, though, is that the business justification for going to the rotation may actually make sense once you sit down and work out the numbers. Think about your current projects and how changes to hours and billing rates may improve your bottom line. Think about work you haven’t gotten or been unwilling to pursue because you or the customer felt it was out of your league. Take some time to play with the numbers and see if this makes sense for you.
If it does, or if you have any further questions, let me know.