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Confidential © 2007 RampRate™ Slide 1
Optimizing CDN Services RelationshipsOptimizing CDN Services Relationships
Tony Greenberg, CEO
March 15, 2007
Confidential © 2007 RampRate™ Slide 2
RampRate: IT Outsourcing SpecialistsRampRate: IT Outsourcing Specialists
Transaction-focusedAuditable Selection Process
Apples-to-Apples Quoting Methods
Business Term NegotiationRisk Mitigation
Operational Audits
Data-Driven Analysis Ongoing Optimization
Fu
ll-C
ycle
So
urc
ing
ITO Best PracticesCost / Risk Benchmarks
Templated Profiling
Accelerated Sourcing
Pro
ven
Met
ho
do
log
y
• Experienced ITO Specialists working with client & Accenture team• Vertical Expertise: Media, Financial Services, Internet E-Commerce• ITO Focus: Managed srvcs, network srvcs, data center, desktop mgmt, complex telecom
Confidential © 2007 RampRate™ Slide 3
Data-Driven Decisions with SPY IndexData-Driven Decisions with SPY Index
1. RampRate’s Historical Data• Over 280 multi-quote transactions in 4 years• Thousand of RFP responses distilled• Ongoing client inputs on actual performance
2. Analyst ‘Research-View’ • Industry trends / best practices vendor ratings• Inputs from Gartner, Telegeography, Aberdeen,
and others
3. Vendor Capabilities• Services data, list prices and actual quotes• Pre-loaded database of over 220 vendors
4. Customer Experience• Primary research on customer satisfaction• Ongoing end-user interview program
5. Cultural Compatibility• Cultural fit matching of clients and vendors• Global compatibility and success ratios
Service Provider Intelligence Index (SPY Index) drives speed and quality of decisions.
Confidential © 2007 RampRate™ Slide 4
Capturing Value From Time in IT OutsourcingCapturing Value From Time in IT Outsourcing
Transaction-focused Fee Structure We succeed when ITO process succeeds Streamlined Vendor Processes Accelerated procurement process Fast, Accurate SPY Index Benchmarks Concrete data on intangibles
Confidential © 2007 RampRate™ Slide 5
Success MetricsSuccess Metrics
Accelerated Time to Market
Average Time for Sourcing Process: 4-8 Weeks
Financial: Restructured Existing Hosting Contract to Reduce Costs by 46% in 14 Days
Gaming: Negotiated $320M+ in 7 multi-national projects in less than 6 Weeks
Media: Cut Multi-Million Dollar CDN Contract by 50.2% in 7 days
Risk Protection
Per-Project Avg of 18 Additional Contractual Protections via Standard SLA Terms
Media: Tripled # of terms in CDN’s SLA and reduced risk exposure by over 90%
Financial: Identified and resolved 60+ deficiencies in a shared services corporate data center contract
Cost Reduction
Average 32% Net Savings From Pre-RampRate
Media: Cut $3M in restructuring software licensing agreement
Financial: Cut 52% of bandwidth costs and 19% of power costs by migrating to carrier-neutral hosting
Internet/E-Commerce: Cut 22% in network services costs by moving client from direct to channel, reshaping mid-contract deal
Confidential © 2007 RampRate™ Slide 6
RampRate’s CDN Practice
Industry Leadership RampRate CDN Practice Leader Steve Lerner:
Former VP of Operations at Speedera (now Akamai)- ran global CDN
Built Speedera’s streaming network
Wrote one of the first CDN patents
Deep CDN Expertise
Web caching, whole site delivery, e-commerce optimization
Download delivery: software, video files, games, audio, patches, updates
Digital rights managements, secure site delivery, P2P
Streaming (live & on demand), encoding, satellite feed, content management
Ad insertion, monetization, web analytics
100+ CDN deals procured
Hundreds of vendor quotes collected
Vendor Partners cover all CDN needs
Confidential © 2007 RampRate™ Slide 7
CDN Sourcing Process
1. Needs Analysis / RFQ Creation Analyze client’s content delivery
business model
Examine current content delivery architecture & performance needs
Create benchmarks for budgeting (including in-source vs. outsource or combination)
Develop contract profile
Time: 1-14 days depending on client
2. Vendor Quote Solicitation Distributes RFQs and Quote Forms
Analyze quotes in apples to apples
Perform clarifications, reference checks, financial due diligence
Time: 7-21 days
Confidential © 2007 RampRate™ Slide 8
Successful ITO Process : Successful ITO Process : Use Data to Narrow ChoicesUse Data to Narrow Choices
Compare Client Requirements Against Vendor Capabilities Partners and Non-Partners are categorized, rated, ranked and assessed
Needs analysis compares specific parameters against partners to narrow choices
Confidential © 2007 RampRate™ Slide 9
Successful ITO Process : Successful ITO Process : Assess FULL Vendor in Reponses – Quickly! Assess FULL Vendor in Reponses – Quickly!
Pre-Quote Capability Rating
0123456789
10
Availablecapacity
Total reach Total peering Historicaluptime
Historicallatency
Historical SLAadherence
Vendor B Median Minimum Threshold WeightConnectivity Constraints
0
50
100
150
200
0
500
1,000
1,500
2,000
2,500
3,000
Available fiber capacity (Gbps) 90 160 180 180 120 160 90
Lit fiber capacity (Gbps) 15 13 15 6 7 11 22
Current Usage (Mbps) 1,350 2,080 2,700 1,080 840 1,760 1,980
Vendor AVendor B -
Site 1Vendor B -
Site 2Vendor C Vendor D Vendor E Vendor X
Analyze the Quantitative and Qualitative Deal Components References, historical performance, vertical expertise, scalability, etc.
Don’t fall into “analysis paralysis”
Confidential © 2007 RampRate™ Slide 10
Content Delivery Network Procurement Process
3. Vendor Quote Analysis Analyze client SPY Index weightings to
assess vendor compatibility
Analyze basic and value-added services (e.g. web caching, download delivery, streaming)
Acquire the “behind-the-scenes” technical facts behind CDN proposals
4. Final Negotiation Contract redlines to ensure all required
provisions are contractually guaranteed
Multi-vendor, single vendor, in-source, or combination chosen to achieve financial and performance goals
Leverage current pricing benchmarks to optimize negotiation strategies
5. Average CDN Savings: 36%
Confidential © 2007 RampRate™ Slide 11
Successful ITO Process : Successful ITO Process : Create Contracts with Teeth and OversightCreate Contracts with Teeth and Oversight
Actionable SLA are Essential
Define key performance metrics
Define boundary performance levels
Have Risk/Reward = 30%-50% of Contract Value
Instill proactive or vendor-facilitated credits
Business Terms Must Also Include:
Term and termination
Jurisdiction and dispute resolution
Provisions for growth
Build Governance Structure During Negotiations
Once the contract is signed, you lose leverage!
Confidential © 2007 RampRate™ Slide 12
CDN Customers
Typical CDN customers include:
Technology companies delivering software, updates, and patches
New media businesses creating a delivery platform for video, audio, podcasts, and Flash.
Broadcast networks streaming live audio and video
Online retailers and advertisers who need fast page loads and the highest uptime
Social networks with complicated and highly dynamic architecture
Government agencies that require advanced security and fault tolerance
Corporations with global applications and audience
Confidential © 2007 RampRate™ Slide 13
4 Rules of Fast, Efficient ITO Process4 Rules of Fast, Efficient ITO Process
Rule 1: Skip RFI / RFP, Go Straight to Request for Quote (RFQ) Standardize requests in clear, vendor-neutral language, creating vendor parity
Require vendor compliance with detailed quote structure
Separate required components from optional
More Work up Front Pays off in Decision-Making Process – Detail is Good!
Company NameDate Bid SubmittedData Center AddressData Center Facility OwnerMaximum Draw per Square Foot (in watts of breakered capacity assuming 60% utilization)Bandwidth provider(s)Guaranteed set-up / installation time (days)
MRC Per Unit NRC Per Unit4-Post Rack (client-supplied cabinets, no power) 17
OR space charge per square footReserved space for short-term expansion (per rack) 8
Network and storage rack power: 220V 20A AC Active / Passive pair 8Network and storage rack power: 220V 30A AC Active / Passive pair 2Render node rack power: 240V / 60A 3-phase AC Active / Passive 13
IP Transit: 10 Mbps Bandwidth Commit burstable to 100 Mbps -- Cost per 1 Mbps increment.
10
Remote hands per hour (15 min increments) 5Other charges (please describe in comments) 0
Vendor Comments
Financial Terms
Current Base Requirements Quantity 12 month Contract
Co-Location Site
Confidential © 2007 RampRate™ Slide 14
4 Rules of Fast, Efficient ITO Process4 Rules of Fast, Efficient ITO Process
Rule 2: Explicitly Set Vendor Commitment to Client Growth Ensure Ability to Scale Up
Demonstrate Client’s Seriousness About Growth
Reach Vendor Discount Thresholds
100Mbps to
149Mbps
150Mbps to
199Mbps
200Mbps to
299Mbps
300Mbps to
499Mbps
500Mbps to
749Mbps
750Mbps to
999Mbps
1000Mbps to
1999Mbps
2000Mbps to
3499Mbps
3500Mbps to
5999Mbps
6000Mbps +
25th Percentile $40.00 $38.75 $41.24 $40.00 $35.18 $35.00 $35.00 $35.00 $29.75 $28.55
Median $57.00 $47.95 $50.00 $45.00 $41.00 $40.00 $40.00 $38.25 $35.00 $35.00
75th Percentile $80.00 $80.00 $65.00 $60.00 $48.75 $45.00 $45.00 $43.50 $39.00 $36.25
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Cost
per
Mbp
s
2006 RampRate-Obtained Rates by Commit Level -- CDN Mbps
Confidential © 2007 RampRate™ Slide 15
4 Rules of Fast, Efficient ITO Process4 Rules of Fast, Efficient ITO Process
Rule 3: Pre-Write SLA / Contract Terms 20% of clients don’t know their SLAs;
Another 18% Accept “Standard” Provider Terms
Don’t negotiate SLAs at the last minute
Demonstrate business value to customer as the Driver
Particularly important where the “Right Choice” is at higher cost than others
SLA / Business Terms Yes / NoStaged implementation: Customer will not be charged for space and power before its equipment is installed.
Monetary penalties to apply for failure to meet committed installation timeline
Monetary penalties to apply for downtime of each servicePhysical isolation of data center environment (caged or walled)
50% extra contiguous space with 45 day right of first refusalData center has sufficient space and power reserves for 50% growth of the footprint by the end of 2007
Redundant HVAC and power systems guarantee.Temperature to be maintained between 64 and 78 degrees F
Comments
Confidential © 2007 RampRate™ Slide 16
4 Rules of Fast, Efficient ITO Process4 Rules of Fast, Efficient ITO Process
Rule 4: Ask for Help When Needed RFQs with strict, reasonable “Not-to-Exceed” rates
Leverage database of best practices, SLA, and contract terms
Pre-select vendors that best fit client profile
Vendor 1 Vendor 2 Vendor 3 Vendor 4 Vendor 5 Vendor 6
Cost Ef fectiveness 6.5 7.8 2.5 6.9 5.4 0.0
SLA Term Acceptance 6.3 4.6 9.4 3.6 5.1 4.3
Price vs. Median 8% -22% 6% -9% -4% 126%
6.5
7.8
2.5
6.9
5.4
0.0
6.3
4.6
9.4
3.6
5.1
4.3
8%
-22%
6%
-9%-4%
126%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Confidential © 2007 RampRate™ Slide 17
ITO Procurement DeliverableITO Procurement Deliverable
Interactive Negotiation ToolsSavings
opportunities*Select
Outcome% of Total Opportunity
Savings Dashboard Annual Cost % of Original
Lower bandwidth commit to match usage Win Last Supplier X Proposal $5,438,640.00 100.00%Lower bandwidth rates by $10/Mbps Loss Current Outcome $4,461,701.85 82.04%
Lower per-rack cost by $120 Win 16.1% Negotiation Target $3,894,562.00 71.61%Lower handservice hourly rate by $20 Loss 18.8%
Lower whip rate by $60 Loss 6.5% Total Potential Savings $133,860.00 2.46%Get T1 loop free of charge Loss 1.2% Money saved so far $69,600.00 1.28%
Gap to negotiation target: $64,260.00 1.18%
SLA Improvement Needs
Select Outcome
% of Importance
Business Term Improvement
NeedsSelect
Outcome% of Importance
Monetary penalties for business interruption Win 40.0%
30/60-day rollout period Loss 70.0%
No-penalty exit for more than 3 outages in a month Loss 40.0%
2-week free trial Win 20.0%
Retroactive reset of commit levels Win 20.0%
Illinois to be the jurisdiction for disputes Win 10.0%
57.4%
First Year Costs Progress Meter
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Proposed Current TargetT1 LoopRemote HandserviceExtra WhipsBandwidthCages
63%
37%
60%
40%
30%
70%
0%10%20%30%40%50%60%70%80%90%
100%
Financial SLA BusinessTerms% of Potential Achieved Gap
Confidential © 2007 RampRate™ Slide 18
Clients from Many Markets
Confidential © 2007 RampRate™ Slide 19
Contact InformationContact Information
Tony GreenbergChief Executive [email protected](310) 985-8669