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onfidential © 2007 RampRate™ Slide 1 Optimizing CDN Services Optimizing CDN Services Relationships Relationships Tony Greenberg, CEO March 15, 2007

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Confidential © 2007 RampRate™ Slide 1

Optimizing CDN Services RelationshipsOptimizing CDN Services Relationships

Tony Greenberg, CEO

March 15, 2007

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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

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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.

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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

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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

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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

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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

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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

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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”

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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%

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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!

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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

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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

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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

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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

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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

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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

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Clients from Many Markets

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Contact InformationContact Information

Tony GreenbergChief Executive [email protected](310) 985-8669