Ramp Rate Methodology Overview Sn

Confidential ©RampRate™ Slide 1

RampRate Methodology Review

Presented by:Steve Nguyen

Sourcing Advisor714-889-9382

[email protected]


Who Is RampRate?

• Reduces decision timeframe• Adds market based data driven analysis• Improve pricing, contract terms, service levels

RampRate advises on sourcing or sale of IT services: colocation, managed hosting, cloud, content delivery, network and telco

• SPY Index market database• In vs outsource analysis• Mid-contract renegotiation• Multi vendor normalized bidding

RampRate uses data-centric tools to remove IT market inefficiency


Sourcing Advisors for IT Infrastructure

Baselining Benchmarking

Sourcing Research

RampRate Services

Enables For


RampRate Clients

Finance

Publishing

Media/Broadcast

GamingHigh-Tech

Internet/E-Commerce Web 2.0 Telecommunications

http://www.shozu.com/portal/index.do

















Data-Driven Decisions with the SPY Index™

1. RampRate’s Historical Data• Over 400 multi-quote transactions in 4 years• 1000s of RFQ responses distilled

2. RampRate Research• Primary research on client satisfaction• Ongoing end-user interview program

3. Analyst Research • Inputs from IDC, Telegeography,

Aberdeen, Renesys, Alinean, and others

4. Vendor Profiles• Services data, list prices and actual quotes• Pre-loaded database of 350+ vendors

5. Contract / SLA Templates• Streamlined for speed• Embedded best practices and approaches

6. Cultural Compatibility• Cultural fit matching of clients and vendors

Service Provider Intelligence Index (SPY Index) Drives speed & quality decisions


Results

• Resetting contract to market rates has proven an average of 30% cost reduction for RampRate Clients

Immediate and Sustainable Cost

Reductions

• Decisions driven using “street level” data, comprehensive industry knowledge and research

• Better Contract Terms and SLAs

Reduced Risk & Improved Contract

• Average time to contract is 6-8 weeksFaster Decision Timeframe


RampRate Services

Baselining / Operations Consulting• Preparing cost data for benchmarking or sourcing

Benchmarking• Comparing a baseline to a market

Sourcing Advisory• Making changes based on baseline via renegotiation or

RFQ/new vendors

Research• Information about a market


RampRate Service Verticals

• Rental of space/power/network/remote hands• DRT, EquinixColocation

• Local or remote managed hosting• Cloud Infrastructure As A Service (IaaS)• Wipro, HCL, IPSoft, Peer1

Infrastructure Management

• MPLS, WAN, VOIP, any large IP circuit• IP transit (bandwidth to the internet), point-to-point (DS3)• Level3, XO, Verizon, ATT• Land lines, mobile

Network Services & Telco

• Managed services for delivery of video, software, web pages• Akamai, Limelight

Content Delivery Networking (CDN)


RampRate DOES NOT source

• Microsoft Enterprise, Oracle, per-seat licenses

Hardware/ Software / Licenses

• Offshore, customer serviceBPO

• Programming, QA, graphic design

Software Development


Key Concepts: Buyer Profile / Strategy

• Multiple services bought from 1 vendor with little / no tactical competitive bidding• Dedicated account management, high touch service, and “one throat to choke”• Signed deals typically fall around 75th percentile of RampRate deals

Strategic

• Best facility / SLA, but amenable to competitive bidding• Signed deals typically fall around median of quotes

Technical & Vendor Fit

• Optimized mix of price and service level with some concessions on both• Signed deals typically fall around 25th percentile

Balanced

• Cost is primary / only selection criterion; service / provider may lack track record• Signed deals typically fall around 10th percentile

Price-Conscious


RampRate Sourcing: How It Works

Impact Report: Final State vs Baseline

Final Negotiations

Vendor recommendation

Quotes analysis

Sourcing - Quote form made from baseline, sent to vendors

Benchmark of Baseline against SPY Index shows gaps in pricing, contract terms, service levels

Baseline built from contracts, bills, inventory


The Result: SPY Index Analysis = Data Driven Insight

Combined market rates for packages

Price evaluated in context of

market

Price range determined by 137,000 real-

world quotes & deal outcomes


Top Line Pricing Analysis / Benchmark

Is Vendor Relationship Truly Strategic?

• If so, moderate savings can be found

• If not, choice of major savings or service gains

RampRate Opens Path to Savings

• Negotiation with Vendor or alternative providers

• Right-sizing price for service level of each infrastructure component

Dollar Spend

Items Not Benchmarked BandwidthHourly Labor Managed Hosting / LeaseData Center

Strategic

Technical

BalancedPrice-

Conscious

Savvis

Mon

thyl

Exp

ense

% of Optimal Contract Terms

Credit Suisse Preliminary Benchmark

Option 2: Cut Cost

Vendor

Client Prelim Benchmark

Vend

or


Top Line Contract Terms Analysis

Strategic

Technical

BalancedPrice-

Conscious

Savvis

Mon

thyl

Exp

ense

% of Optimal Contract Terms

Credit Suisse Preliminary Benchmark

Option 1: Improve Contract

Contract Documentation Incomplete

• SLAs missing for managed services and network

• Co-location SLA: boilerplate

Few Contract Terms Match Strategic Price

Levels

• Slightly flawed: price model needs adjustments

Major Gaps

• Over-broad Force Majeure• Unilateral price increases• No environmental

guarantee

Client Prelim Benchmark

Vendor


SPY Index Sourcing – Vendor Quote Analysis

Offer Performance vs. Criteria

0% 50% 100%

Vendor 1

Vendor 2

Vendor 3

Vendor 4

Vendor 5

Vendor 6

Vendor 7

65%

57%

44%

31%

62%

45%

63%

Price Competitiveness

Operational Health

Technology Fit

Financial Health

SLA / Business Term Assent

Scalability within of fering

Industry Fit

Extensibility outside of fering

Vendor 1 Vendor 2 Vendor 3 Vendor 4 Vendor 5 Vendor 6 Vendor 7 Vendor 8

Operational Health 87% 33% 81% 59% 32% 36% 72% 86%10% SLA 95% 95% 75% 95% 95% 70% 90% 95%

50% Uptime Guarantee (Assume 3 9s)100% 100% 100% 100% 100% 50% 90% 100%50% Temperature Guarantee 90% 90% 50% 90% 90% 90% 90% 90%

10% Facility Protections 71% 76% 60% 67% 70% 70% 63% 78%50% Facility Tier 75% 75% 50% 75% 75% 75% 75% 75%10% Power Redundancy 80% 80% 100% 50% 80% 75% 50% 50%10% UPS Duration 53% 53% 53% 40% 40% 0% 33% 100%

Score Drill-Down

Price Competitiveness,

25%

Operational Health, 20%

Financial Health, 15%

Scalability within of fering, 15%

Extensibility outside of fering,

10%

Technology Fit, 7%

SLA / Business Term Assent, 5%

Industry Fit, 3%

Buyer Selection Criteria Build internal

consensus on buying priorities

Compare fit of

different vendor profiles

Consoli-dated or

drill-down views of selection

All scorecard parameters reflect deep technical expertise and years of building lasting, low-risk services deals


RampRate Sourcing Project Plan

Needs Assessment

SPY Index Benchmark

Solicit Offers

Select Vendor

Negotiate Contract

RFQ /VQF

Demand Letter

Collect Data •Quantities• Budgets• Unit Costs• SLA Needs

Create Base Case• Finalize costs to benchmark

•Set baseline for measuring improvement

Requirements Summary

Assess Performance•Compare to users of similar service

Set Targets• Forecast improvement potential

•Identify tradeoffs

Select Areas to Re-Source or Negotiate

Benchmark

Re-sourcing• Create Vendor Quote Form (VQF) and Request for Quote (RFQ)

•Finalize target vendor list

Renegotiation•Request improvement

•Set walk-away targets

RFQ / VQF Demand Letters

Distribute RFQ / VQF

Vendor Q&A

Collect responses•Preliminary due diligence

•Clarify•Ensure best offer is submitted

Create apples-to-apples comparison

Address risks•Site visits•Additional references

•Detailed transition plan

Finalize sourcing decisions

Finalize targets & receive draft contracts•Price•SLA

RampRate redline

Legal review Signature

Calculate RampRate Impact•Price•SLA

Vendor Quote Analysis

Finalist MSA, SLA, Order

Form(s)

Signed Contract & Impact Report


Contact

Steve NguyenSourcing Advisor

[email protected]

Ramp Rate Methodology Overview Sn

Documents

ramprate sourcing

percentile of ramprate

service levels ramprate

ramprate methodology

cost data

service level service

line contract terms

vendor profiles services