Ramp Rate Methodology Overview Sn
Transcript of Ramp Rate Methodology Overview Sn
Confidential ©RampRate™ Slide 1
RampRate Methodology Review
Presented by:Steve Nguyen
Sourcing Advisor714-889-9382
Confidential ©RampRate™ Slide 2
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
Confidential ©RampRate™ Slide 3
Sourcing Advisors for IT Infrastructure
Baselining Benchmarking
Sourcing Research
RampRate Services
Enables For
Confidential ©RampRate™ Slide 4
RampRate Clients
Finance
Publishing
Media/Broadcast
GamingHigh-Tech
Internet/E-Commerce Web 2.0 Telecommunications
Confidential ©RampRate™ Slide 5
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
Confidential ©RampRate™ Slide 6
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
Confidential ©RampRate™ Slide 7
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
Confidential ©RampRate™ Slide 8
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)
Confidential ©RampRate™ Slide 9
RampRate DOES NOT source
• Microsoft Enterprise, Oracle, per-seat licenses
Hardware/ Software / Licenses
• Offshore, customer serviceBPO
• Programming, QA, graphic design
Software Development
Confidential ©RampRate™ Slide 10
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
Confidential ©RampRate™ Slide 11
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
Confidential ©RampRate™ Slide 12
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
Confidential ©RampRate™ Slide 13
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
Confidential ©RampRate™ Slide 14
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
Confidential ©RampRate™ Slide 15
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
Confidential ©RampRate™ Slide 16
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