Action. Situation. Client: Constant Contact Industry: Marketing Services Geography: United States RampRate Solutions: Data Center HyperSourcing

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Carmel Lester
8 years ago
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1 Client: Cnstant Cntact Industry: Marketing Services Gegraphy: United States RampRate Slutins: Data Center HyperSurcing Situatin At the end f 2010, Cnstant Cntact was a fast-grwing leader in prviding Internet-based marketing services t small cmpanies. It recgnized the need t ensure ptimal price and service levels assciated with a majr IT expense--primary and redundant DR (disaster recvery) data centers n the East and West Casts. When Cnstant Cntact engaged RampRate, it wndered if it wuld end up staying with its incumbent DR supplier. The result prved therwise. Actin DR Facility Actin: Cnstant Cntact is prjected t save a ttal f $21.3M ver the next 6 years and achieve anther $1.9M in intangible benefits. Cnstant Cntact s final csts were 13% belw its gal f reaching market 25th percentile rates and 27% belw the median f all qutes fr West Cast data center space. Achieved intangible benefits f singlesurce prvider, favrable lcatin, and ability t build ut int a large suite withut space cnstraints. Primary Facility Actin: Cnversin f pwer charges frm percircuit t metered charges, resulting in an estimated 75% reductin in pwer csts. 225 kilwatts f additinal high density expansin space. Attainment f bth f the abve gals withut signing a lease lnger than 6 years. Deferral f rent increases and charges fr 4 mnths, which resulted in savings f apprximately $224K. RampRate RampRate 1 1

2 Internet Marketing Service Needs Optimal Data Center Service t Cntinue Grwth Trajectry Cnstant Cntact, Inc., is an nline marketing cmpany ffering marketing, scial media marketing, nline survey, event marketing, digital strefrnts, and lcal deals tls. Its target custmers are primarily small businesses, nnprfit rganizatins, and membership assciatins. It has ver 1,200 emplyees and claims ver 500,000 custmers. Frm its start in 1995, this Waltham, MA-based cmpany has grwn thrugh expansin f features services and thrugh acquisitins. The Task In January f 2011, as it cntinued its grwth, Cnstant Cntact recgnized the need t ensure ptimal primary and redundant data center services. RampRate was engaged by Dave Cnnrs, Senir Directr f SaaS Operatins, and Jasn Parsns, Directr f Netwrk Systems and Security, t prvide surcing advisry services n its primary and redundant disaster recvery (DR) data centers. Data-driven Analysis = Verifiable, Actinable Infrmatin The Apprach Using its prprietary SPY Index, RampRate immediately fund that bth pricing and service levels f the incumbent supplier did nt meet market standards, and develped and implemented a strategy t achieve ITO. The prprietary SPY Index prvides a database f c-lcatin transactinal data and best practices fr deals invlving hundreds f suppliers and hundreds f buyers. The subsequent savings and SLA/business term imprvements achieved were all derived frm a cmmn surce RampRate s data-driven surcing prcess. This prcess bypasses the high-cst RampRate 2

3 direct sales rganizatin and prcures IT services at whlesale rates while using industry cst benchmarks and best practices t ensure maximum client advantage. Fully Cnsidered Cst Savings Withut Exceptin Because f RampRate s prprietary technlgy and industry expertise, it was able t determine the precise right supplier fit fr Cnstant Cntact. RampRate was able t lk beynd the lwest price tag t reveal actual price when all factrs tangible and intangible--were cnsidered. The Results Cnstant Cntact realized significant cst- and service-level utcmes at bth its primary and DR facilities. DR Facility: Tangible Financial Benefits Optimizatin affecting the DR facility included: Cnstant Cntact s prjected data center expenditure fr its DR facility was reduced frm $32 millin, if it had stayed with the incumbent supplier, t $11 millin with the new supplier. Cnstant Cntact was prjected t save a ttal f $21 millin ver the curse f the 72-mnth lease, r 65% f its ptential expenditures. Cnstant Cntact s final csts were 13% belw its gal f reaching market 25th percentile rates and 27% belw the median f all qutes fr West Cast data center space. Cnstant Cntact received intangible benefits f a single-surce prvider, favrable lcatin, and ability t build ut int a large suite withut space cnstraints. By selecting RampRate s identified and recmmended supplier instead f a lwer-cst supplier that did nt meet these targets, Cnstant Cntact valued these intangible benefits at $1.8 millin ver 6 years. The fllwing table and graphs summarize the direct financial impact f RampRate s prcess. RampRate achieved a cst savings f 65% r $21 millin ver the 6-year lease term. These savings culd have been increased by anther $1.8M had Cnstant Cntact nt chsen the intangible value f a mre cnvenient lcatin and a single, established prvider. Cst Structure Lwest Cst (Supplier 1) Selected Slutin (Supplier 2) Current (Supplier 3) SPY Index Median SPY Index 25th Percentile Set-up Cst $47,813 $50,000 $0 $72,614 $39,982 Initial Mnthly Cst $64,125 $64,167 $222,809 $87,745 $64,902 6-Year Cst + Install $9,286,688 $11,044,556 $32,016,995 $12,816,842 $9,439,801 Cst vs. Current: Incumbent (Supplier 3) -71% -65% 0% -59% -70% Cst vs. Current: Selected Slutin (Supplier 2) -54% -45% 55% -37% -54% Cst vs. SPY Index Median -27% -13% 146% 0% -27% Cst vs. SPY Index 25th percentile -1% 19% 236% 36% 0% RampRate 3

4 Mnth-by-Mnth Expense 6-year Cst Plus Install DR Facility: Imprved SLA and Cntract Terms In additin t the financial benefits illustrated abve, RampRate recmmended SLAs and cntract terms based n a review f Cnstant Cntact s in-huse IT peratins/requirements and industry best practices. As a result f RampRate s negtiatins, the new supplier accepted 52% f all 130 requested terms in the initial runds and further wrked t accmmdate each f Cnstant Cntact s majr needs in the final cntract. RampRate 4

5 Primary Facility: Direct Financial Benefits Exceeding $200k In its primary facility, Cnstant Cntact enjyed the fllwing benefits: Cnversin f pwer charges frm per-circuit t metered charges, resulting in an estimated 75% reductin in pwer csts. 225 kilwatts f additinal high density expansin space. Attainment f bth f the abve gals withut signing a lease lnger than 6 years flexibility that Cnstant Cntact valued at $600K during the negtiatin prcess. Deferral f rent increases and charges fr 4 mnths vs. new supplier s riginal prpsal, which resulted in savings f apprximately $224K frm Octber 2010-January Primary Facility: Indirect Benefits that Added Up During the negtiatin prcess with the new supplier, the primary area that required mediatin was the lease term. The supplier s riginal lease stipulated a 13-year term. Cnstant Cntact requested a 6-year term, which RampRate achieved. Fair value fr the cntract term reductin was $600,000. RampRate s hlistic apprach t advisry service supprts ur gal t preserve and strengthen client/supplier relatinships while realizing financial and time savings and risk reductin fr the client. Strng IT Surcing = Strng Grwth Ptential Strng IT ptimizatin engenders an ptimized envirnment fr verall grwth. In additin t the tangible IT successes itemized abve, and perhaps mst imprtantly, RampRate s invlvement in helping Cnstant Cntact identify and negtiate a strng cntract with the right supplier psitined the cmpany fr further success in the cmpetitive nline marketing services industry. Cnstant Cntact was ranked 249th in Delitte's Technlgy Fast 500 in 2012 with an annual grwth rate f 325%. RampRate 5

6 Abut the Client Cnstant Cntact, Inc., prvides nline marketing tls that are designed fr small businesses, assciatins, and nnprfits primarily in the United States. The cmpany ffers marketing prducts that allw custmers t create, send, and track prfessinal-lking campaigns; event marketing prducts, which allw custmers t prmte and manage events, cmmunicate with invitees and registrants, capture and track registratins, and cllect nline payments; and scial media prducts, including Scial Campaigns. As f December 31, 2013, it served apprximately 595,000 custmers, including business-t-business users, business-t-cnsumer users, and nnprfits and assciatins. Abut RampRate RampRate is a leading glbal surcing advisry firm serving sme f the wrld's mst imprtant brands. We advise n and help Glbal 1000 cmpanies transact fr data center, telecm, CDN, RIM, IT supprt, and sftware maintenance services. We leverage ur prprietary surcing decisin executin platfrm and acquire surcing data t ptimize each client s bill f utsurced IT. In ur 14-year histry we have ptimized IT service cntracts exceeding $24 billin fr clients such as EBay, Sny, AT&T, Intel, and CBS wh save an average 23.8% n their IT services purchases with n risk and typically recver 1000s f hurs f valuable staff time by leveraging RampRate. These cmpanies als enjy a 99% success rate n their surcing transactins. The aggregated service prvider infrmatin derived frm the 1000s f surcing transactins we have engineered yields valuable insight t ur clients and partners. In 2013 alne, we structured $4.5 billin in utsurced IT services cntracts. With $15 billin in ur pipeline fr 2014 and an average client prtfli f $125 millin, we are psitined t experience triple-digit grwth. RampRate 6

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