Action. Situation. Client: Shopzilla Industry: Internet Services, Comparison Shopping Geography: Global RampRate Solutions: Data Center HyperSourcing

Transcription

1 Client: Shopzilla Industry: Internet Services, Comparison Shopping Geography: Global RampRate Solutions: Data Center HyperSourcing Situation With a portfolio of shopping Web sites offering a robust price comparison service, Shopzilla sites had attracted over 19 million unique visitors in the US alone by Continued growth coupled with a mission to enable shoppers to find, compare, and buy anything, sold by virtually anyone, anywhere combined with continued growth in the US and Europe meant that data colocation would be critical to success. Shopzilla had multiple service complaints and contractual issues with its colocation provider in the US, and was concerned that its SLAs and contract terms were inadequate. At the same time, Shopzilla needed to identify optimal colo sites in the EU. Shopzilla turned to Rampate for help and realized optimization in areas it never thought possible. Action In just 9 weeks, achieved 7-figure savings in mid-contract renegotiation with incumbent colo supplier equivalent to 28% savings over the previous contract. Negotiated and realized strong protections in new contract against the kinds of service level problems experienced in the past. Consolidated multiple service orders into one coterminous contract. Obtained multiple offers for data center and bandwidth in London during time of scarcity due to Olympics and financial crisis. Helped Shopzilla determine that colo in the EU was not necessary, thus saving nearly $2 million in unnecessary colo expense. RampRate RampRate 1 1

2 Monster Price Comparison Requires Monster Colo Services As a monster shopping search engine, Shopzilla lists more than 100 million products from several thousand retailers. Shopzilla offers clothes, electronics, and other consumer items to more than 40 million shoppers through several Web sites and brands in the US and the EU. Shopzilla was founded in 1996 by entrepreneurs Farhad Mohit and Henri Asseily, and David Reibstein, former vice dean of The Wharton School of The University of Pennsylvania. By 2009 Shopzilla had grown significantly, was struggling with its incumbent colo provider, and turned to RampRate for help. Just as Shopzilla provides matchmaking between buyers and sellers, RampRate provides matchmaking between buyers and suppliers. When RampRate got involved, the two companies understood that success would be based on structuring the right buyer/supplier relationship after considering many factors, including price, service, and reputation. Crucial Component Allowing Shopzilla to Connect Buyers and Sellers Was Missing the Mark In 2009, when Shopzilla engaged RampRate, it was experiencing multiple service complaints and contractual issues with its colo provider. Shopzilla was concerned that its SLAs and contract terms were inadequate. RampRate discovered more than that. Using its proprietary SPY Index, RampRate immediately found that not only service levels but also pricing did not meet market standards, and it developed and implemented a strategy to achieve ITO. The proprietary SPY Index provides a database of colocation transactional data and best practices for deals involving hundreds of suppliers and hundreds of buyers. RampRate 2

3 The subsequent savings, SLA/business term improvements, and intangible advantages achieved were all derived from a common source RampRate s data-driven sourcing process. This process bypasses the high-cost direct sales organization and procures IT services at wholesale rates while using industry cost benchmarks and best practices to ensure maximum client advantage. Through proprietary tools and internal expertise, RampRate achieved results for Shopzilla in just 9 weeks. More Savings, Fewer Headaches in 9 Weeks After RampRate s renegotiation of the buyer/supplier contract, Shopzilla saw quantitative and qualitative improvements of major size: Monthly Costs for Colo = Down Shopzilla saw a decrease in its colo average monthly recurring costs (MRC) of $33,190 per month during the first year, compared to the previous contract Shopzilla signed with the colo supplier. Monthly Costs & Savings in Year 1 Monthly Savings $33,190 Post-RampRate MRC $86,005 Pre-RampRate MRC $119,195 $0 $30,000 $60,000 $90,000 $120,000 $150,000 3-year Costs for Colo = Down Shopzilla saw a cost savings of $1,194,839 over the course of the new 3 year contract. Three Year Costs & Savings Total Savings $1,194,839 Post-RampRate Costs $3,096,180 Pre-RampRate Costs $4,291,019 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 RampRate 3

4 Space, Bandwidth, Power Costs = Down Total space costs were reduced by 18% or $10,555 per month; bandwidth costs (including crossconnects and port fees) were reduced by 77% or $10,285 per month; and power costs were reduced by 26% or $12,350 per month. Service Levels and Contract Terms = Up Lastly, RampRate worked with the incumbent colo supplier to improve SLAs and contract terms to meet the needs of Shopzilla, including strong protections against the kinds of problems the client had experienced in the past: Strict SLAs include monetary penalties covering installation times, network availability and environmental conditions. Environmental SLA credits are scaled based on how long temperature and humidity parameters are exceeded. Supplier to notify Shopzilla if any environmental conditions are exceeded for more than 5 minutes. Shopzilla has the right to terminate the contract if the company experiences 3 qualifying violations of the same metric within a rolling 90-day period. Written Reasons for Outages (RFOs) regarding any outage will be provided within 5 business days of Shopzilla s request. All services for this Service Order are coterminous. RampRate s holistic approach to advisory service supports our goal to preserve and strengthen client/supplier relationships while realizing financial and time savings and risk reduction for the client. EU Colo Determined Unnecessary As a result of due diligence conducted by RampRate surrounding projected versus actual needs, including conducting a pilot project through a potential supplier, Shopzilla s original EU requirements were scaled down by 75%. Had the need for EU colo been validated through RampRate s process, expected savings would have been close to $1.5 million. STRONG IT SOURCING = STRONG GROWTH POTENTIAL In addition to the tangible IT successes itemized above, and perhaps most importantly, RampRate s involvement in helping Shopzilla achieve IT optimization at a critical point set Shopzilla up for further success. By the end of 2011 private equity firm Symphony Technology Group had acquired Shopzilla for $165 million. RampRate 4

5 About the Client Shopzilla, Inc., is a leading source for connecting buyers and sellers online. Reaching a global audience of over 40 million shoppers each month through both its destination Web sites and affiliate network, Shopzilla connects shoppers with over 100 million products from tens of thousands of retailers a month. Shopzilla, Inc., manages a premier portfolio of online shopping brands in the US and Europe, consisting of Bizrate, Beso, Shopzilla, Retrevo, TaDa, PrixMoinsCher, and SparDeinGeld, as well as a series of B2B businesses including Bizrate Insights, Shopzilla Publisher Program, and a display and audience targeting division, Aisle A. Headquartered in Los Angeles, CA, the company operates sites and business services in the United States, the United Kingdom, France, and Germany. Shopzilla, Inc., is owned by Symphony Technology Group (STG). About RampRate RampRate is a leading global sourcing advisory firm serving some of the world's most important brands. We advise on and help Global 1000 companies transact for data center, telecom, CDN, RIM, IT support, and software maintenance services. We leverage our proprietary sourcing decision execution platform and acquire sourcing data to optimize each client s bill of outsourced IT. In our 14-year history we have optimized IT service contracts exceeding $24 billion for clients such as EBay, Sony, AT&T, Intel, and CBS who save an average 23.8% on their IT services purchases with no risk and typically recover 1000s of hours of valuable staff time by leveraging RampRate. These companies also enjoy a 99% success rate on their sourcing transactions. The aggregated service provider information derived from the 1000s of sourcing transactions we have engineered yields valuable insight to our clients and partners. In 2013 alone, we structured $4.5 billion in outsourced IT services contracts. With $15 billion in our pipeline for 2014 and an average client portfolio of $125 million, we are positioned to experience triple-digit growth. RampRate 5