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Slide 1: Optimizing CDN Services Relationships Tony Greenberg, CEO March 15, 2007 Confidential © 2007 RampRate™ Slide 1
Slide 2: RampRate: IT Outsourcing Specialists Full-Cycle Sourcing Data-Driven Analysis ITO Best Practices Cost / Risk Benchmarks Templated Profiling Accelerated Sourcing Transaction-focused Auditable Selection Process Apples-to-Apples Quoting Methods Ongoing Optimization Business Term Negotiation Risk Mitigation Operational Audits • 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 Confidential © 2007 RampRate™ Slide 2 Methodology Proven
Slide 3: Data-Driven Decisions with SPY Index Service Provider Intelligence Index (SPY Index) drives speed and quality of decisions. 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 Confidential © 2007 RampRate™ Slide 3
Slide 4: Capturing 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 Confidential © 2007 RampRate™ Slide 4
Slide 5: Success 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 Confidential © 2007 RampRate™ Slide 5
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 Confidential © 2007 RampRate™ Slide 6
Slide 7: 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 Confidential © 2007 RampRate™ Slide 7
Slide 8: Successful ITO Process : Use 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 Confidential © 2007 RampRate™ Slide 8
Slide 9: Successful ITO Process : Assess FULL Vendor in Reponses – Quickly! Analyze the Quantitative and Qualitative Deal Components  References, historical performance, vertical expertise, scalability, etc.  Don’t fall into “analysis paralysis” Pre-Quote Capability Rating 10 9 8 7 6 5 4 3 2 1 0 Available capacity Total reach Vendor B Total peering Median Historical uptime Historical latency Weight Historical SLA adherence 200 150 100 50 0 Vendor A Minimum Threshold Connectivity Constraints 3,000 2,500 2,000 1,500 1,000 500 Vendor B Site 1 160 13 2,080 Vendor B Site 2 180 15 2,700 0 Vendor C 180 6 1,080 Vendor D 120 7 840 Vendor E 160 11 1,760 Vendor X 90 22 1,980 Available fiber capacity (Gbps) Lit fiber capacity (Gbps) Current Usage (Mbps) 90 15 1,350 Confidential © 2007 RampRate™ Slide 9
Slide 10: 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% Confidential © 2007 RampRate™ Slide 10
Slide 11: Successful ITO Process : Create 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! Confidential © 2007 RampRate™ Slide 11
Slide 12: 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 Confidential © 2007 RampRate™ Slide 12
Slide 13: 4 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! Co-Location Site Company Name Date Bid Submitted Data Center Address Data Center Facility Owner Maximum Draw per Square Foot (in watts of breakered capacity assuming 60% utilization) Bandwidth provider(s) Guaranteed set-up / installation time (days) Financial Terms Current Base Requirements 4-Post Rack (client-supplied cabinets, no power) OR space charge per square foot Reserved space for short-term expansion (per rack) Network and storage rack power: 220V 20A AC Active / Passive pair Network and storage rack power: 220V 30A AC Active / Passive pair Render node rack power: 240V / 60A 3-phase AC Active / Passive IP Transit: 10 Mbps Bandwidth Commit burstable to 100 Mbps -- Cost per 1 Mbps increment. Remote hands per hour (15 min increments) Other charges (please describe in comments) Confidential © 2007 RampRate™ 12 month Contract MRC Per Unit NRC Per Unit Quantity 17 8 8 2 13 10 5 0 Vendor Comments Slide 13
Slide 14: 4 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 2006 RampRate-Obtained Rates by Commit Level -- CDN Mbps $ 9 0 .0 0 $ 8 0 .0 0 $ 7 0 .0 0 $ 6 0 .0 0 $ 5 0 .0 0 b M r e p t s o C $ 4 0 .0 0 $ 3 0 .0 0 $ 2 0 .0 0 $ 1 0 .0 0 $ 0 .0 0 1 0 0 M ps b to 1 4 9 M ps b $ 4 0 .0 0 $ 5 7 .0 0 $ 8 0 .0 0 1 5 0 M ps b to 1 9 9 M ps b $ 3 8 .7 5 $ 4 7 .9 5 $ 8 0 .0 0 2 0 0 M ps b to 2 9 9 M ps b $ 4 1 .2 4 $ 5 0 .0 0 $ 6 5 .0 0 3 0 0 M ps b to 4 9 9 M ps b $ 4 0 .0 0 $ 4 5 .0 0 $ 6 0 .0 0 5 0 0 M ps b to 7 4 9 M ps b $3 5 .1 8 $4 1 .0 0 $4 8 .7 5 7 5 0 M ps b to 9 9 9 M ps b $ 3 5 .0 0 $ 4 0 .0 0 $ 4 5 .0 0 1 0 0 0 M ps 2 0 0 0 M ps 3 5 0 0 M ps b b b 6 0 0 0 M ps b to to to + 1 9 9 9 M ps 3 4 9 9 M ps 5 9 9 9 M ps b b b $ 3 5 .0 0 $ 4 0 .0 0 $ 4 5 .0 0 $ 3 5 .0 0 $ 3 8 .2 5 $ 4 3 .5 0 $ 2 9 .7 5 $ 3 5 .0 0 $ 3 9 .0 0 $ 2 8 .5 5 $ 3 5 .0 0 $ 3 6 .2 5 2 5 th Pe rc e n tile M d ia n e 7 5 th Pe rc e n tile Confidential © 2007 RampRate™ Slide 14
Slide 15: 4 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 Staged 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 service Physical isolation of data center environment (caged or walled) 50% extra contiguous space with 45 day right of first refusal Data 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 Yes / No Comments Confidential © 2007 RampRate™ Slide 15
Slide 16: 4 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 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Cost Eff ectiveness SLA Term Acceptance Price vs. Median -22% Vendor 1 6.5 6.3 8% Vendor 2 7.8 4.6 -22% 8% 2.5 4.6 6.5 6.3 7.8 9.4 126% 140% 120% 6.9 5.4 100% 80% 5.1 4.3 3.6 60% 40% 20% 0% 6% -9% Vendor 3 2.5 9.4 6% Vendor 4 6.9 3.6 -9% -4% 0.0 Vendor 5 5.4 5.1 -4% Vendor 6 0.0 4.3 126% -20% -40% Confidential © 2007 RampRate™ Slide 16
Slide 17: ITO Procurement Deliverable  Interactive Negotiation Tools Savings opportunities* Lower bandwidth commit to match usage Lower bandwidth rates by $10/Mbps Lower per-rack cost by $120 Lower handservice hourly rate by $20 Lower whip rate by $60 Get T1 loop free of charge Select Outcome Win Loss Win Loss Loss Loss 16.1% 18.8% 6.5% 1.2% % of Total Opportunity 57.4% Savings Dashboard Last Supplier X Proposal Current Outcome Negotiation Target Annual Cost $5,438,640.00 $4,461,701.85 $3,894,562.00 % of Original 100.00% 82.04% 71.61% Total Potential Savings Money saved so far Gap to negotiation target: $133,860.00 $69,600.00 $64,260.00 2.46% 1.28% 1.18% SLA Improvement Needs Monetary penalties for business interruption No-penalty exit for more than 3 outages in a month Retroactive reset of commit levels Select Outcome Win Loss Win % of Importance 40.0% 40.0% 20.0% Business Term Improvement Needs 30/60-day rollout period 2-week free trial Illinois to be the jurisdiction for disputes Select Outcome Loss Win Win % of Importance 70.0% 20.0% 10.0% First Year Costs $6,000,000.0 $6,000,000 0 $5,000,000.0 0 $4,000,000.0 $5,000,000 0 $3,000,000.0 $4,000,000 0 $2,000,000.0 $3,000,000 0 $1,000,000.0 $2,000,000 0 $0.00 $1,000,000 Proposed Current Target $0 Proposed Current Target T1 Loop Cages Bandwidth Remote Handservice Extra WhipsExtra Whips Remote Handservice Bandwidth T1 Loop Cages 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Progress Meter 37% 40% 70% 63% 60% 30% Financial SLA Gap % of Potential Achieved Business Terms Confidential © 2007 RampRate™ Slide 17
Slide 18: Clients from Many Markets Confidential © 2007 RampRate™ Slide 18
Slide 19: Contact Information Tony Greenberg Chief Executive Officer tgreenberg@ramprate.com (310) 985-8669 Confidential © 2007 RampRate™ Slide 19