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Data Center Industry – Boom or Crisis
December 2014
Sourcing at the Speed of Innovation
Why most investments may underperform – and what to do about it
RampRate At A GlanceAdvisory Services Based on Decision Execution Platform and Approach
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© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected.
Confidential.
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Year Founded: 2000
Clients Served: 200+, Multiple Industries
Headquarters: Santa Monica, CA
Offices: New York, Boston, Vancouver, India
Key Metrics:500+ Sourcing Transactions170 Restructures99% Success Rate
$24+ Billion In Contract Value23.8% Average Cost Savings
DeliveredData On 1,194 Suppliers, 2,718 Sites in
400+Metros, 119 CountriesOver 140,000 RFP Line Items
2.1 Million+ Unit Costs Given
Differentiation: HyperSource.IT!Decision Execution PlatformTM
Decision Execution Suite
Realtime InfrastructureSourcing Exchange
SPY Online Index
Supplier Ecosystem
Software Enabled Professional Services For Optimizing & Sourcing IT: Low Risk And Guaranteed ROI
Team of Expert Analysts/ Solutions Architects400+ Supplier/Buyer Relationships
Coverage: Data Center/Colo, Cloud,
Hosting, CDN, Network, Telecom, and Mobility RampRate Provides A Pay For Performance Fee StructureProject Fee Of 1%-2.5% Of 1 Year Total Contract Value
Guaranteed Savings Of At Least 300% Of Project Fee; 25% savings fee over Deal Term
3
14 Years, 200+ Clients, 99%+ Success Rate
© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected.
Confidential.
Media/Broadcast
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Finance E-Commerce/SaaS
Services Gaming Publishing
High Tech Social Networks/Web 2.0Telecom/CDN/ Hosting/Cloud
4© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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TOP 5 DATA CENTER INVESTMENT MYTHS
• It’s a real estate investment• … actually a technology one
• The cloud will only make things better• …it will reduce stickiness and won’t live in your data
center
• Demand growth lifts all boats• ...no, just the new, efficient, modular ones
• I can make an investment with a 20-year payback period• … which will be outdated in 5-10
• So there’s no hope against this tectonic shift• … but tectonic shifts are as slow as they are
unstoppable
5© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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DO YOU HAVE THE PERFECT LOCATION
FOR A DATA CENTER?
6© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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SREAL ESTATE: THE POT DOES NOT MAKE A MEAL
Location, Location, Location
EfficiencyPower
Contract
Airflow
7© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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HOW MANY OF YOU THINK CLOUD WILL BE
GOOD FOR YOUR BUSINESS?
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SFORECAST: CLOUDY …WITH A CHANCE OF RAINING ON YOUR PARADE
20% Making money from “The Cloud”
80% Losing growth, stickiness, and margin to the cloud
9© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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WHO’S EXCITED ABOUT THE FLOOD OF
DEMAND FOR DATA CENTERS?
10© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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SABOUT THAT RISING TIDE…
Remember these 90%+ occupancy forecasts in 2008-2012?
“Vacancy rates in New York, Frankfurt, Paris, and London are now 40%, and most operators there indicate little need for further expansion in the near term” (Telegeography, Q4 2013)
11© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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SABOUT THAT RISING TIDE…
12© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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HOW LONG IS THE PROJECTED LIFETIME OF YOUR NEXT DATA
CENTER PROJECT?
13© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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SFUTILITY OF 20-YEAR FORECASTS
Data center differentiators in 1999
14© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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SFUTILITY OF 20-YEAR FORECASTS
First thing I see about these top-of-the-line facilities 15 years later CITY IDC W/SQ
Waltham, MA BO1 67Waltham, MA BO2 67Elk Grove Village, IL CH3 86Sterling, VA DC2 65El Segundo, CA LA1 67Jersey City, NJ NJ1 50Weehawken, NJ NJ2 90Santa Clara, CA SC4 67Tukwila, WA 1st floor SE2 50
What do you even put in a 50 watt / square foot data center?
https://www.savvisstation.savvis.com/docs/welcome/welcome_guide_html/dc_guidelines/policy_power.html
15© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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SO SHOULD WE ALL BE LOOKING FOR NEW
JOBS?
16© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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SIN THE LONG RUN, WE’LL ALL BE DEAD
17© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
WH
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NOTHING IS AS PERMANENT AS A TEMPORARY FIX
IBM's System z mainframe running z/OS revenue declined to $1.1 billion, representing 8.0% of all server revenue in 4Q13 - IDC
18© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
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BUT WHAT CAN I DO?
19© RampRate Sourcing Advisors, Inc. All Rights Reserved and Protected. Confidential.
WH
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DEPENDS ON WHO YOU ARE Enterprise Owner / Operators
o Assess current costs and create a bill of IT (ITBM / ITFM software)o Identify where each workload should live (RampRate Hypersourcing)o Allocate workloads among the different environments (ServiceMesh, etc.)
Providers / Co-los With Older Facilities o Negotiating better deals with utilities / telecom (e,g, Sabey)o Understanding the interplay with cloud solutions (e.g. Equinix CloudConnect)o Working with RampRate as a channel partner o Knowing when to cut your losses and divest
New Incoming Providerso Is the power contract long term, flexible, and competitive?o Is there enough fiber coming into the building (not wishcasting)?o Is there something that I’m absolutely going to be best at? PUE / green power?
Density? Network? Service / support? Latency?o Is everything I build modular?
Outside Investorso Doubt everything and don’t believe precedento Only invest in someone who’s best at something
Cloud / Managed Hosting Capacity Ownerso Find opportunities and learn – commoditization is coming your way too
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