Configuration Pricing Report

Transcription

1 Configuration Pricing Report Client Config price 0000 Vendor: Vendor Benchmarking ref: 0000 Date: 01/01/15 Version: 1.0 PILESTRÆDE 52A DK-1112 COPENHAGEN K T: W:

2 2 Contents

3 3 About this document WHAT WE DID This configuration pricing report is delivered by Quarterly Analytics. It contains the benchmark price for a specific outsourcing contract configuration calculated using the Zangenberg Analytics benchmarking model. The model calculates the price the same way a Vendor will do: based on the individual components of the agreement and all the cost drivers that have an impact on the final cost and risk. Our model is based on data from over 250 outsourcing contracts, data from leading research companies and an ongoing validation and dialog with major market players. The model is recalibrated and validated with the market four times a year. The results in this report are based on a specific operational it configuration provided by the vendor. The full configuration is listed in the chapter Configuration, and is based on the service descriptions listed under Service Scope USE OF THIS DOCUMENT This report is compiled for the specific client configuration provided by the vendor, and can be used in the ongoing dialog with the client regarding pricing and scoping of the outsourcing contract. The report is for the sole use of the vendor and the client. The report is not to be distributed, publicized or in any way shared with any third party without written consent from Zangenberg Analytics or Quarterly Analytics. LIMITATION OF LIABILITY Whatever the circumstances, Zangenberg Analytics and Quarterly Analytics renounces any liability for direct or indirect loss, including loss of expected profit, operating loss, loss of data, damage to registrations or data or consequential loss in connection with the use of this report, whether or not Zangenberg Analytics Quarterly Analytics has been notified of the possibility of such loss.

4 4 Configuration pricing summary sheet The Quarterly Analytics configuration pricing report represents the competitive price for the services in scope for a contract under the terms described under Terms and conditions and with the configuration and SLA s as described under Configuration and the specific service definitions described under Service Scope. Server 291 Servers Storage Gb Workstation 0 Workstations Helpdesk Calls Calls Helpdesk Users Users LAN/WAN Components 0 Components LAN/WAN Ports 0 Ports Database Operation 123 Databases Application Operation 0 Applications Mainframe Operation 0 MIPS Benchmark ref 0000 Benchmark date 01/01/15 Benchmark version 1.0 Contract Title Config price 0000 Client Client Vendor Vendor Contract country Denmark Currency DKK Total Contract Price - full Contract Period 400 MDKK Total contract price - current year 100 MDKK Contract price of benchmarked services - current year Installation/Transition Costs 40 MDKK Monthly Fee at time of Benchmark Contract length 4y Start date of contract (dd/mm/year) 01/05/2015 Termination date of contract (dd/mm/year) 30/04/2019 Extension 3y

5 5 Configuration Pricing Result Server Storage Workstation 0 Helpdesk Network 0 Database Operation Application Operation 0 Mainframe Operation 0 Cloud services 0 Other services 0 Not allocated 0 TOTAL Prices in DKK excluding local taxes and VAT.

6 6 Terms and conditions Multiplier: 1,75 The benchmark price is a function of services included, the scope of these services, the SLA s and the contractual terms and conditions. Services, scope and SLA s are all described under Configuration. The table below describes the specific contractual terms and conditions used to calculate the price for this contract. The Multiplier is a value calculated on the basis of a number of well-defined terms and conditions that influences the total contract price. The benchmark price is calculated on the basis of the service components (including the SLA s and service scope) and is multiplied with the T&C-multiplier to get the final benchmark price. The Multiplier represents the contingency value a vendor will add to the price, based on calculated risk and extra cost. Note that changes to the terms and conditions can have significant impact on the price. In this case the multiplier is 1,75 based on the assumptions set out in the table below

7 7 Capacity-flexibility Cap at 50% of agreement Medium impact The capacity can only be reduced to 80% of initial scope with proportional price reductions. Further reduction in scope will impact unit-prices. The complexity of the pricemodel Follows non standard pricing parameters Medium impact Does the pricing follow standard market-parameters like number of servers, number of Gb storage, number of workstations etc, or is pricing based on client specific parameters like eg the number of users on a given system? Design authority including refresh strategi Supplier No impact Does the supplier or the client define the infrastructure setup? Complexity integration No mainframe, number of integrations compared to systems 4:1 or more than two database platforms Medium impact Select the category that best describes the complexity in the entire setup Governance non standard setup Decentral (national) governance Medium impact Will the supplier report to a single organization within the client organization or to several sub-organizations eg. geographical regions or daughter companies? Reporting Benchmarking Special repporting which requires extra measurement Automatic price adjustment as a consequence of benchmarking Medium impact High impact Are there any client specific demands to the reporting content, structure or format? Does the contract have provisions for price-adjustments or price-negotiation as a result of a benchmarking? Exit - commitment period 4 years binding No impact Is there an option to exit the contract other than breach? Penalty Punitive provision above 25% of High impact Which category of penalty is included in the contract? monthly fee Location of datacenter Denmark High impact Where is the datacenter required to be located? Location of personnel for oversight Europe Medium impact Where is the personnel for oversight required to be located? Special security demands Doubling of datacenters, hot switch etc Medium impact Are there any special security demands in the contract - doubling of datacenter etc.?

8 8 Configuration Server Small virtual server Service Component - Choose from list - UNIX/Linux server - virtual (2 CPU) - (UNIX HW) Medium virtual server Windows/Linux server - virtual (2 CPU) - (Intel/AMD HW) Large virtual server Windows/Linux server - virtual (4 CPU) - (Intel/AMD HW) Small physical server Windows/Linux server - physical (5-8 CPU) - (Intel/AMD HW) Medium physical server Windows/Linux server - physical (5-8 CPU) - (Intel/AMD HW) Large physical server Windows/Linux server - physical (9-16 CPU) - (Intel/AMD HW) Large physical server Windows/Linux server - physical (9-16 CPU) - (Intel/AMD HW) Small local server Windows/Linux server - physical (5-8 CPU) - (Intel/AMD HW) Medium local server Windows/Linux server - physical (5-8 CPU) - (Intel/AMD HW) Large local server Windows/Linux server - physical (9-16 CPU) - (Intel/AMD HW) % % % % % % % % % %

9 9 Storage Service Component - Choose from list - Tier 1 SAN Hosted SAN (FC) % Tier 2 SAN Hosted SAN (SAS) % Backup Hosted Backup % Remote backup Remote Backup %

10 10 Helpdesk Service Component - Choose from list - Service desk Servicedesk/helpdesk - per call % 0.0% %

11 11 Database Service Component - Choose from list - SQL support MS-SQL database % Oracle support Oracle database % MySql support Other database % Local SQL MS-SQL database %

12 12 Service Scope Server 1 Enterprise management participation in the architecture, planning, test, implementation and integration of solutions. Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 2 Data management policy and practices. 3 Application change management policies. 4 Software license management policies. 5 Service-level requirements definitions. 6 Product evaluation and usability testing. 7 Procurement defining processes and procedures and assisting in purchase consumables (such as tapes). 8 Asset management hardware inventory management. 9 Software inventory management. 10 Software configuration management. 11 Financial management of leases or depreciation. 12 Security services security policy development, incident tracking, intrusion detection, compliance management and antivirus management. 13 Reports and metrics. 14 Disaster/recovery (DR) planning planning and testing support.

13 13 Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 1 Identity management. 2 Problem determination and root cause analysis. 3 Help desk support Level 3 (excludes application support). 4 Preventive software maintenance. 5 Performance Management and Tuning, Performance Management Analysis. 6 Capacity Management, Capacity Trending Analysis. 7 Storage Management 8 Change Management 9 Operations Services monitoring. 10 Data backups and backup storage management (system). 11 Installations, moves, adds, changes (IMAC) electronic software distribution to servers, physical IMAC activity and logical IMAC activity. 1 Maintenance of server hardware, operating system and repairs, whether or not these are covered by a warranty. Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 1 Tools used to run the servers and other software. Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 1 Facilities: The physical space. 2 Hardware ownership: Who has ownership of the servers. Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%)

14 14 Storage 1 Enterprise management participation in the architecture and planning, and test implementation and integration, of solutions. Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 2 Data management policy and practices. 3 Application change management policies. 4 Software license management policies. 5 Service-level requirements definitions. 6 Product evaluation and usability testing. 7 Procurement defining processes and procedures and assisting in purchase consumables (such as tapes). 8 Asset management hardware inventory management. 9 Software inventory management. 10 Software configuration management. 11 Financial management of leases or depreciation. 12 Security services security policy development, incident tracking, intrusion detection, compliance management and antivirus management. 13 Reports and metrics (none, low, medium and high), chargeback (none, low, medium and high), and network charges to customer sites. 14 Disaster/recovery (DR) planning planning and testing support.

15 15 Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 1 Identity management 2 Problem determination and root cause analysis. 3 Help desk support Level 3 (excludes application support). 4 Preventive software maintenance. 5 Performance management and tuning, Performance management analysis. 6 Capacity Management, Capacity Trending Analysis. 7 Storage Management. 8 Change Management. 9 Operations Services monitoring. 10 Data backups and backup storage management (system). 11 Installations, moves, adds, changes (IMAC) electronic software distribution to servers, physical IMAC activity and logical IMAC activity. 1 Maintenance of SAN hardware, operating system and repairs, whether or not these are covered by a warranty. Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 1 Tools used to run the SAN and other software. Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 1 Facilities: The physical space. 2 Hardware ownership: Who has ownership of the SAN. Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%)

16 16 Helpdesk Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 1 Desktop support. 2 Midrange Server/SAN support 3 Standard application support. 4 Proprietary application support. 5 Level 1 support. 6 Level 2 support. 7 Language

17 17 Database Included (0-100%) Included (0-100%) Included (0-100%) Included (0-100%) 1 Monitoring and reporting. 2 Manage capacity and performance. 3 Manage problems. 4 Backup and restore. 5 Installations and upgrades.

18 18 Assumptions and attention points TRANSITION The table below describes the transition activities included in the Zangenberg Analytics benchmarking model and examples on transition activities NOT included in the benchmark. Non-standard transition activities will be excluded from the benchmark price and has been subtracted from the contract price. Standard transition activities (included in benchmark) Establish hardware infrastructure Standard network configuration Installation in accordance with contract specification Install and configure OS Install client applications and databases Transport data Establish monitoring Test of full client setup in vendor environment Non-standard transition activities (NOT included in benchmark) Physical movement of client hardware to vendor datacenter Setup and test of client specific hardware configuration Client specific network configuration Integration of client hardware with vendor platforms Virtualization of client hardware portfolio Develop client specific documentation not conforming with vendor standards Data conversion Application development Customization of client applications to run in vendor datacenter

19 19 Outsourcing pricing trends the last years Zangenberg Analytics has been tracking the price-levels in the it-outsourcing market for a number of years, and based on our data material we have developed the Zangenberg index a composite index, that includes sub-indices for Server, Storage, Network and other prices, weighted after their share of the average contract. Starting with index 100 in Q and falling to in Q1 2015, the Zangenberg index shows a decrease in market prices by approximately 40 percent over the period.

20 20 The Benchmarking Method THE BIG PICTURE The figure below illustrates the overall components of the benchmarking model. The basic entity is the agreement entered between a client and service provider, covering the provisioning of a well-defined set of services at a well-defined price over a well-defined period of time.

21 21 The agreement is decomposed into its basic elements using the Zangenberg Analytics Datasheet, which is a fixed-format Excel spreadsheet. The Datasheet is sent to the calculation engine and a price-calculation the should cost is returned. The calculation engine uses an extensive set of pricing parameters. These are recalibrated every 3 months using normalized data-points from the Benchmark database. The Benchmark database is populated with data from the datasheets, using normalization algorithms. The normalization algorithms are the reverse functions of the pricecalculation functions used in calculation engine. The pricing parameters are openly exhibited in the scope description but the price calculation formulas and normalization algorithms are all hidden. The overall layout of these central components can be deducted directly from the agreement sheet. Example: The monthly price for the operation of a physical windows server with 1-4 CPUs is the function of the exact scope of the service (divided into a number of scope-elements such as Service Management, Systems Management and Ownership) and the two SLA-components availability and opening hours. DATA-MODEL The datasheets use the following overall data model for the decomposition of the agreement:

22 22 Agreement The agreement is the basic element in the model. We conduct the benchmark for an agreement that often consists of a main agreement and a number of addendums and changes made over time. The resulting set of services delivered at the benchmark time is included in the benchmark. The following parameters are captured for each agreement and can be used for subsequent statistics across the benchmarks produced. Terms and conditions For each agreement a number of contractual terms and condition can impact the price. If some of these terms and conditions apply, the conditions will be captured in the first section of the datasheet. Based on these elements, the model calculates a Multiplicator. This value is multiplied to the calculated should cost price to arrive at the competitive market price for the agreement as a whole. The following elements are included: Complexity of the price-model Design authority Infrastructure complexity Governance Reporting Benchmarking or renegotiation clauses Contract length and exit-clauses Penalty clauses Location of datacenter Location of personnel for oversight Special security requirements

23 23 Service categories The agreement contains a number of service categories. At present we can handle the following service categories: Server Storage Help-desk Desktop Network Database-operation Application-operation Cloud Services IAAS Cloud Services PaaS Mainframe operation Service components Each service category is split into a number of service components, and the model works at this level: we have pricing points and calculate our benchmark price at the service component level. We constantly define new service components. The section Configuration describes all the service components included in the contract. Volume For each service category, we have defined the volume parameters, and these volumes are noted in the datasheet. Scope For each service category, the scope of the standard service has been defined. This consists of a number of servicescope elements, each broken down to tasks as seen under Service Scope

24 24 SLA The benchmarking model includes the SLA-components that drive prices in the market. At present the following SLA components are used in model: Server: Availability and Opening Hours Storage: Availability and Opening Hours Help-desk: Opening Hours, Response time, First time resolution Desktop: Delivery time, Resolution time Network: Availability, Opening hours Database-operation: Availability and Opening Hours Application-operation: Availability and Opening Hours FUNCTIONAL COMPONENTS The calculation engine The center of the model is the calculation engine, which contains formulas for every service component in the benchmark. Price calculation formulas Zangenberg Analytics maintains a formula for the calculation of the market price for every service-component in the benchmarking model. The formula is deducted from an analysis of the pricing dependencies as they manifest themselves in the data material, combined with Zangenberg Analytics s knowledge of the actual cost-drivers for the service-providers production and delivery of the services. Credible research sources are used in this process. The price calculation formula uses updated pricing data and weights that are part of the parameter set (described below). The formula itself can stay the same over a longer period of time, while the parameters are updated every 3 months. The formulas are regularly re-evaluated and discussed with external parties to ensure that we include the right parameters in our calculations.

25 25 Data normalization algorithms Data-points received from datasheets are all converted to normalized datapoints, using a set of normalization algorithms. We have developed a normalization algorithm for every service-component, which uses the same elements as the price calculation formula to convert the contract price to a price for the service at a specific (normalized) SLA-level. Example: the client pays DKK 4000,00 pr. month for a specific service component at SLA-level 99,8 availability and 24/7 opening hours. According to the algorithm, this corresponds to a should cost level of DKK 3125,00 pr. month at the SLA level defined as the normalized SLA-level. This allows us to compare the prices across contracts. Parameter sets A parameter set contains a number of parameters used by the calculation formulas and normalization algorithms. The two primary parameters are the low price parameter and the high price parameter. Both parameters represent the competitive market price for a service. The Low price is the price at the lowest defined SLA-level and the High-price is the price at the highest defined SLA-level. The competitive market price is the average of the 10% best prices obtained for the service. In some instances the competitive market price is calculated from prices quoted by at least 3 service-providers interviewed by Zangenberg Analytics. This is for example the case, when we see sudden and sharp drops in prices in the market e.g. as a consequence of increased competition. The parameter-set contains a number of weights used by the price calculation formulas. One set of weights describes the influence of the individual scope-elements on the total price. This is used when the specific agreement contains less or more than the standardized service as described by Zangenberg Analytics. Example: if the hardware is owned by the client, the scope-element Ownership will be set to 0% and the benchmarking price will be reduced according to the weight allocated to Ownership. Another set of weights describes the relative impact of the individual SLA-components in the calculation of the price. Query-module The benchmarking model includes a query-module that allow for specialized queries into the normalized database.