While some may say CDN (Content Delivery Network) has become a commodity – with price being the only real variable you need to look at – the opposite is actually true. The challenge of effective CDN outsourcing is balancing costs against the complex mix of suppliers’ capabilities, cultures, geography, service levels, pricing models, and best practices.
The motivation to outsource your content delivery network is typically driven by cold analysis of the costs of in-sourcing vs. outsourcing. This can be sparked by a general cost reduction mandate, but the analysis will take place (at some level at least) before action is taken. There is a clear connection between the level of analysis you apply before approaching the CDN suppliers and your ability to cut through the complexity and uncertainty to arrive at the CDN network that meet your quality and cost requirements.
This analysis should apply to both your needs and cost structure, and match them to the suppliers most capable to meet your requirements. The analysis can be tedious but, if done properly, the benefit is achieved immediately and repeatedly with each bill.
CDN Network Decisions – First, invest in metrics
Internal costs, supplier pricing and network service level metrics are a logical place to start your analysis. At a high level this knowledge is often contained within your organization. It may seem that the internal analysis will be simple, but we all know it is not, at least not at the level you’ll need to understand the cost trade-offs for network supplier services to match a detailed analysis of your needs and usage against what’s available at given price points.
The situation becomes murkier when you begin to break down the supplier offerings, and match their services against your requirements. Supplier information at your disposal can be dated, anecdotal or thin. Inaccurate or incomplete supplier information translates into cost and/or service risk. It is worth the investment of time and effort to neutralize this risk by acquiring proper market data and a better understanding of your own usage, service level and cost data.
Second, set your benchmark
A proper sourcing decision requires appointment of a dedicated operations analyst to create a financial baseline to identify the true cost for each internal division involved. Put the emphasis on “dedicated” and “in-depth” for the duration of this sourcing selection process to avoid a situation where the analysis is shallow or takes too long.
Once a financial baseline is created, tapping your knowledge base of market information can create a market benchmark and compare the existing contract, via its baseline, to market parity for an equivalent contract. If you don’t have an internal data set, you should look to a third-party with detailed market information to supplement your knowledge base. With a benchmark generated, you are ready to engage in the sourcing process to procure or renegotiate a contract for your CDN network services.
Now, get CDN Network pricing data
With your internal costs, usage and service levels defined, you’re now ready to step into the market. Note that your current or previous bills and “friend’s pricing” are illusions that cloud the true potential of contracts. The best way to see into the market is via the database of market pricing, terms, and service levels.
Your operations analyst should be tasked with lining up the data from your internal analysis with this market data to properly benchmark against the market, with the goal of leading you through a process for procurement and negotiations to meet or beat market parity.