By reviewing your colocation or managed services contracts on a regular basis you’re able to pick some low-hanging fruit that will reduce your costs and add to your IT budget.  Like anything else, an organized and deliberate process will lead to a successful result.  The 6 steps in the process breakdown into three categories:

1) Contract Review;

2) Market Options; and

3) Negotiations.

In category 1, Contract Review, I suggest reviewing all of your current colocation/managed service providers and their offerings.  Make sure that there is congruence between your goals and your service provider’s resource set.  Next, analyze all of your billing statements, contracts and service level agreements.  In order to evaluate whether or not you’re paying more than you should be for the services you’ve contracted, you’ll need a benchmark.  Unless you totally understand every aspect of the billing statement including power usage, power cost, meet-me room and bandwidth charges, hire a professional to assist you.  They’ll save you time, money and will be able to provide valuable market information.

Once you’ve completed your statement analysis and know where you stack up compared to the market, it’s time to do some (category 2) research and start contacting a number of service providers.  To obtain accurate quotes, make sure you provide as much information about your IT landscape as possible.  When you receive the quotes, you’ll want to normalize and contrast all of the economics and terms on a spreadsheet to create a financial model.

The results of the financial model will create your negotiation path, allowing you to create as much leverage as possible through developing a competitive environment of providers.  The competition you create will drive the best results.  Several rounds will be necessary before you get to the bottom line.  When you’ve completed the negotiation of financial terms, you’ll spend a lot of time negotiating the statement of work, master services agreement (the contract), and service level agreement.  These documents are extremely important, so don’t be cavalier about this part of the process; they are the only documents that come out of the drawer in case of a dispute.  That pretty much covers the broad brush strokes.

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