Archive for the ‘transparency’ Tag

Some thoughts on cost in the Private Cloud   Leave a comment


The Microsoft Reference Architecture for Private Cloud lists – among a a lot of other very useful and interesting things – a couple of examples of business drivers related to the agility (previously known as time), cost and quality axes:

Agility

  • Reduce Time to Market:Implement new business solutions more quickly so revenue comes in faster.
  • Better Enable the Solution Development Life Cycle:Speed up business solutions through better facilitation for development and testing and overall faster paths to production.
  • Respond to Business Change: New requirements of existing business solutions are met more quickly.

Cost

  • Reduce Operational Costs:Lower daily operational costs for basic needs such as people, power, and space.
  • Reduce Capital Costs or Move to Annuity-Based Operational Costs:Reduced IT physical assets by using more pay-per-use services.
  • Transparency of IT Costs: Customers are more aware of what they get for their money.

Quality

  • Consistently Deliver to Better-Defined Service Levels:Leads to increased customer satisfaction.
  • Provide Better Continuity of Service:Minimize service interruptions.
  • Regulatory Compliance: Meeting or exceeding mandatory requirements, which may grow more complex with online services.

The cost examples reminded me of a discussion I hade with a colleague who insisted that the best way to make money off a customer when it comes to the private cloud (the customer being “the business”) is to charge for capacity even if the customer doesn’t use it.

This is in my opinion the total opposite of what the private cloud is about.

By being totally transparent with the amount of resources the customer is using they can in turn fine tune their demands and needs accordingly.

If we up front charge the customer for 32 Gb RAM, 500 Gb of disk and 4 vCPUs even though they use only a fraction of it then there is no real way of knowing what IT actually costs the business.

It might also prevent them from requesting the VM to begin with, instead perhaps re-using an existing VM or finding another – often unsupported and trouble prone – solution.

This means that you should always charge the customer per Mb of RAM, Gb of disk and MHz of vCPU utilized. This is one aspect of the measured service characteristic of NISTs private cloud definition.

Make no mistake, you should still make a profit on Mb, Gb and MHz of course but the business should be able to see exactly how much their VMs cost them at any given time.

The Private Cloud Principles, Patterns and Concepts documentation also has a section about this.

One very interesting point that documentation makes is that by providing the business with on-going reports on how much their servers actually cost per month there’s (hopefully) an incentive to actually phase out old systems and services in order to reduce cost.

Transparency and honesty is always the best way to create a reliable long-term relation with your customers, and especially so when it comes to costs.

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