Steve Watkins, Guest Blogger
Steve Watkins is a Consulting Systems Engineer for Cisco Intelligent Automation for Cloud. He came to Cisco as part of the newScale acquisition in 2011. He has been helping customers manage the migration to IT as a Service (ITaaS) since 2004.
Showback and Chargeback have become increasingly hot topics for IT, especially infrastructure teams. This is fuelled at least in part by the general acceptance of cloud computing, including private clouds and SaaS applications. Chargeback (and even Showback) are great ways of affecting behavior of the consumers of IT. It keeps consumers from demanding an unreasonable amount of services, and encourages them to use of what has already been invested in. There is also a growing mandate from Finance to make IT accountable for its spend, or at the very least to justify any requests for further investment. So infrastructure teams find themselves in the unexpected position of defining prices for the services traditionally offered. Most have no idea where to start.
Several vendors have produced offerings to help manage the showback/chargeback business case. This post will not discuss any vendor in detail. Instead, I want to talk about philosophy.
Broadly speaking, there are two major approaches to creating a price model for IT. There is the Utility-based model, in which pricing derived from actual consumption of CPU cycles, RAM, bandwidth, storage, etc. In this model, if you stood up a virtual machine for one week you would only pay for the actual amount CPU cycles and storage you consumed.
Alternately, there is Service-based pricing, which advocates a fixed price based on either the service itself or some other unit of measure such as hours, etc. In this model, if you stood up a virtual machine for one week you would pay for how many hours the VM was active, whether you used it or not.
I always council my customers to adopt service-based pricing. I think utility-based pricing is the wrong approach for IT departments, especially infrastructure teams. Here are my reasons:
1.INFLEXIBLE – Utility pricing is asset based, and therefore assumes that the assets will remain more-or-less the same. The model breaks down when you introduce changes, like renting infrastructure from public providers or changing service levels. What about if I offer VDI next year? That may mean two different types of pricing models, which gets even more complex. A service-based pricing scheme works with all services.
2.POOR CAPACITY MANAGEMENT – by only charging for the CPU cycles you actually consume, it encourages users to stand up systems and leave them in place.. which is exactly what we don’t want. Think of renting a car: you rent a car for 4 days but only drive it for a total of 3 hours, you still have to pay for all for days. If I just paid when I actually drove it, I would keep it all the time. We want to encourage users to return unused assets. Which leads to..
If you are reading this, you are probably interested in getting more out of your network. You have most likely made a huge investment in your network, but you simply aren’t getting the payback you had been expecting. How can Cisco help in this regard? That’s just one of the many concepts we will be covering in our webinar October 24: Get Your Network Ready for BYOD, Video, and Cloud with Cisco Unified Access!
Early this week, there was much buzz and speculation about how Cisco and Citrix will be doing business differently. The news was finally unveiled at Mark Templeton’s keynote, when he introduced Cisco CTO, Padmasree Warrior, and they jointly announced the expansion to the two companies’ current partnership on three strategic areas: cloud networking, cloud orchestration and mobile workstyles. Details are outlined in this press release.
Enterprise organizations seek more and more to adopt telepresence and HD video solutions that offer instantaneous, in-person virtual communication more pervasively across their organizations. While they may use the technology to connect with colleagues, partners, and customers all over the globe, these businesses want to access their video collaboration tools in one very specific place – the cloud – as they plan more pervasive deployments across their organization and ecosystem.
Why the cloud? It’s simple: The cloud allows for flexible deployment models, easy implementation, seamless integration of mobile and other remote users, and scalable video that can expand with the pace of business while freeing up resources to focus on their core business. We’ve empowered our partners to bring these invaluable benefits to their customers with our cloud-based telepresence solution, the Cisco TelePresence Exchange System.
I had the opportunity to attend Meeting of the Minds in San Francisco last week. It was an amazing event that brought together thought leaders from the world’s most innovative organizations to spotlight fresh ideas in urban connectivity and sustainability.
The emerging themes centered around innovation, leadership, and enabling connectivity. While there and after the first day of sessions, my team had the pleasure of catching up with Gordon Feller, director of the Cisco Internet Business Solutions Group (IBSG) Public Sector Practice, Urban Innovations team and convenor and co-founder of Meeting of the Minds, to capture his insights. Check out the video: