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..
Stretching the Olympic theme of my previous blog, where I used the analogy of a 100m sprinter and his backup team to introduce the new Cisco Intelligent Automation for Cloud Deployment Services, I’d like to now discuss how to roll out new cloud projects in the data center. Thinking again about a team of Olympic champions -- and the Team GB (Great Britain) cycling team, illustrate this principle so well -- with their fabulous winning streak, not least the incredibly exciting keirin event win by my countryman Sir Chris Hoy (yes, fellow Scot, however that’s where the association ends ). Such teams don’t often win with a “big bang” all-at-once, approach. Their training and successes usually builds incrementally, over several years and phases.
In the case of Team GB Cycling, they have developed from practically “also rans” in 1998 to consistent world beaters in Beijing 2008 and now London 2012. They have improved incrementally, event by event, year by year, demonstrating incremental successes as they went along, to be world beaters. In essence, they have used an approach we in Cisco sometimes call “Crawl, Walk, Run”, illustrating the progress to success. From my experience over the past 25 years in IT, there are big lessons here for IT project delivery. Let’s use a Cloud Automation project as an example.
Recent numbers from Gartner suggest that by 2016, enterprise public cloud services spending will reach $207 billion, up from $109 billion in 2012. Additionally, according to IDG’s Unified Communications and Collaboration survey, 90% of organizations plan to invest in new or upgraded unified communications and collaboration technology in the next 12 months.
It’s clear that businesses see a lot of opportunity in the cloud and collaboration, but how exactly can it help your business? At Cisco, we see four main ways that organizations can benefit from services that provide collaboration in the cloud, such as those offered with the Cisco Hosted Collaboration Solution:
You Can Create Unified User Experiences: Cloud-based collaboration solutions deliver a consistent experience across all devices – something important with the increasingly expanding array of devices used for work. This means, that someone using a smartphone from their car will be having the same WebEx meeting experience as the person joining from their desktop computer in a cubicle and the lucky coworker that is dialing in from their tablet at a sunny outdoor café. The application will look and feel the same so there isn’t a learning curve to use it on a different device and you can be assured that there won’t be any difference in the features and functionalities between users as well.
You Can Optimize Resources: One of the many ways that collaboration delivers value is through operational ROI that allows organizations to avoid unnecessary costs and improve processes, but the resource gains from cloud collaboration go well beyond fiscal benefits. Since the cloud can unify and automate operations across employees and offices, it allows IT and business executives to refocus their energy and investments less on operational issues and more on strategic priorities ultimately leading to business transformation. Read More »
As the London 2012 Olympics kicks off today, the 100m sprint event will be one I’ll definitely be watching on TV. And with Cisco as the Official Network Infrastructure Supporter for London 2012 - an event that is generating huge excitement here in Cisco UK and Ireland as well as Cisco globally, let me use an Olympics analogy to illustrate how Cisco Services helps you accelerate deployment of our recently announced Cisco Intelligent Automation for Cloud Starter Edition, described in excellent detail by my good colleagues Wayne Green and Jason Schroedl.
While the 100m sprint will (hopefully!) be won in a sub-10 second time, without doubt the winner will have taken much, much longer in preparation. Like all the Olympic sports, the 100 sprint is an event where the participants will have prepared for several -- if not many -- years. They are at the top of their game. As I learned recently in a seminar at our Cisco Scotland office with Olympic medal winners Roger Black and Steve Backley, what is maybe not so visible is that they all have an extensive team behind them, helping them deliver that fantastic time. And despite their own expertise, commitment and talent, they will have called on specialist expertise -- physios, expert trainers, even sports psychologists -- to help them accelerate from those starting blocks and over that finishing line in record time. And for those competitors participating for the first time in such a major event, this background team will be all the more important in helping them develop their race plan.
So now onto cloud automation, and how Cisco Services can -- in an analagous manner -- help you accelerate from the starting block with Cisco Intelligent Automation for Cloud Starter Edition ….
Are you interested in how enterprises and service providers are making and saving money via cloud? Last week, Cisco hosted a live webcast featuring IT executives from CSC, Sprint, and Educational Testing Service (ETS) who discussed the economic benefits of cloud computing for their businesses and their customers.
This session provided real-world perspectives into the cloud adoption of major enterprises and service providers, as cloud computing continues to transform businesses through improved agility, better economics, enhanced security and a dynamic, assured experience. The executives discussed the economic benefits derived from cloud business models and shared examples of how cloud computing is changing their industries.