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How Much is This Gonna Cost? Price Models for IT Infrastructure

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..

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Unified Data Center IQ Contest : It’s All about Intelligent Automation and OpenStack

October 16, 2012 at 12:06 pm PST

In case you are still in denial, we entered the 3rd week of our  6 weeks long Unified Data Center IQ Challenge . Since Sunday midnight PST , you can find on www.Facebook.com/ciscodc , a new set of questions , focused this week on Cisco Intelligent Automation and OpenStack .

Don’t tell me that you can’t answer at least one question ! Remember that only one correct answer makes you eligible to participate to the raffle for the iPAD.

So now , let me help you a little bit more to thank you for being on this blog -- Why don’t you check the last blog of Rodrigo Flores about the announcement
Cisco Intelligent Automation for Cloud -- OpenStack support  (And AWS, vCloud, vCenter) -- I bet it can’t hurt .
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Cisco Intelligent Automation for Cloud – Openstack Support (and AWS, vCloud, vCenter)

In support of our Openstack Edition, Cisco Intelligent Automation for Cloud (IAC video) is introducing a community supported “Multi-Cloud Acceleration Kit” (MCAK) that extends IAC Starter Edition to enable provisioning of OpenStack clouds as well as vCloud, Amazon EC2 as well as vCenter and UCS blades. IAC provides both a real service catalog and an orchestration tool that help OpenStack be adopted by the enterprise. IAC provides rich Role-Based Access Control,physical provisioning and adapters to a large variety of back IT systems including help desks, CMDB’s, directories and many other systems.

 

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Workload Automation, The Next Generation

I was talking to a few analysts this week on workload automation and some interesting themes came up.   Workload Automation (aka Job Scheduling) starting with IBM mainframes and job control language.  Over the years the automated execution of business processes (moving batch data  in real-time schedules) became a major workload in the data center.   This was extended from mainframe to distributed computing with Unix and then Windows compute.  Along with this came all the Enterprise Resource Planning and Business Intelligence package applications that made SAP and Oracle famous.  Moving the data around was absolutely mission critical.  Huge demand on the data center resources drove the need to begin to control the resource states of the target compute engines to be ready for the high demands of processing millions of transactions or running critical reports for the Enterprise.

Now here is the rub…

The 40 to 60 year old set (of which I am member) know all about this “in the background” processing and its importance.  The challenge now, with all the new Web applications being created and a new batch of IT professionals is that this critical part of the IT ecosystem is being forgot about, downplayed and generally not paid attention too until there is a big outage and enterprise controls and automation are put in place.  There are so many places where workload automation can be applied to help automate key processes.  Many of our customers of this product line have increased the size of their operations 2-3x over the past 3 years.  All this cool new technology and new products being sold are putting increased demands on workload automation.   Learn more about this cost saving automation technology, your CIO will thank you for it.

 

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Attend a Cloud Workshop by Cisco

I have previously blogged about the value of a having a Cloud Workshop to drive success for your first Private Cloud.   Well now Cisco’s Cloud & Systems Management Technology Group and Cisco Corporate IT will host a Workshop at the 11th International Cloud Expo.   Register to hear the best “true grit” about the Private Cloud.   I will be presenting with Rodrigo Flores, Joann Starke and Brian Cinque.

See you there.

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