Managing the real costs of running a cloud

At what point does cost management—the business of tracking usage and billing—really come into play in the data center?

The New York Times recently ran a year-long study examining the wastefulness of server-filled data centers, where online companies expend as much as 90 percent of the electricity they pull off the grid simply running data centers at full capacity to ensure availability, even if they’re only using a fraction of the capacity at any given time.

This is just one example of the inefficiency and high cost of maintaining a data center—a reality for most large enterprises and service providers. And then there are all the costs that aren’t as easy to measure effectively.

Even though server proliferation can be partially addressed through virtualization, the usage of virtual and physical assets becomes complex to accurately assess or manage, and it’s easy to lose sight of what resources are being used and by whom.

Cost management may not be the first thing on the mind of an IT manager, and it’s certainly not the most glamorous aspect of managing the data center, but it’s a set of capabilities that is crucial to integrate into overall service management, especially with a move into cloud.

IT costs represent one of the largest expenses to organizations today, yet most businesses lack true IT cost transparency—the ability to allocate IT costs, usage, and value. But you can’t manage what you don’t measure. And a lack of resource usage data makes it difficult to determine what costs are associated with which application, how applications are associated with departments and resources, true utilization, and ultimately what IT costs need to be recovered. In turn, this makes it hard to justify IT expenses, and challenging to determine if a line of business is profitable.

The true cost of managing the cloud? For starters, a financial management roadmap can help companies in the transformation to cloud, gradually adopting cost management capabilities consistent with the cloud and service management strategy. A core set of integrated capabilities for cost management can help to delivery cost transparency and control costs in the data center.

  • Visibility of IT costs of physical, virtualized and cloud resources, storage and network resources, applications, and other non-IT cost drivers
  • Common reporting and usage metering coverage for measuring, analyzing, reporting and invoicing based on usage across IT
  • Insights into the relationships between virtualized and physical IT assets to determine utilization of shared resources to determine efficient departmental and project behavior to lower TCO
  • Advanced analytics of collected data from shared devices, to track resources and manage capacity according to business organizational structures and needs
  • Automating chargeback reporting to internal organizations and external clients by integrating with accounting and billing systems
  • Integrate secure cloud usage reporting with cloud provisioning and management strategy to allow users to manage the infrastructure cost for cloud offerings.

With the move to cloud, implementing granular service usage metering and billing leverages automated license management to accurately offer and track usage of standardized services. Cloud usage also dramatically reduces deployment cycles and lowers infrastructure costs. It also allows for scalability and flexibility to deliver new processes and services and make better decisions on more effective IT investments.

Effective usage and accounting for cloud can help companies realize immediate benefits. Tracking real usage results in accurate billing. Accountability for usage and chargeback results in improved services and better alignment between business and IT costs. And while the verdict on what to do with the enormous energy waste in data centers is still out, organizations can start by getting a handle on what it really costs to run their cloud.

Here’s more on cost management for the cloud: http://www-01.ibm.com/software/tivoli/products/smartcloud-cost-mgmt/ 

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Cynthya Peranandam

About Cynthya Peranandam

Cynthya Peranandam leads worldwide marketing for IBM's cloud orchestration solutions. She’s provided consulting services to clients across the e-business spectrum, and drove adoption and commercialization of emerging technology through IBM's early-adopter program. Prior to joining IBM, she established one of Canada's first emerging technology magazines and authored numerous articles about the IT industry. She lives in Los Angeles.
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