Virtualization
Chargeback Development
Chargeback. Charge Who?
Cost saving is a primary driver for virtualization deployment. Its full value lies in its ability to:
- Improve total cost of ownership (TCO) by decreasing management costs and increasing asset utilization. The cost and complexity of disaster recovery solutions are also lowered.
- Increase flexibility by the pooling of resources centrally managed through an enterprise hub to better support dynamically changing business requirements.
- Enable access through shared infrastructure and provide a resilient foundation that enables better access to infrastructure and information in support of business applications and service-oriented architecture (SOA).
But with the shared resources benefits, a problem arises in trying to account for the cost savings. Who pays for the underlying physical servers and how?
Traditionally, organizations funded server and storage acquisition as part of the new project process - the budgeting for these items was included within the project. When it came to chargeback, these initial costs were associated with an application owned by a business unit. There was a vendor invoice amount that could directly attach to the purchase of product in addition to the charge for the amount of man hours associated with setup, provisioning, and maintenance of the equipment.
In the new dynamic, virtual data center, hardware is being shared. The one server/one app model is a thing of the past. One server no longer belongs to a single business unit.
The question arises, how do you charge a business unit for using a tenth of a server that took ten minutes to deploy?
How do you consider things like the consolidation of servers at various life-cycle stages and factoring in depreciation costs? And who pays when the next physical server is needed?
Software Solutions for Chargeback Development
The good news is that the leading vendors for virtualization software have developed chargeback management tools that allow you to model, measure, and assign costs associated with virtual machines. You can transition your IT environment from a cost center to a value center. Specifics on some of the leading chargeback management tools allow IT administrators to:
- Create customized cost models and metrics. Flexible cost models allow IT to measure fixed costs, allocated costs, actual utilization or a mix of all three, tracking costs by business unit or group.
- Report on virtualization costs precisely, capturing accurate cost metrics for virtual environments, giving you insight into the true costs of provisioning systems. You can account for multiple hardware costs (CPU, memory, storage, etc.) as well as elements such as power and cooling. The detailed cost information can be used to help the business make better decisions about deploying IT resources.
- Simplify billing and reporting by automatically creating detailed billing reports that can be submitted to business units within an organization, providing them with a clear view into resources consumed and their associated costs.
ENS-Inc chargeback development empowers IT administrators to deliver IT as a service; today’s relevant lingo has dubbed it "Software as a Service" or "SaaS". With virtualization management tools, SaaS is relevant to your datacenter.
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Chargeback Cost Models that Your Accounting Team will Appreciate
Let’s face it. It all comes down to the "bean counters" and their need to provide an accurate accounting of all expenses (and savings!) for the organization. You know that virtualization reduces costs for the various Lines of Business (LOBs) in your organization and for the business as a whole. It’s the allocation of the costs and proving it to the bean counters that produces the actual realization of the savings to management.
Leading vendors of virtualization management tools understand the needs of accounting and have built into chargeback management tools the flexibility of multiple cost models:
- Fixed Cost - Specific per virtual machine instance costs such as floor space, power/cooling, software or administrative overhead.
- Allocation-based Costing - Variable costs per virtual machine based on allocated resources, such as the amount of memory, CPU or storage allocated or reserved for the virtual machine.
- Utilization-based Costing - Variable costs per virtual machine base on actual resources used, including average memory, disk and CPU usage, network I/O and disk I/O.
Cost models can be combined in a cost template, making it easy to start with a simple chargeback model and align with organizational requirements.
Your Software as a Service (SaaS) is a kind of internal customer service, providing everyone with what they need to do their job.
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Chargeback Development Benefits for Your Organization
Chargeback management tools are a valuable asset to your organization enabling accurate cost measurement, analysis, and reporting. Management gains a better understanding of how much resources cost and what can be done to optimize resource utilization thereby reducing overall spending on IT infrastructure. Overall, chargeback development allows your organization to:
- Create a simple, flexible, and accurate model for measuring costs in a shared IT services environment.
- Make better resource utilization and allocation decisions by ensuring accurate measurement of the true costs of virtualized workloads.
- Help end users make informed decisions about service levels requested with better visibility of their associated costs.
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