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Chargeback http://clean-clouds.com
What is chargeback? • Mainframe ERA • Objective • Responsibility Accounting Chargeback
Resource Metrics + • Excess capacity handling • De Duplication • Server virtualization is leading the way 2 Factors + New Technologies
Needs of Business • Benefit from a chargeback system • Objective • Implementation Cost • Evaluating S/W Implementation Steps
Difficult to manage • Virtualization • De Duplication Challenges
Separate infrastructure costs from services costs • Unit costs change over time • Use tiered pricing • Bundling is a necessity Chargeback in the context of Virtualization
Periodically Subscription • User Based Subscription • Usage Based Subscription • Volume Usage Based • Function Based Subscription • Other Types of Billing Options SaaS
User Based Subscription • Periodically Subscription • Per User-session-hour Based Subscription • Per Login Pricing • Usage Based Subscription • Group based Subscription • Module based Subscription PaaS
On-Demand Instances • Reserved Instances • Spot Instances • Data transfer based subscription • Usage Based Subscription • PUT, COPY, POST or LIST - $0.01 per 1,000 requests • GET and anything else - $0.01 per 10,000 requests IaaS
Data Collection Functions • Account Table Maintenance • Rate Setting • Billing & Reporting • Administrative functions • Budgeting Activities • Pricing Decisions • Usage Variance Analysis Requests • Business General Ledger & Accounting • Cost Allocation Decisions • Capacity Planning & Usage Trending • Activities Key Chargeback Functions
Organizational Alignment • Business stakeholders • Roles and Deliverables • Defined SLAs Successful chargeback model
Chargeback Software Selection • Configuration versus Utilization Costing Strategies • Fixed Versus Variable Cost Elements • Unused or Idle Resources • Overhead Resources • Shared Resources • Systems Software Customization • Scope of Processing Costs • Manual Services • Variable Charge Rates • Variance Analysis • Charge Penalties Features
Cost awareness • Recognition of the value • Resource flexibility • Transition from a cost center to a value center • Redefine itself as a service provider • Lengthy customized Service Level Agreements -> standard service catalog • Understanding of the complications and charges for requesting an IT service in IT Users • Accountability Benefits
Implementing and maintaining IT chargeback systems is a daunting task. • Comparisons to commercial service providers • Comparisons to commercial service providers • Potential to erode the IT-customer relationship Disadvantages
No Chargeback Non IT based Chargeback IT based Chargeback Direct Chargeback Profit-oriented pricing Fixed Revenue Fixed Revenue within predefined range Subscription Pricing Peak-Level Pricing User-Based Pricing Ticket-Based Pricing Virtual Server Count Based Pricing Resource consumption Based Pricing Static capacity-based Based Pricing Hardware Based Pricing Flat rate Pricing Hybrid Model based Pricing SOA Transaction Ratio Funding Activity Based Pricing Different Chargeback Models
Build a “best practices” chargeback process. • Develop a chargeback requirements document. • Evaluate and select chargeback software. • Implement the chargeback software. • Build a finance and chargeback support team dedicated to IT management. Possible Approach
