Welcome back to the 2nd part of the series where we are discussing how an organisation’s IT team can act like a service provider by also managing business aspects of the cloud services to make lines of business accountable for their cloud consumption & spend. To effectively achieve this IT should be able to provide a upfront rate card for the published services and should be able to at least showback for the consumed services.
At the same time there should be a formal process in place to track recovery of the “Cloud Expense” using “Pricing Policies”
In this part, I will focus on how you can accurately capture the “Capital Cost” and “Operating Cost” for running your cloud environment and providing cloud services which can eventually help you to calculate the unit cost of a virtual machine in your private cloud environment using vRealize Business for Cloud 7.3.
It is always difficult to precisely know the cost of a virtual machine for a given hardware configuration using manual methods or spreadsheets as so many cost drivers like Server, Storage, Network, Labor and Facilities etc are involved and on top of this all these cost drivers are shared among multiple virtual machines serving multiple consumers or deprtments.
So, let’s first understand what are these “Cost Drivers” which constitute the cost of a Virtual Machine in private cloud environment and how vRealize Business for Cloud can capture them to accurately calculate the overall “Cloud Expense”
In vRealize Business for Cloud “Expense” is divided into following 8 categories of “Cost Drivers”
- Storage on Demand,
- Additional Costs
As soon as you add your “vCenter Server” in vRBC it does an automatic discovery of all the associated clusters and capture some environment specific details as given below.
ESXi hosts: Make, Model, Configuration and Quantity etc.
Data Stores: Storage Type, Capacity and Quantity
Virtual Machines: Quantity & Operating System type (to associate OS licensing & Labor cost)
So basically, it picks up environment specific details of first 3 cost drivers during the inventory collection.
After doing the initial discovery, vRBC associate a cost for each of these 8 “Cost Drivers” from the reference database. Reference database in vRBC keep ready reference prices of all major makes and model of server hardware and industry standard bench mark for other “Cost Drivers”. It also has reference prices for the public cloud services based on region and type of service.
These reference prices are good starting point but may not be applicable in your environment for example you may be entitled for some special pricing from hardware OEM based on your bulk purchase agreement with them or you may have an ELA with VMware which may not match the socket based pricing available in vRBC reference database. Hence it is always advisable to modify these “Cost Drivers” so that the “Expense” can be calculated as accurately as possible.
You can go to Expenses ->Private Cloud (vSphere) to know the current cost of each of these “Cost Drivers” based on the vRBC Reference Database price.
If you want to modify these “Cost Drivers”, you can click on “Edit Cost Drivers” and replace each one of them with an actual cost applicable to you. Let’s run through with each one of them.
In the edit section, you will notice you can modify all the 8 “Cost Drivers” with an actual cost applicable to your environment.
For example, under “Hardware” I can see the list of ESXi hosts across all my clusters which vRBC has already discovered and has also associated a cost based on the model & configuration of the server matching from the reference database. But you can go ahead and modify this cost based on actual purchase price.
Storage on Demand
Under this section you can modify the cost based on following 2 options
Storage Category: vRBC will group the data stores based on the vCenter Tags for example ,Profile:Gold or Profile:Silver etc. If there are no tags defined in vCenter then it will group them under “Uncategorized”
Storage Type: vRB will group the data stores based on storage types i.e. “SAN”, “NAS” etc.
Under Licensing you can see the list of Virtual Machines discovered by vRB and grouped by Operating System type and quantity.
You have a flexibility to modify these costs based on either “Monthly Cost Per Socket” or “Monthly Cost of ELA”. It is interesting to notice that vRBC progressively reduce the licensing cost associated with your Virtual Machines as your consolidation ratio improves because the cost is divided and shared by all the virtual machines running on a licensed server.
Maintenance fee in case of hardware is an ongoing fee which you pay as “Annual Maintenance Charges” to your hardware OEM provider.
In case of OS it may be “Software Assurance” or “Support and Subscriptions” fee paid to the software OEM to entitle you for technical support or free future upgrades. This is calculated as a percentage of the purchase cost of the server or license. Most likely you may not need to modify these numbers as these are industry standard and are pretty much applicable to most of the customers, unless you are adding your licensing expense as monthly ELA cost.
This is the cost you are likely to pay to your FTE, full-time employees or contractors to provide an ongoing operations and support.
You have an option to provide the “Hourly Rate” with the expected numbers of hours spent each month for each of the technology stack or you can also provide a fixed monthly cost.
In case of “Network” you either provide a cost based on NIC types or a fixed monthly cost. For example, if you have already calculated your overall monthly network expense for the private cloud infrastructure then you add it directly.
Again in case of facilities either you can provide the rental rate per Rack Unit along with power and cooling rate per Kilowatt hour or if you are hosting your servers with an external hosting service provider you can also provide a fixed monthly cost which will cover your facilities expense.
Apart from the standard cost drivers you may also have some additional cost which you may be incurring to provide certain services for example cost associated with “Business Continuity” or “Backup”. Therefore, in this section you add all those monthly miscellaneous expenses which are not covered in the other cost drivers.
Once you are finished, you should be able to see the updated monthly cost for your private cloud considering all the cost drivers which is more accurate and applicable to your environment.
Next we will see how does vRBC distribute and allocate this expense for actual virtual machine cost calculation.
vRealize Business for Cloud 7.3.1