One company’s management of IT financials in a Cloud era

I attended this week the IT Financial Management Association Conference in a very warm Scottsdale Arizona. Cox Enterprises presented first on the challenges as well as the lessons learned from moving to cloud based model. Just so it is clear, Cox’s cloud costing model is focused on budgeting. Cox Enterprises has multiple businesses within it including the cable that I know many of you love. However, from an IT perspective, Cox’s goal was to do cloud across all of its businesses units.

 

Why did Cox choose to do cloud? It was to reduce infrastructure delivery times from 6 weeks to 1 day.  It was also to squeeze out staff productivity savings. As part of their presentation, Cox Enterprises showed their cloud business case. This smartly included not only initial investment but also ongoing cost. It defined specific savings in terms of provisioning labor hours, maintenance hours, software maintenance, and hardware maintenance. They claim to have already achieved a $283 reduction in their cost per server. Part of making this cost reduction reality comes from getting to 12 to 15 VMs per box. What I found most amazing, they developed their cost model totally within Excel. As their presenter said, the problem is “excel is easy to use but difficult to explain.”

Another issue Cox had was deciding what to include in the cost model. The speaker recommended that you keep it simple and transparent. Cox’s model includes a monthly usage rate per VM. The model is by storage and CPU consumed. The presenter admitted that Cox is not ready for metering—something that I personally view as inappropriate with cloud resources as they are a changing pool. Another question that they were struggling with is how to deal with capacity users reserved but did not use. Do you charge for that or instead embed into the cost model a percentage of unused capacity? To sell cloud to business units, Cox came up with a rate card. However, internal customers also have asked for SLAs for their private cloud instances just like they have had for dedicated capacity. Cox has taken the final step of embedding their rate card into their service catalog. This decision has ended what Cox called a service request “gentleman’s agreement.” Customers have to live with our prices in the catalog.

 

Solution page:  IT Performance Management

Twitter: @MylesSuer

Labels: Cloud Billing
Comments
Nadhan | ‎08-27-2012 01:25 PM

Thank you very much for sharing this, Myles.  It is really encouraging to see such mature and complete business cases being made for moving to the cloud.  I can see that such enterprises are well positioned to answer the ROI question on Cloud Computing.

 

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About the Author
Mr. Suer is a senior manager for IT Performance Management. Prior to this role, Mr. Suer headed IT Performance Management Analytics Product ...


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