Managing the bottom line for cloud services

With written contribution by Andrew Wahl

 

There’s no way around it: IT is part of a business and that means IT projects must either save money or help make money. This is no less true for organizations that transition into cloud service brokers. Here are some important considerations for taking fiscal responsibility for this operating model.

 

Cost transparency

You will need to know how much your cloud services cost to operate. Administrators must be able to look into the cloud environment and have a complete view of what IT assets are being used and how much, including servers, storage networks and applications. Managing software license compliance is one important aspect of this, in order to make sure there are enough Oracle licenses, for example, but also not too many.

 

For private cloud infrastructure, you will largely rely on capex calculations. But with public cloud services, the notion of asset management shifts into operating expenditures. The financial implications of this are that although these are not owned assets, you still need to manage them as such—and most importantly, any time you turn on a server or a load balancer in the cloud, the meter is running.

 

Ensure efficiency and agility

Having this kind of visibility ensures that internal cloud services are run economically compared with external cloud service providers. It also lets you assess the value you’re getting versus the money you’re spending.

 

In order to be an effective cloud service broker, IT needs to be able to offer the business a variety of cloud services at price points that meet its needs. For this reason, IT should be able to comparatively evaluate the range of options for external cloud services, such as purchasing on-demand versus reserving instances in advance and the costs and benefits of purchasing at different scales.

 

Cost recovery

Knowing how much cloud services cost allows IT to charge for consumption of IT virtualized and cloud resources based on actual usage. This billing and budget reconciliation is important to accurately reflect the fiscal reality of employing cloud services across the enterprise. Instituting chargeback and showback policies provide personalized cost control at the departmental or individual level, allowing them to assess the value of using certain cloud services.

 

Report progress

Of course, as with anything you manage, you will need to generate regular reports on how effectively you are managing the environment. Are you charging enough to recover costs?

 

Reporting should extend to the consumers of the services, department managers and IT Services Managers so they have a complete understanding of the subscribed services and charged amounts according to actual consumption.

 

Finally, you should consider connecting your IT asset management of the cloud services to corporate financial systems will bring cloud financial data to the larger enterprise supply chain.

 

Balancing the equation

The financial management of your cloud assets will require careful oversight of many variables. Find out how HP Cloud management provides IT asset management systems and tools that allow enable you to transform into a successful, agile and cost-effective cloud service broker. Visit www.hp.com/go/cloudmanagement

 

Also, be sure to meet us at HP Discover in Barcelona to witness financial management for the cloud in action, both at demo booths and from breakout sessions.

 

 

Editor's Note: This is the fifth in a series of thought leadership blog posts on the seven things you need to know about becoming a successful cloud services broker. To catch up on the series, be sure to read these posts:

  1. Your cloud transformation starts here: How to develop a strategic plan
  2. Building on a foundation of automation
  3. How to decide what cloud services to offer
  4. Managing SLAs for your cloud services
  5. How to manage security as a cloud services broker

 

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