Thursday Jan 03, 2013

Key Principles of Cloud Chargeback System

Contributed by Eric Tran-Le, VP, Product Management, Oracle Enterprise Manager

With public clouds users can now compare compute pricing pretty much like they would compare a car models. One could argue that compute power and services are different than a car but the fact is that users can compare costs.

Nothing has changed and everything has changed

Cost wise nothing has changed in a sense that the decision to implement a private cloud versus hosting on a public cloud is driven by the same factors than outsourcing or on-premise. It goes well beyond simple cost comparisons to touch upon key principles such as:

- Control of costs
- Visibility of costs
- Fairness of costs

Everything has changed in a sense that there is now a cost “predictability” expectation from users derived from a notion of “unit of compute” (the equivalent of standard energy Unit of Work) from which you can predict your resources consumption and infer total costs (a 45mpg rating means that you can drive 450 miles with 10 gallons or $40 if $4 per gallon). This is a more fundamental change in a sense that IT needs to work with the finance department to rationalize the cost-of-compute(Infrastructure + SW platform) and link it to the cost-to-serve (incident, problem, change & configuration management), the end goal is to produce a standard unit of compute that can be applied to various products and services configurations.

In part 1 of this blog, we will highlight how a cloud chargeback system can help addressing the key principles mentioned above and in part 2 we talk about how to create a profitable cost recovery model.

Key Principles of Chargeback System

Control of Costs

What is not defined cannot be controlled”, “What is not controlled cannot be measured”, “What is not measured cannot be charged”.
A cloud chargeback system provides a framework by which you can define a standard unit of cost for products and services. You can set unit of costs for resources based on hardware tiers or database high availability tiers, you can add fixed costs for on-going support costs or for facilities driven cost such as real-estate, power, HVAC,… but more importantly you can organized them by business units and cost centers so that you do have a cost structure hierarchy to report in aggregate or by business units. To define the right set of configurations, you need to baseline the current workloads utilization, characterize the patterns group of users and type of workloads and since you will use based compute metrics (CPU, memory, I/O,…) to measure utilization it is important for you to define which layers of computing ( Servers, Middleware, Databases,…) will reflect fairly the actual usage pattern of an application.

Visibility of Costs

Among all the features showing business units their VM consumption and allocations is the one that will start to change the relationship between IT and users more fundamentally. Actual utilization rate, historical trending, heat map displaying under and over utilized servers but also virtual environment configuration attributes such as high availability and regulatory compliance reports will contribute to a better cost-to-serve transparency. Another important capability to look for is how you can identify servers that cannot be part of a shared pool of resources due either to legacy applications or simply very high workload requiring dedicated machine this will help when you start sharing with the user the calculation of his charge plan.

Fairness of Costs

This the ONE difference with traditional chargeback models in a sense that metrics collected for charge calculation are actually “IT compute metrics” on top of which you add “services fee-based” metrics. In traditional chargeback direct or indirect model, the finance department tends to use non IT metrics such as # of users in a business unit as a % of aggregate IT costs or data center space taken by rack of servers,…this has led to a lot to the lack of transparency and the sense of “unfair” chargeback. As part of the charge plan calculation the characterization of fixed versus variable costs is essential to calculate the unit of charge.

Conclusion

Remember that in the cloud, users do not want to pay for resources they do not use and there is an expectation that they can dynamically request more resources, allocate and de-allocate resources. A cloud chargeback system will help you transition to a usage-based pricing of your IT resources will the key principles of control, visibility and fairness of costs. Last but not least, you do not need to go for the big-bang and turn chargeback right away you can implement showback and specific chargeback initiatives so that the business units can work with you on an efficient chargeback model.

Monday Dec 10, 2012

CISDI Cloud - Industrial Cloud Computing Platform based on Oracle Products

In today's era, Cloud Computing is becoming integral to the vision and corporate strategy of leading organizations and is often seen as a key business driver to achieve growth and innovation. Headquartered in Chongqing, China, CISDI Engineering Co., Ltd. is a large state-owned engineering company, offering consulting, engineering design, EPC contracting, and equipment integration services to steel producers all over the world. With over 50 years of experience, CISDI offers quality services for every aspect of production for projects in the metal industry and the company has evolved into a leading international engineering service group with 18 subsidiaries providing complete lifecycle for E&C projects.

CISDI group delegation led by Mr. Zhaohui Yu, CEO of CISDI Group, Mr. Zhiyou Li, CEO of CISDI Info, Mr. Qing Peng, CTO of CISDI Info and Mr. Xin Xiao, Head of CISDI Info's R&D joined Oracle OpenWorld 2012 and presented a very impressive cloud initiative case in their session titled “E&C Industry Solution in CISDI Cloud - An Industrial Cloud Computing Platform Based on Oracle Products”.

CISDI group plans to expand through three phases in the construction of its cloud computing platform: first, it will relocate its existing technologies to Oracle systems, along with establishing private cloud for CISDI; secondly, it will gradually provide mixed cloud services for its subsidiaries and partners; and finally it plans to launch an industrial cloud with a highly mature, secure and scalable environment providing cloud services for customers in the engineering construction and steel industries, among others. “CISDI Cloud” will become the growth engine for the organization to expand its global reach through online services and achieving the strategic objective of being the preferred choice of E&C companies worldwide.


The new cloud computing platform is designed to provide access to the shared computing resources pool in a self-service, dynamic, elastic and measurable way. It’s flexible and scalable grid structure can support elastic expansion and sustainable growth, and can bring significant benefits in speed, agility and efficiency. Further, the platform can greatly cut down deployment and maintenance costs.

CISDI delegation highlighted these points as the key reasons why the group decided to have a strategic collaboration with Oracle for building this world class industrial cloud -
- Oracle’s strategy: Open, Complete and Integrated
- Oracle as the only company who can provide engineered system, with complete product chain of hardware and software
- Exadata, Exalogic, EM 12c to provide solid foundation for "CISDI Cloud"

The cloud blueprint and advanced architecture for industrial cloud computing platform presented in the session shows how Oracle products and technologies together with industrial applications from CISDI can provide end-end portfolio of E&C industry services in cloud.



CISDI group was recognized for business leadership and innovative solutions and was presented with Engineering and Construction Industry Excellence Award during Oracle OpenWorld.

Wednesday Nov 14, 2012

Slap the App on the VM for every private cloud solution! Really ?

One of the key attractions of the general session "Managing Enterprise Private Cloud" at Oracle OpenWorld 2012 was an interactive role play depicting how to address some of the key challenges of planning, deploying and managing an enterprise private cloud. It was a face-off between Don DeVM, IT manager at a fictitious enterprise 'Vulcan' and Ed Muntz, the Enterprise Manager hero .

 


Don DeVM is really excited about the efficiency and cost savings from virtualization. The success he enjoyed from the infrastructure virtualization made him believe that for all cloud service delivery models ( database, testing or applications as-a-service ), he has a single solution - slap the app on the VM and here you go .

However, Ed Muntz believes in delivering cloud services that allows the business units and enterprise users to manage the complete lifecycle of the cloud services they are providing, for example, setting up cloud, provisioning it to users through a self-service portal ,  managing and tuning the performance, monitoring and applying patches for database or applications.

Watch the video of the face-off , see how Don and Ed address s
ome of the key challenges of planning, deploying and managing an enterprise private cloud and be the judge !


Tuesday Oct 23, 2012

Clouds, Clouds, Clouds Everywhere, Not a Drop of Rain!

At the recently concluded Oracle OpenWorld 2012, the center of discussion was clearly Cloud. Over the five action packed days, I got to meet a large number of customers and most of them had serious interest in all things cloud.  Public Cloud - particularly the Oracle Cloud - clearly got a lot of attention and interest. I think the use cases and the value proposition for public cloud is pretty straight forward. However, when it comes to private cloud, there were some interesting revelations.  Well, I shouldn’t really call them revelations since they are pretty consistent with what I have heard from customers at other conferences as well as during 1:1 interactions.

While the interest in enterprise private cloud remains to be very high, only a handful of enterprises have truly embarked on a journey to create what the purists would call true private cloud - with capabilities such as self-service and chargeback/show back. For a large majority, today's reality is simply consolidation and virtualization - and they are quite far off from creating an agile, self-service and transparent IT infrastructure which is what the enterprise cloud is all about.  Even a handful of those who have actually implemented a close-to-real enterprise private cloud have taken an infrastructure centric approach and are seeing only limited business upside. Quite a few were frank enough to admit that chargeback and self-service isn’t something that they see an immediate need for. 

This is in quite contrast to the picture being painted by all those surveys out there that show a large number of enterprises having already implemented an enterprise private cloud.  On the face of it, this seems quite contrary to the observations outlined above. So what exactly is the reality?

Well, the reality is that there is undoubtedly a huge amount of interest among enterprises about transforming their legacy IT environment - which is often seen as too rigid, too fragmented, and ultimately too expensive - to something more agile, transparent and business-focused. At the same time however, there is a great deal of confusion among CIOs and architects about how to get there. This isn't very surprising given all the buzz and hype surrounding cloud computing. Every IT vendor claims to have the most unique solution and there isn't a single IT product out there that does not have a cloud angle to it. Add to this the chatter on the blogosphere, it will get even a sane mind spinning.  Consequently, most  enterprises are still struggling to fully understand the concept and value of enterprise private cloud.  Even among those who have chosen to move forward relatively early, quite a few have made their decisions more based on vendor influence/preferences rather than what their businesses actually need.  Clearly, there is a disconnect between the promise of the enterprise private cloud and the current adoption trends. 

So what is the way forward?  I certainly do not claim to have all the answers. But here is a perspective that many cloud practitioners have found useful and thus worth sharing.

To take a step back, the fundamental premise of the enterprise private cloud is IT transformation. It is the quest to create a more agile, transparent and efficient IT infrastructure that is driven more by business needs rather than constrained by operational and procedural inefficiencies. It is the new way of delivering and consuming IT services - where the IT organizations operate more like enablers of  strategic services rather than just being the gatekeepers of IT resources. In an enterprise private cloud environment, IT organizations are expected to empower the end users via self-service access/control and provide the business stakeholders a transparent view of how the resources are being used, what’s the cost of delivering a given service, how well are the customers being served, etc.  But the most important thing to note here is the enterprise private cloud is not just an IT project, rather it is a business initiative to create an IT setup that is more aligned with the needs of today's dynamic and highly competitive business environment. Surprised? You shouldn’t be. Just remember how the business users have been at the forefront of public cloud adoption within enterprises and private cloud is no exception.  

Such a broad-based transformation makes cloud more than a technology initiative. It requires people (organizational) and process changes as well, and these changes are as critical as is the choice of right tools and technology. In my next blog,  I will share how essential it is for enterprise cloud technology to go hand-in hand with process re-engineering and organization changes to unlock true value of  enterprise cloud.

I am sharing a short video from my session "Managing your private Cloud" at Oracle OpenWorld 2012. More videos from this session will be posted at the recently introduced Zero to Cloud resource page.

Many other experts of Oracle enterprise private cloud solution will join me on this blog "Zero to Cloud"  and share best practices , deployment tips and information on how to plan, build, deploy, monitor, manage , meter and optimize the enterprise private cloud. We look forward to your feedback, suggestions and having an engaging conversion with you on this blog.

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