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Transcript of © 2009 IBM Corporation Sig Puchacz [email protected]@us.ibm.com 512-658-0758 Usage &...
© 2009 IBM Corporation
Sig Puchacz
[email protected] 512-658-0758
Usage & Accounting in the Virtual & Cloud Environments
2
Agenda
IT Pressures and Needs
The Cloud Requirements to Management Account
– Models
– Data Capture Requirements and Importance
– Reporting Capabilities
– Process Model for Service Catalogs and Accounting
– Performance and Capacity Management Ties to Financial Management
– Recommendations
Benefits
3
IT Departments contain many different platforms, environments, sub-system, and users:
Costly to own, maintain, and operate
With unique record formats and metrics
Ill equipped to discuss services delivered in a business context
What problem does it help solve? Inability to allocate IT costs, usage, and value – IT Cost Transparency
Unix / Linux / Windows
Databases & Networks
Storage & many other systems
Internet & E-Mail
Mainframes
Time sheets
Power Consumption
4
....service sourcing and service value
Cloud Computing …
ORGANIZATION CULTURE GOVERNANCE
Flexible Delivery Model
Public …• Service provider owned and
managed.• Access by subscription.• Delivers select set of
standardized business process, application and/or infrastructure services on a flexible price per use basis.
Private …• Client owned and
managed.• Access limited to client
and its partner network.• Drives efficiency,
standardization and best practices while retaining greater customization and control
Cloud Services
Cloud Computing Model
.… Customization, efficiency, availability, resiliency, security and privacy
.…Standardization, capital preservation, flexibility and
time to deploy
Driving the necessity of cooperative performance/capacity management and cost accounting!!!
IAAS SAASPAAS BPAAS
5
Cloud Services DeliveryElastic Scaling
Rapidly provisionedService usage billing
Ease of useStandardized offerings
Infrastructure Characteristics for effective Cloud Delivery
Service-oriented; easy to use service catalog Advanced virtualization and automated
management Common components and processes Advanced security and resiliency Rapid provisioning of server stack and storage
resources, with seamless accounting for resource use
Usage Based Pricing in Cloud Delivery Requires Knowledge of Service Usage and Resource Usage
As organizations move to private or public cloud, they must be able to demonstrate usage based pricing
6
Virtualization: Significant advantages / new challenges
From Dedicated Systems, Storage, Applications . . .
. . . to Shared Virtualized Environments and SOA
Advantage:
More simple to account for with a spreadsheet – one machine, one workload, and one cost center
Challenges – Resources are highly underutilized which means:Paying more for hardware and softwareUnnecessarily high energy costsUsing more real estate than requiredMore assets that are harder to track, manage,
and maintain Inflexible to varying peak in demand
Data storage
Host
Servers
Advantages:
Better utilization of existing resources so future investments can be deferred
More cost effective – hardware, software, energy, staff, and floor space
More responsive to differing peak loads
Challenges:How to allocate costs
Prove to the users they’re getting what they deserve
7
Plan your Financial Management Transformation Roadmap
Simplified
Shared
Dynamic
Consolidate
Virtualize
Automate
Implement asset-based costing
Manage full-capacity licenses
Reduce infrastructure complexity
Improve business resilience (manage fewer things better)
Improve operational costs/reduce TCO
Implement usage-based costing
Manage sub-capacity licenses
Increased hardware utilization
Allocate less than physical boundary
Reduce hardware costs
Simplify deployments
Granular service usage metering and billing
Deliver automated license management
Standardized Services
Dramatically reduce deployment cycles
Massively scalable Autonomic Flexible delivery
enables new processes and services
Getting Harder to Truly Know IT costs
Service
8
The “industry standard” starting point – establish a strong technology resource-based cost accounting system and then build upon that to a business service based or IT service based cost accounting system.
Resources are the people and IT equipment, hardware and software. Business Services are the business units or volumes that result in
resources being used and activities being performed. IT Services are all of the things done to carry out work related to the
use and maintenance of IT resources and processes. Cost Pools are the components selected to quantify the cost and to
account for costs. Billable Unit is the measured unit that is used to calculate the
charge for either the resource, business item or activity being charged.
Business VolumeDenominations
Resource Based(processor time, DASD storage)
Business Service Based
(checks processed, # of customers)
IT Service Based(produce report, install software)
TechnologyDenominations
CostPool Billable
Unit
Resource driver
Business driver
IT Service driver
"Collaborate to Innovate" 9
When Developing Management Accounting and Chargeback Models, Think Like A Utility Company
Utilities are the model of a shared service chargeback Electric, gas, telephone, cable
Each utility bill has several components Use electric bill as an example Has data about usage (meter)
− Measured in absolute units (kWh) Includes fixed fees for service
− Not based on usage Includes delivery charges,
taxes, etc. proportional to usage Each charge has an associated rate
Here, the metric is the same – kWh The rate varies for each bill component (each service)
10
Cloud delivery requires service and resource usage informationCloud Service Requestor #1
Service A4 CPUs on Server 12 GB60 server hrs @ $25/ server hr 240 CPU hrs @ $5/ CPU hr120 GB hrs @ $3/ GB hr
Cloud Service Requestor #2
Service A3 CPUs on Server 24 GB50 server hrs @ 25/ server hr150 CPU hrs @ $5/ CPU hr200 GB hrs @ $3/ GB hr
Cloud Service Requestor #3
Service B2 CPUs on Server 11 GB100 server hrs @ $20/ server hr 200 CPU hrs @ $3/ CPU hr100 GB hrs @ $2/ GB hr100 DB2 Support hr @ $2/ DB2 Support hr
Cloud Service Provider
Service A Costs
Server 1 CPU usage = 3,000 CPU mins * $.40/min
Server 2 CPU usage = 2,500 CPU mins * $.60/min
Server 1 software usage = 60 hrs * $15/hr
Server 2 software usage = 40 hrs * $10/hr
Server 1 labor costs = $40
Server 2 labor costs = $60
$3,060
$2,600
Service A revenue = $5,660 Service A costs = $4,100
Cloud Service Provider
Service B revenue = $3,000
Service B Costs
Server 1 CPU usage = 5,000 CPU mins * $.40/min
Server 1 software usage = 80 hrs * $15/hr
Server 1 labor costs = $40
DB2 Help Desk = $50
Service B costs = $3,290
Profit
Loss
Service Usage Resource Usage
11
Virtual ServersNeed to collect and report resource data from any combination of
– The virtual machine manager/hypervisor– The operating system hosted on the virtual machine– Applications hosted on the operating system within the virtual machine
Virtual Machine Manager or Hypervisor
(PR/SM, VMware, IBM PowerVM, z/VM)
VirtualServer
… …Virtual Machine
E-m
ail
Ap
plicatio
n
RD
BM
S
Usage Processor
Operating System VirtualServer
12
DataCollector
TUAM
13
Elements of IT Management Accounting
SoftwareNetworkStorageServers
Floor Space
Power
Development / Test
Labor
BackupRecovery
• Looking at each of these in a vacuum can lead to poor decision-making and investments• Need a balanced view of today’s total costs to better future investments
14
Failure to Accurately Allocate and Distribute Costs can Lead to False Economics
How Are CostsAssociated With
Applications?(ATM, Credit Card,Commercial Loans,
Mortgages)
How are Applications
Associated With Departments And
Resources?
DetermineUtilization
Create Department
Reports/Invoices
Receive Recoveries
From Departments
What Costs Need To
Be Recovered?
ITFMA.COMIT Financial Management Association Lack of resource usage data makes it:
Difficult justifying IT expenses
Failure to make proper investment choices
Challenging to determine if a line of business is profitable without IT costs
15
Typical Allocation – Management Estimates
Best Practice Allocation – Actual Costs
Distributed % MF % Distributed % MF %
Power Cost 0 0 $15,084 100 $11,917 79 $3,167 21
Labor Cost 0 0 $350,000 100 $210,000 60 $140,000 40
Floor space 0 0 $11,620 100 $6,300 54 $5,320 46
Software OTC depreciation
$120,240 60 $102,472 40 $216,194 97 $6518 3
Software S&S and MLC
$168,783 50 $168,783 50 $181,242 54 $156,325 46
Hardware OTC depreciation
$103,691 25 $311,074 75 $184,435 44 $230,330 56
Hardware Maintenance
$20,276 25 $60,829 75 $37,151 46 $43,953 54
Network 0 0 $4,758 100 $ 4,758 100 $0 0
Total $412,990 29 $1,024,620 71 $851,997 60 $585,613 40
Accurate Cost Allocations Usually Show a Truer Picture of Costs and Aid Investment Decisions
Total $1,437,610 Total $1,437,610
Best practice allocation is to use actual distributed and mainframe costs In this example, the mainframe allocation decreased from 71% to 40%
Sample monthly allocation
16
Align IT Software Spending with Business Priorities Capability
Who is consuming which IT resources?
What is the cost of those resources, including those that are shared?
How should IT allocate cost for chargeback, ROI, costing analysis, and reporting/billing?
Data collectors for IT infrastructure can review consumption across multiple dimensions
Costing engine assigns cost to resource usage
Costing and reporting engine associates and report usage costs to consumers of IT resources
All three questions help align IT spending with business priorities
What is needed to do Usage & Accounting?Three variables to the equation
17
Know What IT Costs!!!
18
19
20
21
PowerVM Examples (Cont’d)
22
23
Cloud Service Cost by Client
24
Example of Cloud Service Billing
25
05/08/09
Cloud Detailed Service Cost Report
26
Drilldown of Usage Data Captured and Exploited
27
28
29
30
31
Example of Resource Usage Trend report over a period of time
32
http://docs.dfw.ibm.com/knowITcosts/
3333 IBM Confidential
TSAM Web UI / Service Catalog
TSAM 7.2
TPAE Admin UI
Finance Management : Usage Scenario
• Enable CSR file transfer between servers (OS)• Enable daily CSR file creation (TPAE)
• Activate capacity change tracking (DB configuration)• Define file location (set system property)• Activate scheduling (activate escalation)
• Define account code structure • Define rate codes • Customize processing of CSR file(Transfer and Process)
Daily creation of TSAM CSR file
• Create Project and Add Server• Add / Remove Server• Cancel Project
• Create/View Service Usage Reports• Enable billing
• Get CSR file • Process CSR file
7
6
4
21
CSR
Identifiers• Host name• Server type• Service type• Deployment instance• Deployment owner• Chargeback owner
Resources• Server hours • CPU hours• Memory hours
TSAM CSR file content Integrated SolutionsConsole
Processing Engine
Web IFReporting Engine
DB
TUAM 7.1.2
Cloud Provider Admin
Cloud Service Requestor
5
Cloud Admin
• Add Account Information
3
CSR
34
Need to more closely join IT production workloads and new workloads to investment alternatives evaluations
35
What Are We Trying to Decide?
New service or planned
growthWhere can I host?
Does it fit?
Existing?
New and which new?
What does it cost
to operate?
• Hardware
• Software
• Facilities
• Administration
• Etc.
• Hardware
• Software
• Facilities
• Administration
• Etc.
Option A
Option A
Option B
Option B
36
Build the Cost & Value Milking Stool
The Technical Case(Operations)Analyze the impact of a new service or forecasted growth
Build the hardware, personnel, software, and facilities impact cases
Ensure cases cover both operational performance impact and service levels/availability
The Value Case(Together)
What are the main value items of your service?
What is the best both short term and longer term technical solution?
The Costs Case(IT Finance)
How do the costs of the new service compare on differing solutions?
Ensure you are comparing like-for-like capabilities. Include all costs that can be identified.
37
IT Accounting Assigns Expenses to Specific Services Through Cost Types and Classifications
Servers, Hosting, and Management
Database Provisioning, Hosting, and Management
Servers
Windows System Management
SQLServer Service
Oracle Server Service
Unix System Management
MySQL Service
Cost Type Amount
Hardware
Software
Hardware Maintenance
Software Maintenance
Staff
Facilitates
Group Similar Services Determine ServicesDevelop Cost Types and Classifications and
Assign them to Specific Services
38
Recommendations
IT Operations– Ensure that you’re capturing three levels of technical
metricsSystem level metrics – how much room do I
have?Which workload (s) on which server (s)Workload level metrics – what could I move or
what is the impact of growth or contractions?
– Software stacks need to be associated with servers– Start associating facilities requirements to servers:
EnergyCoolingFloor spaceCablingRacks
– What are my people to server ratios?
Service UsageHardwareSoftwareHardware maintenanceSoftware maintenanceStaffRackCablingEnergyCoolingFloor Space
Server UsageHardwareSoftwareHardware maintenanceSoftware maintenanceStaffRackCablingEnergyCoolingFloor Space
39
Recommendations
IT Finance– Be able to monetize facilities, software, hardware, and administration
costs – Build investment models covering Total Cost of Ownership rather than
Total Cost of Acquisition of service delivery alternatives
Alertnative 1 Amount Cost Yr1 Cost Yr2 Cost Yr3 TotalHardwareSoftwareHardware MaintenanceSoftware MaintenanceStaffRackCablingEnergyCoolingFloor space
Total
Alertnative 2 Amount Cost Yr1 Cost Yr2 Cost Yr3 TotalHardwareSoftwareHardware MaintenanceSoftware MaintenanceStaffRackCablingEnergyCoolingFloor space
Total
40
Recommendations
Together (Operations and Finance) with services sponsor, balance cost alternatives and version value
Preferred Alternative Amount Cost Yr1 Cost Yr2 Cost Yr3 TotalHardwareSoftwareHardware MaintenanceSoftware MaintenanceStaffRackCablingEnergyCoolingFloor space
Total $XX $XX $XX Sum of $XXService Benefit $YY $YY $YY Sum of $YYReturn on Investment or Business Benefit $YY-$XX $YY-$XX $YY-$XX
SUM of $YY-$XX
41
Management Accounting Starting Recommendations Track assets at the application level, not server
– Simplifies asset accounting as servers disappear Gather shared resource costs into appropriate categories
– Accurate costs and low chargebacks influence Lines of Business to deploy on the shared service environment
– Reduce distributed server and storage sprawl, lower datacenter costs Identify additional cost drivers, create cost sub-categories and identify metrics to track usage
of those resources– Greater transparency and visibility to cost details reduce LOB challenges against charges and
simplify reconciliation– Identifies levers that LOBs can pull to affect costs
Incorporate standard unit cost forecasting into the shared resource environment– More accurate invoices, fewer true-ups, tighter relationship with LOBs
Create a longer range plan with regard to service catalog “bundles” and a more comprehensive roll out plan
Acquire or build a management accounting application which will process the accounting units for all services delivered, not just IT. The application should provide information repository, summarization, costing of usage, and self-service reporting
Acquire or build a time reporting application which will integrate with project tracking, service management, and possibly payroll. Establish time reporting guidelines for all of IT to better assign costs to services
42
IBM can help you realize immediate benefits
Increase Client (Business Units) Satisfaction– Real Usage = Accurate Reporting – Accountability = Improved services– Alignment between Business and IT costs
Lower Infrastructure Cost– Reduced server sprawl– Higher utilization – Rationalization of resources
Continued Infrastructure Improvement– Understanding costs can lead to managing
costs– Usage comparisons can lead to more
effective investments
When running a business, nothing matters more than
knowing how much something costs.
You can’t manage what
you don’t measure!
43
Russia
DankeGermany
GrazieItaly
GraciasSpain
Dank u Belgium
BedanktNetherlands
Dankschen Austria
Dekuju Czech Republic
Takk Norway
Tak Denmark
Jag tackar Finland
Dziekuje Poland
TackSweden
Toda Israel
Engraziel Switzerland
Tesekkür ederim Turkey
Dakujem Slovakia
ObrigadoPortugal
Thank YouAustralia
MerciFrance
ThanksUnited States
Thank YouUnited Kingdom
End of presentationGo raibh maith agat
Gaelic