Automated cost allocation in IT environments

by Paweł Orzechowski | 4 January 2022 | Knowledge, Technologies

Access to data on fees for the use of IT systems allows you to answer the question “How much does it cost?”. But with the help of a module, where you can find reports and billing statements, you will also be able to make key decisions about your IT environment. The module will prove equally invaluable when looking for savings, planning a budget or when you want to compare offers from different suppliers.

Why is it worth accounting for costs in IT environments?

The answer to this question is simple. Each participant in the process wants to know how much and for what exactly they are paying. It can be assumed with a high degree of certainty that the question “How much will it cost me?” is going to be raised at some stage of decision making (e.g. budget planning for a new system). It is important to determine at the outset whether migration to a new environment will generate savings for the business.

Cost allocation in IT environments can be considered from two points of view: from the IT infrastructure owner’s standpoint and from the perspective of the end user or the ordering party.

Benefits to owners or suppliers of infrastructure

What will the owner or supplier of IT infrastructure gain thanks to the implementation of the VMware vRealize Operations Manager (vROPS) module and a payment policy in VMware vRealize Automation (vRA)?

The most important benefits include:

• Defining a pricing policy flexibly – it can be individually negotiated, while also taking into account the type of application, environment (production, test, development), as well as location.
• Options to verify the current pricing policy based on financial performance.
• Access to reports which allow you to identify entities generating the highest costs.
• If the contractor has access to official price lists of other cloud providers, it is possible to perform comparative simulations for a single application or a given client.
• An option to generate reports and statements of charges which can be attached to end-of-month invoices.
• Fees for using a virtual machine are automatically determined based on the costs associated with the cloud infrastructure (e.g. for internal entities that use the same infrastructure).

Benefits to end users or purchasing entities

How can a company ordering or using a cloud environment take advantage of access to cost information?

End users can:

• make informed decisions on whether to continue using or to opt out of services based on quantified cost and fees data, such as reports and detailed views;
• check accounts on an ongoing basis in any time interval, e.g. daily, monthly or yearly;
• compare charges over a given billing period, e.g. annually;
• estimate its daily or monthly cost when planning a new system;
• easily plan the budget for the coming months;
• analyse the fees for cloud environment and compare them with the official price lists of other providers;
• look for savings on the CPU/Memory/Storage level if it turns out that the current architecture of the environment is overestimated in relation to the actual needs;
•  easily control expenses at the level of a particular, internal entity or application thanks to constant access to statements of current charges.

How do we do it at INDEVOPS?

Defining a pricing policy

Formulating a pricing policy underlines our operations within vRealize Automation. This is the very policy that enables us to settle entities precisely. It includes rates for CPU/Memory/Storage and any additional services (such as the use of licenses or IT support).

In the case of complex systems with very large budgets, an approval of senior management is often required on the part of the client. In such situations, we define a pricing policy which subjects the deployment of a new system to its price.

Cost dashboards for infrastructure owners

We utilise vRealize Operations Manager as a cost, reporting and billing module. All expenses that the owner of cloud infrastructure incurs in connection with its maintenance are entered into the cost module. These may include licence purchases, charges for electricity used e.g. for cooling servers, insurance, IT support services, purchasing software and additional applications, creating backups, renting space in the server room, etc.

The reports we prepare contain a summary of costs per single virtual machine, host, cluster, data center or location. Service providers can quickly see what the profit-to-cost ratio is, which allows them to measure and analyse business profitability and make informed decisions about further investments.

Billing information for final users

Final customers using the vROPS module have access to statements where they can check the current amount of fees on an ongoing basis. In this module, they can also view the number of systems currently running, along with the costs generated by them.

Billing statements are also very helpful when systems have been overestimated at the design stage and savings are required. The module gives end customers access to historical data, thanks to which they can compare charges from different settlement periods.

This part of the module also includes official price lists of the largest cloud providers operating on the market, such as Amazon (AWS), Microsoft (Azure), Google (GCP) – this is a valuable source of information for people who want to compare service offers.

Do you already know why allocating costs to virtual machines is one of the most important aspects of IT automation? If you have any questions about it, please get in touch.

We will be happy to help!