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The 10 biggest metering and billing mistakes

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If you are considering selling cloud services or are already doing so, you need to get to grips with metering and billing. …

If you are considering selling cloud services or are already doing so, you need to get to grips with metering and billing.

In this presentation you will discover that some of your assumptions on what is required to be successful will be proven wrong. For instance, we will explain why you may need to generate up to 3,000 times more customer records than an average mobile phone operator and the implications of doing so. Find out more here... http://learning.flexiant.com/flexiant-cloud-orchestrator-download-xfF4R/

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  • 1. The 10 Biggest Metering andBilling Mistakes that CloudService Providers MakeAlex BlighCOO & CTO, Flexiant Ltd.www.flexiant.com© 2012 Flexiant Ltd1
  • 2. www.flexiant.com© 2012 Flexiant Ltd2
  • 3. §  Why conventional “Hosting billing” and “Telco billing” approaches do not work §  Why many companies are losing revenue and margin every hour §  What cloud customers demand from cloud billing and why existing systems are unsuitable §  What you need to support resellers and white labelling, multiple price plans, and multiple currencies §  How you can overcome the implications of handling big data sets §  How to remove complexity from your customer billing modelswww.flexiant.com© 2012 Flexiant Ltd3 §  And much more...
  • 4. Why us? •  Heritage •  Made the journey from hosting •  Launched Europe’s first public cloud services •  Over 100 customers using Flexiant Cloud Orchestrator •  Metering & Billing is an acknowledged strengthwww.flexiant.com© 2012 Flexiant Ltd4
  • 5. Metering and Billingwww.flexiant.com© 2012 Flexiant Ltd5
  • 6. Metering and billing is...www.flexiant.com© 2012 Flexiant Ltd6
  • 7. But they turn this...www.flexiant.com© 2012 Flexiant Ltd7
  • 8. …into thiswww.flexiant.com© 2012 Flexiant Ltd8
  • 9. Metering and BillingWhat is it?www.flexiant.com© 2012 Flexiant Ltd9
  • 10. What is it?Ø  Metering §  Measuring consumption of resourcesØ  Rating §  Correlating resource consumption with a product that has been purchased §  Combining the two to form a chargeØ  Billing §  Aggregating charges to form a monetary amount to be invoiced www.flexiant.com © 2012 Flexiant Ltd 10
  • 11. What is it?Ø  Invoicing §  Producing an invoice in respect of a charged amount §  Handling of sales taxesØ  Collection §  Automated / semi-automated collection of amounts owing §  Credit card processing, direct debit/ credit processingØ  Dunning & Credit Control §  Maintenance of accounts receivable §  Handling of credit limits, aged debtors and credit exceptions www.flexiant.com © 2012 Flexiant Ltd 11
  • 12. Metering and BillingWhy Conventional Billing Won’t Workwww.flexiant.com© 2012 Flexiant Ltd12
  • 13. Why conventional billing won’t work“Hosting Billing” Ø  Subscription billing Ø  Fixed bill per month Ø  One bill per month per customer Ø  Non-real timewww.flexiant.com© 2012 Flexiant Ltd13
  • 14. Why conventional billing won’t work“Telco Billing” Ø  CDR based Ø  Non-real time Ø  Inflexiblewww.flexiant.com© 2012 Flexiant Ltd14
  • 15. Why conventional billing won’t workCloud customers expect: Ø  Real time billing Ø  Instant signup Ø  Their bill to be comprehensible www.flexiant.com © 2012 Flexiant Ltd 15
  • 16. Metering and BillingTypical Issues for the Cloud Providerwww.flexiant.com© 2012 Flexiant Ltd16
  • 17. Typical issues for the cloud providerØ  Multiple existing systems §  All typically unsuitable for cloud billingØ  Strategies to reduce the number of invoicesØ  Resellers and white labelingØ  Multiple price plansØ  Multiple currenciesØ  Flexibilitywww.flexiant.com© 2012 Flexiant Ltd17
  • 18. Metering and BillingDid We Forget to Mention Big Data?www.flexiant.com© 2012 Flexiant Ltd18
  • 19. Big data setsMobile phones in UK Ø  Number of handsets approx. 60 million Ø  Number of calls per month per subscriber, approx. 150 Ø  One year, number of records about: 100,000,000,000 Ø  Records per customer per year: 1,800 www.flexiant.com © 2012 Flexiant Ltd 19
  • 20. Big data setsCloud IaaS platform Ø  50,000 customers, 2 running servers per customer Ø  100,000 virtual servers Ø  Hourly billing Ø  6 components per server Ø  Around 200 inserts per second Ø  One year, number of records: about 1,000,000,000,000 Ø  Records per customer per year: 10,000 - 5,000,000 www.flexiant.com © 2012 Flexiant Ltd 20
  • 21. Metering and BillingPricing Policywww.flexiant.com© 2012 Flexiant Ltd21
  • 22. Pricing PolicyØ  Our single most common post- sale question: §  “How do I price my products?”Ø  First understand your cost structure §  Model your platform §  Cost every component §  Recognise some are linked (e.g. RAM/CPU) §  Marginal cost basis often helpfulwww.flexiant.com© 2012 Flexiant Ltd22
  • 23. Pricing Advice and PitfallsØ  Use pricing components that are §  Measurable §  Aligned with your own costs §  Verifiable §  Explicable §  NecessaryØ  Obscure components sometimes cost more than less obscure ones §  e.g. Disk I/O will cost you far more than disk spaceØ  Don’t be tempted to ignore these costs because §  Your costs and revenue will be unaligned §  Worse, you will attract unprofitable customerswww.flexiant.com© 2012 Flexiant Ltd23
  • 24. Pricing Advice and PitfallsØ  Remember where the components are measured §  Consider thin provisioning, cachingØ  Linked Components §  e.g. RAM/CPU ratio set by your hardware choice §  If customers use a different ratio, you will end up with suboptimal utilisation §  Use economic incentives to drive desired behaviourwww.flexiant.com© 2012 Flexiant Ltd24
  • 25. Metering and BillingThe Dangers of Complexitywww.flexiant.com© 2012 Flexiant Ltd25
  • 26. Try to do this...www.flexiant.com© 2012 Flexiant Ltd26
  • 27. …and not thiswww.flexiant.com© 2012 Flexiant Ltd27
  • 28. SimplicityØ Some billing systems are very powerfulØ Do not be tempted to use every featureØ Start off with a small number of line itemsØ Add more later if necessaryØ Remember, your pricing model needs to be explained: §  by you to your customer §  by you to your reseller §  by your reseller to their customersØ Remember, one day someone will www.flexiant.com © 2012 Flexiant Ltd query their bill 28
  • 29. •  Single pane of glass •  Multi-hypervisor •  Multi-cluster •  Highly configurable UI •  Flexible self-service •  Multi-level metering & billing •  Fine-grained permissions •  Application management •  Intelligent workload placementwww.flexiant.com© 2012 Flexiant Ltd29
  • 30. Metering and BillingWho has the first Question?www.flexiant.com© 2012 Flexiant Ltd30
  • 31. www.flexiant.com© 2012 Flexiant Ltd31
  • 32. Photo Attributions: •  Seattle Municipal Archives •  Jo Jakeman •  Svadilfari •  Liz Marie AK •  Images of Money •  Dave Dugdale •  Ed Yourdon •  Believe Kevin •  NeoSpire •  401(K) 2012 •  Nodespt •  ClaraDonwww.flexiant.com© 2012 Flexiant Ltd32