This document proposes a new chargeback system in ManageIQ to accurately report the financial costs of virtualization and cloud environments. It would integrate with other systems like data warehouses, ERP systems, and billing to understand infrastructure costs and analyze the economic impact of different actions. Costs would be tracked and grouped by activity centers like instances, storage, networks etc. and modifiers like support levels. Expenses would track costs associated with users and services. The system would provide consumption intelligence, budgeting, rating, billing and external cost integration to help strategically manage costs.

1. Proposal for a New
Chargeback in ManageIQ
Sergio Ocón (sergio.ocon@redhat.com)
A bunch of others that could not make it here today
ManageiQ Design Summit June 2016
@sergioocon github:sergio-ocon

2. Agenda
The problem
Understanding the cost structure
External costs
Consumption intelligence
Priorities
Improvements to rating and billing

3. The problem
Accurately report information about the financial side of the virtualization and
cloud environment
Cost allocation and distribution
For Operational, Tactical and Strategical management
Integrate with other elements in the company:
Data-warehouse / ERP / Billing
Being able to understand economic results of actions:
Costs of changing all infrastructure to the cloud
Renewal of hardware

4. Being able to understand the costs of the infrastructure is key to manage it
Integrating with DWH / ERP / Billing for company-wide management
This is not a financial system
Simplified: no taxes, no legal, no payments
Understanding the costs
Inputs
Reports
Dashboards
Analysis
EXPORT
ERP
Billing
DWH

5. Differentiating views on costs
Expense: cost to the user
Associated to users and services
“Independent” of costs of service (but related)
Cost: infrastructure and providers
Amount expended to maintain the infrastructure
Associated to providers
External and internal costs
Budget

6. Activity Centers
Use | Infrastructure
Use | Infrastructure
Use | Infrastructure
Instance
Storage
Network
Container
Service
VAS
Compute
Memory
Performance
CPU
Other
Fixed + variable
Fixed + variable
Fixed + variable
Costs (direct + indirect)
1. Individual elements costs - how
much it costs to have it running
(i.e. VM, container, LUN,
hypervisor, etc)
2. Cost center grouping
a. Numbering schemes
b. G/L account-type scheme
3. Tenant / Cost grouping
a. Understand costs by
group/user/tenant
4. KPI
a. Cost/VM
b. Cost/Transaction
c. Cost/VM/Provider
5. Amortization
a. OPEX/CAPEX
Costdistribution
Costs

7. Activity Centers Modifier
Modifier
Modifier
Costs
Instance
Storage
Network
Container
Service
VAS
Compute
Support level
Licenses
Managed
Other
Fixed + variable
Fixed + variable
Fixed + variable
1. Individual elements costs - how
much it costs to have it running
(i.e. VM, container, LUN,
hypervisor, etc)
2. Cost center grouping
a. Numbering schemes
b. G/L account-type scheme
3. Tenant / Cost grouping
a. Understand costs by
group/user/tenant
4. KPI
a. Cost/VM
b. Cost/Transaction
c. Cost/VM/Provider
5. Amortization
a. OPEX/CAPEX
Costdistribution
Costs (direct + indirect)

8. Activity Centers
Modifier
Modifier
Costs
Instance
Storage
Network
Container
Service
VAS
Compute
Electricity
Personnel
Other
Fixed + variable
Fixed + variable
1. Individual elements costs - how
much it costs to have it running
(i.e. VM, container, LUN,
hypervisor, etc)
2. Cost center grouping
a. Numbering schemes
b. G/L account-type scheme
3. Tenant / Cost grouping
a. Understand costs by
group/user/tenant
4. KPI
a. Cost/VM
b. Cost/Transaction
c. Cost/VM/Provider
5. Amortization
a. OPEX/CAPEX
Costdistribution
Costs (direct + indirect)

9. Activity Centers
Expense
Instance
Storage
Network
Container
Service
VAS
Compute
Other
1. Price per service associated to
user / group / tenant
a. Different users can have
different prices
b. Service can be a VM or a
mix of VM and storage
c. Different options for the
same service
2. Dependencies in prices
a. I.e. Service includes 3 GB
of storage for free
b. Unlimited VM
3. Reserved or used
4. Relatively independent of costs
a. Cost+
b. Income-
5. Wholesale + Retail
Service
catalogue
Service 1
Service 2
Option A Option B
Service 3 Not allowed

10. External costs
Some costs are external, meaning:
You don’t control them
Their price can vary with time outside of your control
Examples
Public cloud costs
Licensing renewal
Those elements have to be included in the model in an automatic/manual way
Using public API
Time-bounded

11. Consumption Intelligence
Demand
a. What is the demand
b. How it is structured
Costs
a. What are the costs
b. Structure
KPI★ This are not mockups of the result

12. Consumption Intelligence

13. Budget
Define expected demand and budget
associated to it
Compare with actual costs
Define strategic plan
12+0
3+9, 6+6, 9+3
0+12

14. Scenarios and comparative analysis
Understand what would be the impact of:
Renewing hardware - less hardware needed + OPEX
Moving workloads to the cloud => Change of cost structure
Compare performance of providers
Cost per transaction of changing one or more layer (i.e. HW, storage)
Understanding parameters that get affected (i.e. AWS different performance per VM type)
Plan for OPEX and CAPEX

15. Development priorities
C & U
Time
Database
Providers
Charging
Mediation
Guiding
Export DWH / ERP /Billing Engine
Reporting
Budgeting
Cost
association
Cost model
Expense
model
KPIDashboard
Services
definition
Rating
Billing
External
costs
Dev priority

16. Rating
Tiers
Define rates that are dependent on another parameter.
I.e. First 3 GiB free, over that 30 c€/month/GiB
Steps
Minimum step to be rated
I.e. 30 c€/mont/GiB, minimum step 5 GiB
Everything under 5GiB is rated as 5 GiB, between 5.001 and 10 as 10, etc
Discounts
Discounting are a modification of rates after rating is done

17. Billing
Automatic billing done by defined period
Hourly, daily, weekly, monthly, yearly
Without customer request (defined by admin, not user)
Wholesale vs. retail
Does not include taxing, payment or collection
Simplified invoicing
Summary vs detail/itemized
Independent on reporting

18. Take aways
For strategic management and economic operations
Not for financial reporting
Capable of integrating with financial systems
Multi-layer
Costs
Income
Analysis
Dashboards

19. Thank you!