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7/22/2010
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Tread Lightly On The Private Cloud

Companies testing private clouds are realizing they make usage billing for IT much more feasible. That doesn't mean it's a good idea.

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One of the most enticing advantages of the private cloud is that it lets IT organizations explore metered billing as a way to justify IT budgets and to scale services based on user demands. It's easier said than done. Even as they seek ways to provide the increasing levels of metered billing popularized by public cloud services, many companies are asking, "Is it worth it for us?"

Sure, there's finally a hard metric to justify IT budgets and provide visibility back to the business units using the services. But private cloud chargeback systems can raise issues many companies aren't prepared to address, upsetting an already tenuous balance between CFO and CIO and among other departments. Consider the following:

>> Language barrier: Metered billing must be based on a unit of something. But gigabytes, CPU time, network capacity, and other terms may be intimately familiar to IT professionals, yet they're abstract to the business pros reviewing the chargebacks. And if the business can't see the value in the charges, those charges won't mean any more to them than some ambiguous IT line item on a budget spreadsheet.

>> Transparency required: Surprises at the end of the billing cycle yield frustrated, disgruntled customers, so you must make real-time usage reports accurate and securely accessible to users. If a means to deliver that kind of information doesn't exist within the company, you'll have to develop it from the ground up, keeping within broader company guidelines for information sharing.

>> Balancing act: Broadband access is critical in a private cloud environment to reach end users, and it can cost an arm and a leg, yet you don't want to discourage employees from using the technology to solve business problems or develop innovative applications to improve business competitiveness.

>> Inefficiency spotlight: Metering usage lets the business determine a fee for a discrete unit--just as other providers do. But how do you determine fair, competitive pricing for your services? It's not easy: The U.S. Small Business Administration found it was spending $1,640 for a single smart card while the General Services Administration offered the same card for $240, according to federal CIO Vivek Kundra. But price services wrong, and users could turn to outside providers.

>> Global complexities: If your business operates in a multinational environment, you will need to account for variances in currency and exchange rates, or agree that all charges will occur in one currency. Taxation also may be a factor, depending on the enterprise structure and whether you are providing private cloud services to external organizations. You may even need a finance group to handle the many potential variables here.

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7 Landmines of Metered Billing

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