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Singapore, Q1 2013

Chargeback in the Virtual World

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Chargeback changes in the virtual world

It’s a shared Infrastructure.• Apps Team or “Business” no longer own the infrastructure.

• Why should they pay for the “entire box” when they only have a slice?

• Bespoke system to standardized services

Emerging of 2-tier “Infrastructure”• VM level

• Owned by Apps team.

• Infra level.• Compute, Storage, Network, Security, Datacenter

• Done by DC Infra team.

• Clear SLA and boundary needs to be defined.

It is not just technical• It is also cultural, social, political, or whatever you want to label it.

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Approach

Decide what to charge

Work out your cost

Configure Chargeback

You decide what to charge first, so when you work out your cost, you can allocate or classify it to the cost model.

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Guideline

You want to keep the model simple• Actual utilisation can result in arguments

• Certain areas such as Network utilisation and Storage IOPS are difficult item for financial management.

You want to encourage the right behaviour• Avoid Large VM

• 1 VM, 1 OS, 1 App, 1 Instance model

• Scale Out, not Scale Up

• Right size, not oversized

• This means charge will go up as VM gets larger.

• Avoid Unique VM• Standards, not bespoke

• Avoid Idle VM, as they still incur management cost.• Fee for VM creation

• Fee for VM even though it’s not running.

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What to charge

Items Explanation

vCPU

If you don’t specify the CPU, users will ask for VM with lots of CPU. This impacts performance.Unfair to charge the same for small VM vs big VM.Charging based on Utilisation or Reservation complicates matters drastically.Include DC cost.

vRAM As above

Storage As above. Utilisation in Storage means IOPS, not capacity. So we’re charging vDisk capacity

Network Not charging in this example.

Fixed costStandard administration fee is charged per VM regardless of size.Includes network, security, DR, staff, etc.

This is a sample model. Your model might differ

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Work out your cost

Cost Bucket Sample Components

Server

Server hardwareOS + Server management software (VMware, Microsoft, etc)KVMNetwork hardware + software + bandwidthDatacenter cost: space, power, cooling, rack, etcCost will be 50/50 split between vCPU and vRAM.

Storage

Storage hardware + softwareSAN related costsBack up related costDR related cost

Fixed Cost

People related costSecurity related costDC related cost: Rack, Power, Cooling, UPS, etcAll other costs

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Sample Cost Model

Define your goal• E.g. Provide a shared platform for 500 VM, growing at 10%/year, with DR, for the next

3 years.

Architect the solution• Leverage your VMware/Partner SE & PSO & TAM

• Translate #VM into vCPU, vRAM, vDisk• You are not charging per VM, but per vCPU, vRAM and vDisk

• Below is a sample example.

• Year 1 500 VM = 1000 vCPU, 5000 GB vRAM, 10 TB vDisk

• Year 2 +50 VM = 100 vCPU, 500 GB vRAM, 1 TB vDisk

• Year 3 +60 VM = 120 vCPU, 600 GB vRAM, 2 TB vDisk

• Define the hardware & software requirements• What you need on Year 1, Year 2, Year 3.

• Server, Storage, Network, Guest OS, etc

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Work out your Cost per Cost Bucket

Work out what you need and your Total Cost• Server:

• Year 1: 50 ESX (2 x 10 cores, 128 GB RAM) Total Cost is $1M

• Year 2: +5 ESX. Total is 55 ESXi host.

• Year 3: +6 ESX

• Storage:• Year 1: 10 TB Total Cost is $1M

• Year 2: +1 TB. Total 11 TB

• Year 3: +2 TB. Total 13 TB

• Other costs• Year 1: Total Cost is $1M

• Year 2

• Year 3

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Sample Cost (Year 1 only)

Item Cost Cost

Server $1000KvCPU cost: $1000K x 50% / 500 vCPU / 12 months = $80/month/vCPU

vRAM cost: $1000K x 50% / 5000 GB vRAM / 12 months = $8/month/vRAM

Storage $1000K vDisk cost: $1000K / 10000 vGB / 12 months = $8/month/vGB

Fixed Cost $1000K Fixed cost: $1000K / 500 VM / 12 months = $150/month/VM

I’ve rounded the final numbers as users need to see a simple number.No CPU or RAM oversubscribed in this model to keep the formula simple. You should do ~1.5x.At 10:1 consolidation ratio, it has buffer for HA, FT, SRM.The model has buffer for IT VMs and IT cluster.

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Sample Cost (Year 1 - 3)

Item Year 1 Year 2 Year 3 Total

Server $1000K $100K $300K $1400K

Storage $1000K $300K $600K $1900K

Fixed Cost $1000K $300K $500K $1800K

I’ve rounded the final numbers as users need to see a simple number.Year 2 and 3 costs include maintenance (S&S) of items bought in previous year.

Item Cost

ServervCPU cost: $1400K x 50% / 610 vCPU/ 36 months = $32/month/vCPU

vRAM cost: $1400K x 50% / 6100 GB / 36 months = $4/month/vRAM

Storage vDisk cost: $1900 / 13,000 vGB / 36 months = $5/month/vGB

Fixed Cost Fixed cost: $1800K / 610 VM / 36 months = $82/month/VM

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Cost Comparison

Microsoft Excel Worksheet

Item 1 Year model 3 Year model

Server$80/month/vCPU

$8/month/vRAM

$32/month/vCPU

$4/month/vRAM

Storage $8/month/vGB $5/month/vGB

Fixed Cost $150/month/VM $82/month/VM

If you spread your charges (but not your cost) over 3 years, you will lose money in Year 1.If you charge all capital expense on Year 1, it will be high, and you will make too much profit in Year 2.

That’s a business call you need to discuss with Finance.

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Discussion Point

What models will you adopt? How will you charge?

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vCenter Chargeback: Configuration

Steps to implement the previous model• Configure Hierarchy to follow the Folder hierarchy

• Create a Cost Model• Choose the Billing Policy “Fixed Cost and vCPU Cost and Memory Size”

• Enter the Base Rate you work out earlier

• Create a Fixed Cost

• Map the Cost Model + Fixed Cost to your hierarchy

• Schedule a report.• Make it monthly.

That’s it!

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Create a hierarchy

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Create a hierarchy

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Hide items not to be charged

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Create a cost model

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Cost Model

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Cost Model

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Cost Model: enter the base rate

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Fixed Cost

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Fixed Cost: create 1 fixed cost

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Fixed Cost: create 1 fixed cost

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Apply the cost to the Hierarchy

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Generate Report

Wait at least 24 hours to get 1 day worth of data

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Generate Report

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Generate Report

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Generate Report

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Chargeback and vCenter

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Mapping between vCenter and Chargeback

vCenter term Chargeback term RemarksCPU: Configured vCPU: usage Use this in the model.CPU: Reservation CPU: reservationCPU: Utilisation CPU: usageCPU: Share No equivalentNo equivalent CPU: AllocationMemory: Configured Memory: size Use this in the model.Memory: Reservation Memory: reservationMemory: Utilisation Memory: usageMemory: Share No equivalentNo equivalent Memory: AllocationDisk: Configured Storage: usage Use this in the model.Disk: Utilisation Disk Read and Write: usage