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Top 4 Cloud Costing Models

  
  
  

cloud costsWhen you start looking into cloud computing solutions, one of the refrains you’ll hear again and again is that it will save you money. Vendors shout it from the rooftops, and industry experts tell you that cloud computing is a must if you’re going to survive these tough economic times. That said, it can be hard to quantify cloud solutions. In fact, in some cases, cloud computing may not be providing nearly the savings that we think it is.

Add to the mix the fact that it can be difficult to do cost accounting for cloud solutions. Being able to do business unit chargebacks isn’t something every IT department needs, but more and more do as they seek to justify their budgets. You need to be able to determine the real cost of your cloud solutions, and be able to bill out those services internally as needed.

There are four models currently being used across various organizations in order to cost out their cloud solutions. Take a look, and see which might be right for your organization:

  1. Weighted cloud costing. This is perhaps the most indirect method of dividing up the cloud service costs. It looks at each business unit as a part of the whole company. That might be looked at from a budgetary perspective, or it might take into account headcount. You then divide up the cost of your cloud solutions to each business unit, based on this weighted percentage. This is the easiest and least accurate way to divide costs.
  2. Tiered cloud costing. Another approach is to break up business units or other groups into tiers. Each tier requires greater resources than the tier below it. You charge a lower rate to the business units and groups who use the most resources, reflecting a discount based on demand. You then offer other discounts, for example, to those groups that are able to do their own server provisioning or management.
  3. Costing that differentiates service and infrastructure. This type of costing accounts for your infrastructure costs separately from your application costs. Thus, your data center expenses come in a different direction from your cloud computing solutions. This means that you can still charge a baseline per-head infrastructure charge, while recovering either a tiered or consumption-based cost for your cloud solutions. 
  4. Consumption cloud costing. Consumption is the costing method that’s most accurate and that requires the most resources. It looks at the actual amounts of service time that each unit requires and charges them accordingly.

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