The Cloud Computing Solutions Pricing Debate Rages On

Posted by Mark Teter, Chief Technology Officer
January 19, 2012

In the CIO article The Great Cloud Computing Pricing Debate, Bernard Golden astutely discusses the public versus private cloud computing pricing and reliability standards and imparts some tips on which cloud computing model may be best for your business.

I recommend this article to anyone considering implementing a cloud computing solution. But I think it’s also important to add something to this discussion—the idea of IT departments adopting a chargeback model based on the services they provide to their business organizations.

What does that mean? IT departments should consider recovering the costs of providing cloud computing services from their end users. This doesn’t necessarily involve billing end users—a chargeback model would also map resource usage, which would help predict capacity management needs and future growth planning.

In order to answer that critical question, “How can a business evaluate the benefits between using its own IT versus those from a public cloud provider?” IT needs to provide accurate cost structures about its services much like an ISP, and businesses need to be held accountable for their IT service consumption. Some very mature organizations may achieve this with a show back of costs to the consuming business units, but in most enterprises, chargeback will be a necessity.

The difficulty is that internal IT organizations can’t build capability prior to demand. CFOs should be ready to fund future capacity to enable rapid service provisioning so the business unit receives Johnny-on-the-spot service delivery. The average IT shop is going to have a lot of work ahead of it to sell a CFO on financing an information factory. It could start by establishing an internal chargeback service model.

Once the capacity is in place, IT can get on the task of selling its services to other business units, even business units outside of their own organization! Some companies have already implemented this strategy. For example, a few hospitals we work with already provide regional medical offices with outsourced medical billing and patient applications.

What do you think? We’d love to hear your thoughts on pricing IT service delivery, so drop a comment below.

About Mark Teter Before he retired from ASG in 2013, Mark Teter was Chief Technology Officer (CTO) and the author of 'Paradigm Shift: Seven Keys of Highly successful Linux and Open Source Adoptions.' As CTO, Mark regularly advised IT organizations, vendors, and government agencies, and he frequently conducted seminars and training programs.

Filed Under: Cloud Computing

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