Cost management in the cloud: 3 tips for IT service providers

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Author: Simon Kilchmann

Category: Business / IT infrastructure / Cloud

November 19, 2021

The topic of cloud infrastructure costs raises questions for many IT service providers. Who is allowed to create servers on the cloud platform? Where does the main responsibility for cost management of the cloud infrastructure lie? And how are services charged to end customers? Here, T-Service providers learn how they can master the challenges related to cost management in the cloud.

"One topic that probably the whole world is talking about when it comes to cloud infrastructure is the cost aspect. In my opinion, there are three reasons why the cost of cloud infrastructure is such a big issue," says Xelon CEO and Swiss cloud pioneer Michael Dudli. He has summarised these reasons for us:

Control: Basically, as a system administrator - whether with a hyperscaler like Azure or with an on-premises provider like Xelon - you can set up a server in the portal. In comparison, with on-prem infrastructure, there was the process of hardware procurement. "Now most IT service providers want the system administrator to be able to do it themselves. To a certain extent, this leads to a loss of control, because who now controls and determines how many servers are created at which customer?", Michael Dudli knows from his many years of experience working directly with Swiss IT service providers.

Reporting: Who controls the allocated servers at the end of the month, who releases the invoice and who ultimately takes the main responsibility?

Billing: If someone creates a server in a client system or adds more CPU, more hard drives to a server in a client tenant - who ensures that this is charged on to the client? How can it be guaranteed that the process is really correct internally, so that at the end of the month the right invoice is triggered for the end customer?

"We recently carried out a project with a larger Swiss data centre provider. This one, of course, has some customers that need to be charged on and completely automates this process. At the end of the month, the resource calculations are automatically extracted, imported into the ERP and also automatically invoiced. The server creation and the assignment of rights, who is allowed to do what, have also been automated," reports Michael Dudli.

Michael has compiled tips on how IT service providers can master the challenges associated with the costs of cloud infrastructures. Here you can find out what should be taken into account.

3 tips for cost management in the cloud for IT service providers

  • Cost calculation: "In the cloud, you have to know how much CPU, RAM and hard disks you need to be able to do the calculation for an entire project," explains Michael Dudli. "It's not that demanding either, but it's a change in thinking compared to the past, when you simply ordered hardware - usually way too much anyway - and allocated as much to the VM as was needed at the time. That's changing now because it also saves you money. With every gigabyte of RAM, with every CPU core that is less, you end up paying less money," the Xelon CEO continues.
  • Access Rights and Access Flow: "If you don't want an employee to create a server, then you don't have to or shouldn't give them that right. An alternative would be to implement an access flow. That is, if an employee creates a server, then this server should not be created directly, but an e-mail should be sent to a department head who can approve it, and then the server is created. Or a notification is triggered so that at least the accounting department, the department management or the Head of Operations knows that someone has created a server and could check whether that is right or wrong," Michael Dudli points out possibilities for controlling the costs of cloud infrastructures. Access rights and access flow are important points to consider in a cloud migration. The larger the team, the more difficult it becomes to keep control unless access rights and responsibilities are regulated accordingly.
  • Charging on: "If a server is created for a customer or more CPU, more RAM is added, then it must also be ensured that this is charged on so that you are not stuck with these costs," says Michael Dudli. This can be a manual process or an automatic report. But it can also be an API integration that extracts the costs directly. "In practice, you see all kinds of variations. With the small IT service providers, it is often still a manual task, they receive reports, which they then divide up among the customers and charge on. With the larger companies, this is usually solved with an API integration that completely automates the process so that possible sources of error can be eliminated," says the Xelon CEO.

    In our e-book "Das kleine Cloud-Einmaleins für IT-Dienstleister" (The little cloud 101 for IT service providers) there is more content about cost management in the cloud and the cost aspect of cloud infrastructures. Download it now for free!




Simon Kilchmann

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