Azure: Guide to Recovering Costs for Virtual Machines
Who is this guide intended for?
This guide is for cloud service providers and IT service providers.
How can this guide help you?
You can use this guide to understand the high-level design and implementation steps that we recommend to address showback, chargeback, or billing for virtual machine and cloud services. This guide describes:
- the recommended virtual machine cost recovery strategy that will enable a cloud service provider/enterprise to create reports for customers using showback
- the basic steps needed to create a billing system to bill customers for the services that you provide using chargeback
The following diagram illustrates the problem and scenario that this guide is addressing.
Virtual Machine Cost Recovery Problem
In this guide:
Scenario, problem statement, and goals
This section describes the scenario, problem, and goals for an organization that needs a virtual machine cost recovery strategy that will enable a cloud service provider/enterprise to create reports for customers.
Scenario
As both the hardware infrastructure and server administrator for the Relecloud cloud service provider you need to provide your billing department with detailed usage reports for cloud services including virtual machine, computational, network, and storage resources. Every month you use a variety of tools to gather data from many different internal web sites to determine the amount of services consumed by tenants.
Problem statement
You have to produce manual monthly reports that are difficult to create because they require using a variety of tools and viewing many web reports that show inconsistent data so that you can manually create reports that you submit to your billing partner. Creating accurate reports is time-consuming and frustrating. Under-reporting contributes to lost business and over-reporting contributes to customer satisfaction and trust problems. Both these situations have undesirable outcomes.
The overall problem you want to solve is:
How can I easily create reports that I can submit to my billing partner to use as a basis for billing?
Organization goals
You want to:
- Produce a report with views of consumption for the computational, memory, storage, and networking resources for hosted virtual machines for each tenant.
- Increase the accuracy of the billing process and reduce under or over reported resources.
- Reduce time and costs associated with managing and developing a usage tracking process.
What is the recommended planning and design approach for this strategy?
The following diagram illustrates how you can use Service Reporting to easily generate reports for showback and trending analysis and Windows Azure Pack Usage Service billing data that you can provide to a billing partner.
Virtual Machine Cost Recovery Strategy Architecture
The following table lists the elements that are part of this design and describes the reason for the design choice.
Product or Technology |
Why is it included in this strategy? |
|---|---|
Windows Azure Pack for Windows Server |
Deploy and use Windows Azure Pack for Windows Server because it the technology at the core of this strategy. It is the primary means of providing standardized processes and IT infrastructure. For more information, see Windows Azure Pack. |
System Center 2012 R2 Service Reporting |
Deploy and use Service Reporting to produce usage reports that enable showback, consumption trending, and Server Inventory reporting. For more information, see Service Reporting in System Center 2012 R2. |
Windows Azure Pack Usage Service |
Understand and use elements of the Windows Azure Pack Usage Service so that you can partner with a billing management company to build your own customized system for customer billing and analytics processing. For more information, see Windows Azure Pack Usage Service. |
Determining your strategy
The type of IT organization that you belong to determines the type of cost recovery that you perform for the services that you provide to your customers. Within the scenario described above, there are two basic approaches to cost recovery. The implementation of this strategy differs somewhat based on the approach that is right for you.
Most often, cloud service providers recover costs with usage-based billing when they charge their customers directly for the services that they provide in the form of bills or invoices, where the provider expects to be paid with hard currency. In this case, you need to develop a billing method where your customers pay for the services that you provide to them. The bill that you submit to customers shows the costs that you expect them to pay. The bill should also provide some explanation of the services that you provided, showing usage data. This usage data enables usage-based billing. With usage information from Windows Azure Pack for Windows Server and System Center 2012 R2 Service Reporting, and by partnering with a billing management company, you can show customers their virtual machine usage and also bill them.
Enterprise organizations, as opposed to cloud service providers, do not typically charge internal customers with a bill for hard currency where external banking intuitions or cash is exchanged. Instead, internal customers typically reimburse their IT department using internal mechanisms such as transfers between cost centers based on reports that show the costs that they incurred. Most often large IT enterprises recover costs with chargeback or are shown costs with showback.
As an enterprise IT Administrator, you need to know how to perform some sort of showback for cost recovery where the enterprise provides internal customers with proof that a level of service was provided. With showback, IT staff provide usage data in the form of reports to their internal customers that show the level of service that was provided for a specific time period, or for a measurable amount of computational resources. Chargeback goes further where internal customers are charged for the services that they receive. Often formal chargeback agreements are made between an IT department and IT consuming departments where costs are reimbursed at specific time intervals.
Although this strategy does not describe a specific chargeback strategy for enterprise organizations, they can use it with Service Reporting in this strategy without a formal billing mechanism to help recover costs. Showback does not have costs associated with it; however, it can help influence consumption in by showing where resources are over-consumption occurs.
Trending data is imported in order to determine past, present, and possible future consumption of IT resources. Such data might be a valuable part of any reports that support billing or showback to your customers.
If your organization participates in the Microsoft Services Providers License Agreement (SPLA) program, then monthly usage reporting is required. Producing usage data or reports that show the number of software licenses used for a given month for a particular customer should be included in any form of cost recovery that your organization employs.
Usage-based billing is based on data collected from virtual machines that run in your infrastructure. With the usage data, you can view reports and use it to generate bills based on virtual machine usage. With Windows Azure Pack and System Center 2012 R2 Service Reporting, you cannot bill customers directly. Instead, you create a billing system by configuring the Windows Azure Pack Usage Service and partner with a billing management company so that they can access your Windows Azure Pack usage data. You can read more about the Windows Azure Pack Usage Service at Windows Azure Pack Usage Service Overview.
You can read planning information for these technologies at the following:
- Windows Azure Pack for Windows Server
- Getting Started with Service Reporting
- Windows Azure Pack Usage Service Overview
What are the high-level steps to implement this strategy?
You can use the steps in this section to implement the strategy. Make sure to verify the correct deployment of each step before proceeding to the next step.
1. Install Windows Azure Pack for Windows Server.
You can install Windows Azure Pack on a single server or you can install the components on multiple servers.
Deployment information is at Deploy Windows Azure Pack for Windows Server.
2. Integrate VMM and Operations Manager
VMM manages the virtual machines and Operations Manager monitors their health and collects data.
Deployment information is at Deploying System Center 2012 - Virtual Machine Manager and Deploying System Center 2012 - Operations Manager.
3. Deploy and configure Service Provider Foundation with Operations Manager.
Service Provider Foundation exposes a web service that interacts with Virtual Machine Manager that enables self-service portal integration for IaaS capabilities.
Deployment and configuration information is at Service Provider Foundation.
4. Configure Windows Azure Pack services that you want to offer to customers with the following steps.
Web sites deployed with Windows Azure Pack are part of a broad hosting platform.
You provision virtual machine clouds for the VM Clouds service and you configure the management portal for administrators to associate with Service Provider Foundation.
You can add one or more Microsoft SQL Server or MySQL Server instances for tenants to deploy and use.
You manage Service Bus using the Windows Azure Pack management portal, deploying and managing the actual farm (cloud). Customers can use the portal to create namespaces and messaging entities.
5. Deploy Service Reporting and integrate it with Windows Azure Pack.
You use Service reporting to view tenant consumption of virtual machines, resources (computation, network, and storage), and operating system inventory in your infrastructure.
a. Deploy Service Reporting
You can deploy Service Reporting by using a wizard or command prompt.
Deployment information is at Deploying Service Reporting.
b. Configure Service Reporting
You configure Service Reporting it so that it can gather data from source systems.
Configuration information is at How to Configure Service Reporting for Windows Azure Pack and System Center.
c. Use Service Reporting usage data and inventory reports
You view and analyze information in reports so that you can view virtual machine usage data, identify trends, and report SPLA licensing usage. This information alone is all that you need for showback with your tenants.
Usage report information is at Using Service Reporting Usage Data and Inventory Reports.
6. Create a billing process by importing usage data and using the Windows Azure Pack Usage Service API to copy the data into your current billing system.
The information in this step provides generalized guidance because how you partner with an organization or company outside your business may vary from others. When you create a billing process, you perform the following sub-steps.
a. Deploy, configure, and enable the Windows Azure Pack Usage Service.
Information about how to deploy, configure, and enable the Windows Azure Pack Usage Service Adapter is at Windows Azure Pack Usage Service.
b. Implement a billing adapter
You implement a billing adapter to expose API endpoints that a billing system can access.
Implementation information is at Implementing a Billing Adapter.
c. Partner with a billing management company so that they can access your billing adapter and create billing invoices for customers.
See also
Content type |
References |
|---|---|
Technology Overview |
|
Product documentation |
|
Community resources |
· Chargeback with System Center 2012 SP1 tutorial · IaaS Usage and Service Reporting using System Center 2012 R2 and Windows Azure Pack · Building Private Clouds with Windows Azure Pack · WAP Wiki - A Collection of Windows Azure Pack and Related Blogs, Videos and TechNet Articles |
Videos |