Welcome!

Cloud Expo Authors: Yung Chou, Deborah Strickland, JP Morgenthal, Maureen O'Gara, John Cowan

Related Topics: Cloud Expo, Virtualization

Cloud Expo: Article

Enterprise Cloud Computing: Understanding the Costs

Forecasting of cloud computing demand within enterprises is becoming more important

John Gannon's Blog

Although cloud computing provides financial benefits like reduction of CAPEX and the ability to pay-as-you-go, organizations will still need a reasonable amount of granularity in the reporting of cloud usage and the ability to map that usage into a financial chargeback model that makes sense.

Amazon has gone live with Windows support in the EC2 cloud while at the same time announcing a private beta for some new scaling and load balancing features. These features will certainly be useful for the smaller customers of EC2, but my guess is that those features were driven by a desire to make the Amazon cloud more “enterprise friendly”. And speaking of enterprise friendly…

In an earlier post I discussed some areas that Amazon and the other cloud providers will need to address before they’ll see mass enterprise adoption. One area I did not discuss, but that is also important, is cloud financial management (cloud “chargeback”).

Chargeback methodologies and technologies are used to help medium-to-large enterprise IT departments meter usage of key IT resources (storage, network, compute) and then allocate usage back to individual business units, applications, etc.

Although cloud computing provides financial benefits like reduction of CAPEX and the ability to pay-as-you-go, organizations will still need a reasonable amount of granularity in the reporting of cloud usage and the ability to map that usage into a financial chargeback model that makes sense. Knowing which applications and departments are driving IT expenses is critical now, and will continue to be critical as cloud computing goes mainstream in the enterprise. Therefore, any cloud chargeback solution should integrate with the chargeback framework that the company uses to manage their physical assets.

I can also see forecasting of cloud computing demand within enterprises becoming more important as greater usage variability drives expense variability. Avoiding CAPEX is a great thing, but if you’re unable to predict OPEX, you’re going to have other problems. Traditionally, capacity planning and demand forecasting has been a dark art (at least in the distributed systems world), but I think the industry as a whole needs to think about new ways to address the problem in a hybrid cloud/non-clouded world.

More Stories By John Gannon

John Gannon is an Associate at L Capital Partners, a $165-million fund looking to advance companies with the potential to take groundbreaking products to market. He blogs at http://johngannonblog.com. Prior to joining L Capital Partners, John worked with Highland Capital Partners and Chart Venture Partners to identify and evaluate new opportunities in the enterprise IT sector. He also served as a consultant advising startup companies on business development, product strategy and venture capital fundraising. He currently sit on the board of advisers of VAlign Software.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


Cloud Expo Breaking News
Why are APIs so important in clouds? Do APIs have to be open? How fast or slow will standardization in the cloud be? Why is ensuring high availability for the cloud service critical? In his session at the 10th International Cloud Expo, Mårten Mickos, CEO of Eucalyptus Systems, will answer these questions and address cloud standards, APIs and the critical question: Will we end up with one, two or more competing cloud standards? And, how will this affect the evolution and adoption of cloud comput...
Very few trends in IT have generated as much buzz as cloud computing. In his session at the 10th International Cloud Expo, Mark Hinkle, Director, Cloud Computing Community at Citrix, will cut through the hype and quickly clarify the ontology for cloud computing. The bulk of the conversation will focus on the open source software that can be used to build compute clouds (infrastructure-as-a-service) and the complementary open source management tools that can be combined to automate the management...
The proliferation of device connectivity is redefining the functionality requirements and capabilities of many embedded systems as more and more of these devices look to leverage the “Cloud.” While many commercial software and hardware component vendors have begun to realign their value propositions to satisfy growing demand, commercial-off-the-shelf products (COTS) alone cannot meet every OEM’s needs. As a result, the Embedded Cloud has injected a new level of uncertainty and a new competitive ...
Hardware and chemistry improvements will make the $1,000 human genome a reality soon. While the massive amount of genomics data that will be generated represents a huge opportunity to advance personal medicine, it also presents an enormous big data challenge. In his session at the 10th International Cloud Expo, Dr Andreas Sundquist, CEO of DNAnexus, will discuss how the cloud will address these issues by enabling the management, storage, sharing and analysis of the world’s DNA data and how it ...
With Cloud Expo 2012 New York (10th Cloud Expo) just four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what else h...
With Big Data Expo 2012 New York (co-located with 10th Cloud Expo) just four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference...
In 2011, Apache Hadoop received tremendous attention for helping organizations cost-effectively capitalize on their big data. Hadoop is now disrupting the business of analyzing data. In his session at the 10th International Cloud Expo, Eric Baldeschwieler, Co-Founder & CEO of Hortonworks, will look at the current state of the Hadoop project, lessons learned by deploying it at scale, and the roadmap for its future. Big Data Track attendees will learn about the exciting developments that have ...
With Cloud Expo 2012 New York (10th Cloud Expo) just four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what else h...
The focus of Java EE 7 is on the cloud, and specifically it aims to bring Platform-as-a-Service providers and application developers together so that portable applications can be deployed on any cloud infrastructure and reap all its benefits in terms of scalability, elasticity, multitenancy, etc. The existing specifications in the platform such as JPA, Servlets, EJB, and others will be updated to meet these requirements. Java EE 7 continues the ease of development push that characterized prior ...
With Cloud Expo 2012 New York (10th Cloud Expo) just four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what else h...