AM chargeback/ TCO reporting for business services

Transcription

1 AM chargeback/ TCO reporting for business services Mike Grainge, AM Product Manager Mark Bradley, Product Marketing Manager #HPDiscover-CMS Copyright 2015 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

8 There was a time when every household had its own water well.? Compelling and realistic business cases

9 What should ITFM professionals do to prepare their organizations? Top three cloud-related challenges Evidence of cost savings Shifting to usagedriven pricing Compelling and realistic business cases What ITFM professionals do to prepare for Cloud Validate current cost models Chargeback and showback Determine new unit Cost models Evaluate Procurement Models Assess subscription based models Pay as you go pricing Alignment of vendor contracts Identify accounting & tax effects

10 The opportunity Deliver business innovation/growth Visibility Resource allocation Investment capital Cut costs and manage budgets well Maximize investment of company funds and resources to make a difference Communicate IT value through IT spend trends and baselines by business service, application, business unit, and IT budget categories

11 What is your current IT financial baseline? Operations spending Total spending 10% Application management New IT investments 31.9% 8% 23% S/W licenses Data Center End user support Operations and support 63.5% 16% 11% Security and continuity Outside services Planning and strategy 4.6% 5% Network Shared service Source: Planning and Budgeting Best Practices Benchmark Survey 3% 11% 13% Other

12 Consumers Highly satisfied Expectation/s Service Catalog IT Services Options Parameters Levels SLA Request for service SLA Performance/$ IT Organization Highly dissatisfied OLA UC Gold Silver Bronze Source: Implementing Service & Support Management Processes: A Practical Guide Page: By Mark E. Bradley

13 Balancing demand and supply Having visibility into your environment is critical IT demand drivers External market forces Internal business initiatives Regulatory compliance requirements Demand management IT demand (Quantity and quality) Internal IT end users IT cost / budget (Volume and price) IT FTEs IT operating budget Financial management IT cost control strategies Sustainable structural improvements Discretionary cuts IT demand management Chargeback/cost allocation Service catalog Project portfolio management External IT end users Short term measured activities

14 Production and consumption of IT are changing radically at the same time The living room The marketplace The back office Consumerization New consumption demands Mobility: Bring your own device Systems of engagement: Evaluation venues Social media New architectures Systems of record Cloud New production and sourcing methods Public cloud Private cloud Traditional provisioning

15 Multiple delivery options emerging for businesses Differentiated by service level agreements (SLAs), price points and length of financial commitment Consumers Broker, integrate and monitor Produce (build and run) on-premises cloud services Traditional Customer-defined Private Cloud Managed Cloud Public Cloud Systems of Engagement Customer-defined Negotiated Standard, published External platform (Facebook, Google Apps, Apple Apps) SLAs Availability, security, performance, compliance, cost Open services are upon you, whether you would risk them or not.

16 Building a business service catalog becomes critical Business insight into the IT enabled business services Business service catalog Service definition Consumption rules Agreed service levels Service price Cost of IT Infrastructure (monthly) Server $125 per CPU Storage $0.12 per GB? service Cost of IT Service (monthly) $5 per User Payroll Service $15 per User

17 Internal solution

18 Object model and IT services Logical: Service Logical: System (Exchange) System (Lotus Notes) Logical: Platform (HW) (Exchange) Software (Exchange) Databases (Exchange) Documents (Exchange) Physical: Server 1 Exchange SW SQL DB Policy Size Limit Server 2 Server 3

19 Object model and IT services

20 Service costing and usage

21 Each stage aggregates cost based on what it consumes in terms of labor, depreciation and external services Business services stage Business service Application services stages (compare to SaaS) Infrastructure services stage (compare to IaaS) Business Application service Application instance Computing Database Management Support Depreciation Projects opex Storage Data protection Network Facilities Raw cost data Labor Internal Non- Labor Labor External Non- Labor

22 Financial cost automation example Calculate Linux server service cost scenario Calculate data center hosting costs Stage 1 Facility costs Project Stage 2 initiation Power costs Project Stage 3 execution Security costs Project Stage 4 completion Labor costs Calculate managed service costs Stage 1 Backup costs Project Stage 2 initiation Patch costs Project Stage 3 execution DR costs Project Stage 4 completion Labor costs Calculate server costs Stage 1 Hardware costs Project Stage 2 initiation Software costs Project Stage 3 execution Maint. Costs Project Stage 4 completion Cost per server

23 Full lifecycle use case: Linking project cost to service cost Proposal Estimation in Application Development: Run assumptions based on Infrastructure Service price list Forecast into Infrastructure Service demand Proposal assumptions: build, run and maintain Project forecast & actuals Project final Capex Opex Maintenance Project analyst selects quantity of units Common IT data model: Projects mapped to services Run rate costs in Operations tracked by service Depreciation Support Computing Allocation Rule Allocation Rule Consumption Volume Storage Consumption Volume Infrastructure Service Price List (Unit Cost) Total Run Rate Cost of Business Service X

24 HP IT Financial Management BSM, NNM, SE Insight-Control Showback Cost Allocation Engine PPM AM Budgeting SM Service Providers ucmdb (topology) CSA Excel\External Cost

25 Financial Management Chargeback with Asset Management

26 The HP Software Asset Management solution Dashboards, Reports, Scorecards C on Procurement Financial Management C on t e n t Contract Management Asset Portfolio Management Software Asset Management t e n t Business Information Sources

27 Asset Management is part of an eco system Information owned by each system Service Management Calls Incidents Changes ERP Purchase orders Catalogues Costs Contract Management Terms and conditions Leasing contracts Active Directory Employees Departments Locations Roles Asset Management TCO / IMAC processes / Assets Statuses / Software Compliance / Costs allocation / Contracts Financial Management Budets Depreciations schemes CMS Business Services definitions Application mapping Inventory Management / Application mapping Network devices Project Management Projects Labor costs

28 AM tracks the associated costs and more Track Costs Acquisition (lease or not) Operational Changes costs Maintenance contracts costs Links and categorize costs Assets Users Cost Center Cost categories Reconcile with Budget Center and budgets Financial periods Re-allocates costs automatic allocation, chargeback Manages contracts reconcile users, assets, projects and contracts Tracks software compliance report cost for compliance

29 Beyond cost understanding, Asset Manager allows savings Chargeback to end users induces expense optimizations Entitlement Management and Software counters that include usage and entitlement dimensions allow software investments optimizations Automation around leasing contracts return allow to avoid late return penalties Reflect of real status of asset and integration to ERP fixed assets allow fixed asset taxes decrease 29

30 Chargeback engine allows to reallocate costs Charge back rules reflect your business organization Triggered by periodic or database events On certain objects For a certain amount From a source cost center To a target cost center Two expense lines are created for each charge back One crediting a cost center One debiting a cost center Operation is balanced, no wealth created, but accountability for costs is modified for financial reporting You manage your IT as a real P&L

31 Examples of expense lines

32 Examples of chargeback rules Each time a server is moved, its cost center is charged with $400 A new development software license received is charged to IT for 20% of its purchase value and 80% to Development An access to the SAP business service will be charged back to the business unit of the user for 200$ / year

33 Asset Manager can also simulate costs Example of Software Compliance

34 TCO calculation AQL engine allows advanced calculation for TCO Retrieve all expenses on an Asset Acquisition cost Maintenance cost Operational costs (work orders, logistics costs) An economic depreciation of costs is applied For instance Purchase price on 4 years for IT assets Yearly maintenance on one year A yearly TCO is calculated for the asset This asset yearly TCO is aggregated at asset class level TCO optimizes your IT financial Management Vendor selection Cost forecasting Basis for charge back rules

35 OOB integrations with other tools of the IT ecosystem brings value to cost tracking Service Management (change costs), out of the box integration ERP (purchase cost) Suppliers catalogues imports UCMDB (get definitions of the business services) Cloud Service Providers - Integrates seamlessly with HP Cloud Service Automation (CSA), HP CloudSystem Matrix and Amazon EC2 for billing activities

36 HP Asset Management Chargeback Use Case Charging Human Resources system access to end users

37 AM provides TCO of the HR service (includ. HW, licenses, contracts and operational costs) Human Resources SAP clients (Client) SAP Web clients (Client) Application Server (Resource / client): 100% Web Server (Client): 23% Oracle Db server 1 (resource): 60% Oracle Db server 2 (resource): 30%

38 This information is available in the Business Services screen

39 And Yearly TCO is available on the ROI tab of the business service tab

40 Yearly TCO of the business service uses each Yearly TCO of the resources including all costs

41 HR Service Manager can build his price Fixed price (Yearly TCO + Margin)/nr of uses = Use Price A pricing based on Usage is possible but needs appropriate reporting on usage

42 User can request access to the HR Service Managed through requests (possibly out of Asset Manager, can be in SM too) Approval workflow in AM Users are associated to the service and tracked

43 A charge Back Rule is set Charge each user s cost center of the HR Service Monthly For a fixed Cost (amount can be calculated too)

44 Detail of the charge back rule

45 A charge back rule can also be set for non respect of SLAs in AM

46 The Value of AM AM is much more than a repository that gets costs from other sources, it Captures costs in a highly automated way Reallocates when need the costs automatically way (charge back) Aggregates costs into TCO, and even business services TCOs Captures links to users, locations, cost center, budgets and categories Keeps the links updated along the whole asset life cycle. AM prepares and automates all the financial analysis angles that FPA will propose!

47 Costs coming from AM Assets (Individual tracking on barcode, precise categorization) Purchase costs (and vendors) Initial purchase cost Leasing rents Maintenance costs Yearly rents Operational costs (from Change Management tool: OOB integration with SM to capture change time and apply technician hourly cost) Internal charges cost for Service Penalties All sums that are charged back to end users by the business services

48 Conclusion & resources

49 Date Platform Partner Topic Presenter Tuesday, October 6, pm PT / 1pm ET / 8pm GMT HP Software IT Experts Community Leverage Discovery Showcasing the flexibility of the HP CMS developers framework Rarely does a shrink-wrapped product have everything a customer needs. So the question becomes, how flexible and extensible is the product? An extensible product allows you the ability to add what isn t available out-of-the-box. And you can do so with internal FTEs, HP professional services, HP partners, and freelance consultants. By extending the ability to create missing parts, it puts the control back in the customer s hands. This presentation will showcase the power and flexibility of HP s UCMDB and UD developers framework, through screen shots and brief explanations of solutions developed: Dynamic discovery and mapping of software components without knowing anything to start (use cases include: app-dev inclusion in ITSM disciplines, datacenter migrations, security vulnerability) Reporting perspectives specific to data set (use cases: include disaster recovery, datacenter migrations, data comparisons with CMS product upgrades) Dynamic calculations for Total Cost of Ownership with applications (use cases include: charge-back, asset management) Chris Satterthwaite (Leveraged Discovery) October 7 th Wednesday, 8:00-9:00 AM PDT (Los Angeles), 11:00 AM -12:00 PM EDT (New York) 17:00-18:00 CEST (Frankfurt) HP Software IT Experts Community RevealIT Solutions Software Asset Management with HP Asset Manager and HP Universal Discovery: A Primer Description:Join RevealIT Solutions as they share their deep expertise with Software Asset Management, HP Asset Manager and HP Universal Discovery to help you get additional value out of your HP software investment. We'll review a number of use stories around software asset management and how the HP solution can help you know more about your software positions and make the business decisions to get the most out of your software investment while meeting your contractual obligations with your vendors. Wally Waltner (RevealIT Solutions) October 8 th Thursday, 8:00-9:00 AM PDT (Los Angeles), 11:00 AM -12:00 PM EDT (New York) 17:00-18:00 CEST (Frankfurt) HP Software IT Experts Community HPE Security Compliance & Automated Remediation Description: In most cases, IT security runs its own scans and maintains its own repository of assets and their configuration status and report upon it. By leveraging technologies like ucmdb, AM, SA, NA and OO we can provide IT security up to date and continuous visibility into IT assets and enable them to patch and automate remediation at scale. Technologies as SA and NA report upon CVE s and can take automatic action. As the majority of security exploit still happen by poor patch and configuration management we need to help to establish patch management processes and automate deployments to minimize risk. Boris Schneider (HP) Gerben Verstraete (HP) 49

50 Resources Plus brochures, whitepapers, demo videos, case studies

51 HP Discover 2015 London December 1-3, London Register Now via the unique Vivit link: Check out Vivit Breakout Session! Details to come.

52 Resources Materials you can use: Transformation Area promotional videos are on hp.com/discover Internal discussion from leaders is here: AEM-video-1-%281%29.aspx?pk_campaign= &pk_kwd=Newsflash Top 10 reasons to attend Discover: Article/ template to drive attendance: