BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE PROVIDER A channel guide
CONTENTS Introduction 3 The Billing Process 3 Public, Private and Hybrid Cloud Billing Requirements 4 Cloud Service Providers Billing Challenges 4 Requirements for Cloud Billing 7 Summary 7 The ALVEA Infrastructure Billing Solution 8 What Makes a Great Cloud Service Provider 9 About Us 10 02 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
Managed and hosted services have the potential to provide IT resellers with valuable, additional revenue streams. The challenge is to ensure that these services also deliver both margin and added value to the business. Effective billing, whilst not the most exciting subject, is vital to ensure a managed service is profitable and contributes to the growth and not the demise of the business. Yet it is often one of the last things to be considered when a reseller builds new services into its portfolio. Cloud computing accentuates what is already a significant challenge for many service providers. This is because the on-demand, agile and instantly scalable nature of the cloud demands a billing engine that is just as responsive. This paper outlines an effective billing process for managed and cloud services and explains why service providers need a billing engine built specifically for the cloud. It will consider the distinctive billing requirements of providing cloud services, the challenges they pose to service providers and how they can work through these challenges to deliver transparent billing to their customers. THE BILLING PROCESS What exactly is effective billing? Ultimately good billing is ensuring you, as a service provider, are paid for the services you provide and that your customers are clear about what they are paying for. Under the surface, however, there is a much more complex process, starting with: Metering monitoring precisely which resources (CPU, RAM, network I/O and disk I/O) are being used. Product catalogues defining the various ways of charging for each product on the system. Rating applying a charge to the metered use by combining it with the relevant product. Invoicing charging the customer for the service they have used. Collection taking payment from the customer. 03 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
PUBLIC, PRIVATE AND HYBRID CLOUD BILLING REQUIREMENTS Public Clouds Public clouds typically bill by usage. Cloud Service Providers will therefore need a system which meters the usage of individual components, correlates this data to products purchased by the customer, produces rating information by combining the products and metering, and consolidates this information into invoices or invoice lines. Even if you are a service provider offering a wrapped cloud offering where one invoice is produced at the end of each month that is not directly correlated to usage, you will still need to know how much it is costing you to provide these services. Private Clouds Billing is just as important for private clouds. The ability to meter and rate usage, whether it is for internal chargeback or simply to demonstrate what department is using what resources, requires 90% of a billing system, albeit without necessarily generating an invoice for payment at the end. Every organisation needs to know how its resources are used, and by centralising the delivery of many services to one internal Cloud Service Provider, cloud computing offers a real opportunity to do so. The billing engine is a key component of this monitoring. Hybrid Clouds Hybrid clouds, as a combination of the private and public cloud, typically have more complex billing requirements. The requirements may be a combination of those set out above typically some public cloud usage-related billing and some fixed rate non-cloud billing though there may be a requirement to wrap these into a single bill. For just about every application of cloud within service providers, billing really matters. CLOUD SERVICE PROVIDERS BILLING CHALLENGES The Legacy Challenge For service providers who are planning to provide cloud services, it appears that there are two main types of billing engines available today: Hosting Billing this is subscription billing; typically billing a fixed amount each month, on a single bill. Telco Billing this type of billing is the sort of billing that your company uses, based on CDRs ( call description records ). These are metered, rated and billled, much like the back page of your phone bill. Unfortunately neither system is sufficiently well suited to the cloud. Hosting billing, for example, is not performed in realtime and the systems do not cope well with large amounts of usage-dependent data. In addition, cloud services that allow rapid scaling (both up and down) of servers do not fit well with the subscription model offered by such systems. Whilst there are hosting providers offering services they describe as cloud using hosting billing systems, these in general are no more than a VPS system with a slightly improved user interface, rather than a true cloud service. 04 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
Telco billing systems represent a different set of challenges altogether. Typically the systems are large, inflexible and again do not operate in real-time. Once upon a time, BT s product range was limited by the fact their billing system only supported 99 price rating codes. Whilst the world has moved on a little from that position, some would say not by much. It s not much use providing a stream of billing information unless it s also possible to dig down into it, and reference it by the virtual resources which generated the bills. Telco billing systems are not good at this. Ultimately, the business objective of any cloud service provider is to sell their customers products or services. The billing system should never hinder this. For instance, some usage-based cloud billing schemes work backwards from the provision of technical components first, associating that with a rating scheme, then billing for it. More specifically: X : 1G User X provisions: 1GB RAM single CPU server @ 1 pence per hour, over 10 hours = ten pence to bill At first glance this sounds simple. Now consider how you would run a special offer for servers signed up within a given time period, or where you offer the customer either a per-minute price or a per-month price for a product that is technically identical. Far better to say: : X1 Y1 T1 User X1 has bought product Y1. This entitles them to technology T1 and is billed in manner B1; however user X2 has bought product Y2, which also entitles them to technology T1 but is billed in manner B2 In this instance the billing system can be far more flexible and responsive to the needs of the business. 05 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
The International Challenge Finally, as cloud computing increases and end-users become more used to the self service model of delivery, the provision of cross-border services will become easier. Aside from the requirements of internationalisation of the interface, it also means that the billing system will need to support multiple currencies and exchange rates. The Scale of the Problem Another major problem is that of scale. Compare the problem with billing all the mobile phone users in the UK: There are approximately 60 million handsets in the UK Assume each subscriber makes approximately 150 calls per month That s about 1,800 records per customer per year (quite a lot) The total number of records generated is therefore somewhere around one hundred billion That sounds like a big number, right? Now consider a cloud service provider with 10,000 virtual servers: Assume they have 5,000 customers Each with an average of 2 running servers per customer who are billed hourly Each server has 6 components (perhaps network, disk size, disk I/O, network I/O, OS Image, and CPU/RAM) The platform therefore produces 20 billing records each second In one year, that s one hundred billion records Think about whether your favourite hosting billing system is capable of that. Next, add up what is spent on mobile phone billing systems in the UK, multiply by ten, and ask whether you want to spend that. 06 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
REQUIREMENTS FOR CLOUD BILLING So if the legacy hosting and Telco billing solutions are not fit-for-purpose, what does a cloud billing system need? One A truly of the cloud-centric key ingredients billing to system provide needs a cloud to management support solution the following to support services: the requirements of not only the business, but also the customer. These requirements include Complex the products capability to: Cloud computing products can be as simple or as Deploy quickly to reduce the time to market complex as the customer requires. But just as BT s This product is of portfolio pivotal importance was previously as cloud limited service by their providers billing all system, try to service capture providers the $30 billion that can market support opportunity as much quickly. complexity This as will they enable choose customers provide. to buy cloud services in the shortest possible time. Service providers and hosting Scalability companies excel at providing services, not building software. They need a solution to get to market As the mobile quickly phone and easily. example demonstrates, the sheer volume of individual items that a cloud service provider needs to bill is significant, and will grow rapidly as each Manage resources new service is brought to market and the customer Using base expands. a cloud management solution that allows you to view, filter, organise and manage your resources, be they Real-time physical or virtual, in a manner that suits you and your business will help you achieve greater efficiencies and If the responsiveness. cloud can provision new services in seconds, then the billing system needs to keep up. And with new products, prices, cross-product promotions, introductory offers or Automate common repetitive tasks new packages to consider, the billing system needs to to free up time maintain real-time data on all prices at the same time The of billing. cloud One management way to ensure solution an unhappy should reduce customer the (and operations consequently staff s unhappy time spent support on staff) repetitive is to activities generate that an add invoice little that value doesn t to your reflect service the quality. promotion Automating the customer these repetitive thought they tasks were frees taking up highly advantage skilled of. staff to concentrate on higher margin activities and deal pro-actively with more complex issues. The benefit is improved margins for the business. SUMMARY Scale, reliably Confidently know that your cloud management solution Having agile resources is fruitless if you cannot bill for can grow with your IaaS platform as customer numbers them. Cloud customers expect real-time billing, instant and usage increases. sign-up and their bill to be comprehensive, so they can see, line-by-line, what has been used and in what capacity. At the Support same time additional cloud providers routes expect to market their billing To move up the value chain, or to offer more than commodity products, select a cloud management platform with built-in white labelling and a reseller system to allow the setup of a reseller channel and address new markets. Self-service Deliver application provisioning solutions quickly and easily Customers need to know what they re going to pay Seek up-front, the capability and your billing to easily system create, needs manage to be and able deploy to sophisticated track every time application they provision templates. a new service, check it against current prices and any joint promotions, and generate Offer flexible an invoice and accordingly. differentiated billing and metering solutions Visibility & control As you expand with an IaaS offering, look for a management platform In a public, that private has a full-featured, or hybrid cloud integrated environment, billing cloud system to service provide providers a complete need solution complete depending visibility on over a companies how their existing resources capabilities are being up used, to and so including that they measurement, can bill or monitor rating, effectively. invoice Prior line to generation, the cloud, invoice how your generation resources and were credit being card used collection was generally facilities much if required. more invisible to you, but this was not an issue as customers agreed to pay fixed amounts Provide per a highly month. customisable With cloud billing, user you interface can take the utility model and transparency of the cloud Select and make a cloud it profitable. management platform that includes a highly customisable user interface. Every business and customer is different and has different skill levels, so Granular billing allowing each to dynamically reconfigure and customise the With user so many interface components to suit their making requirements up a cloud is service, important. the billing system needs to be granular enough to drill down Offer into each role-based component access or service control and report this back to the customer as and when they need it. Ensure the solution allows access control to enable your end users to scale their usage. By supporting multiple users and groups within each customer account, you can allow different groups of users access to different sets of resources securely. Deliver a single pane of glass view Check for a single pane of glass view to allow users seamless control over multiple clusters, diverse hardware, storage and hypervisors. Ensure it is hypervisor agnostic systems and provides to work this at multi-cluster scale, instantly support. reflect newproducts or promotions, and be up-and-running as quickly as the service itself. Neither hosting billing nor telco billing systems can deliver these functions, so a new, built-for-the-cloud billing solution is required. 07 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
THE ALVEA INFRASTRUCTURE BILLING SOLUTION ALVEA s billing solution was built with all of the end-user s and cloud provider s requirements in mind. Performs full cloud-style metering, billing, and rating Manages product catalogues Supports both pre-pay and post-pay customers Differentiates between technical offerings ( products ) and the commercial terms on which they are sold ( Product offers ) Contains a fully brand-able reseller system Designed to support any currency Will bill right through to credit card or can hand off at the metering, rating, invoice line, or invoice level. 08 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
WHAT MAKES A GREAT CLOUD SERVICE PROVIDER This paper has outlined how an effective billing system is vital to ensure the growth and profitability of managed or cloud service provider s business. When it comes to providing public cloud to enterprises, IT resellers and services companies have a choice; either develop their own infrastructure or partner with an established provider and deliver cloud services under their own (or the established provider s) brand. If they choose to develop their own service, resellers face all the challenges of delivering effective billing that have been outlined in this paper. However, by partnering with an established provider such as ALVEA Services and offering a cloud infrastructure based on best of breed cloud orchestration software, they can be assured of delivering a flexible, robust and cost-effective solution for their clients. ALVEA Services have been created exclusively for channel partners. They allow resellers to offer enterprise-class cloud services to their clients without the need to invest time or finances in developing or supporting a complex virtual infrastructure themselves. ALVEA Services enables the channel to offer the new products and services that their existing and prospective customers want, while building a recurring revenue base, with the option to white label. The benefits of partnering with ALVEA Services include: The ability to sell enterprise-class cloud services to customers and generate monthly fees which grow as customers demands increase The knowledge that ALVEA s datacentre allows total control over the service delivered to resellers as well as their customers, along with a 100% SLA Access to a data seeding service to quickly and securely deploy large quantities of data into the cloud service Confidence that the100% channel service means customers cannot buy ALVEA direct, giving resellers total control of their value-add and margin Just-in-time delivery of virtual servers removes the need to hold physical stock for deployment, maintenance or replacement. Servers are deployed instantly when resellers or their customer need them, so they never need to be purchased in advance A reseller portal that allows new accounts to be provisioned quickly and tailored to each customer s needs Simple online provisioning of all services no need to email requests or find out progress via the phone, the whole process can be executed online Customers can manage their services online, cutting the amount of direct support resellers need to provide Private labeling of ALVEA services with no set-up fees that allows resellers to deliver cloud services under their own brand Sticky client relationships for resellers; as hosted services increase client retention because they are critical to business, they create recurring revenue and offer the channel opportunities for consulting fees With ALVEA Services, the virtual infrastructure is managed, maintained and supported, allowing resellers to concentrate on their clients and core business. ALVEA Services is fully certified against the Cloud Industry Forum s (CIF) Code of Practice. The certification demonstrates the company s commitment to best practice in the transparency, accountability and capability of its cloud services and provides channel partners and their customers with the confidence that ALVEA Services is a trusted and fully accredited Cloud Service Provider. 09 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
ABOUT US This white paper is brought to you by ALVEA Services and Flexiant. ALVEA Services selected Flexiant s cloud orchestration software for its ALVEA Infrastructure Service. Flexiant provides ALVEA Infrastructure with an on-demand, fully automated cloud services provisioning solution which includes comprehensive billing, white-labelling and a single pane of glass infrastructure control. ALVEA Services ALVEA Services offers a suite of cloud and managed solutions across security, infrastructure and resilience. Available exclusively via the channel and delivered through one easy-to-use platform, the ALVEA range offers its partners a one-stop shop for a multitude of services. ALVEA Security, ALVEA Infrastructure and ALVEA Resilience & Continuity currently offer eight distinct services across the portfolio: Managed Network Security, Cloud Based Infrastructure, Managed Content & Application Delivery, Cloud Attached Storage, Satellite Broadband, DNS, Authentication & Anti-Virus. The ALVEA brand is an independent services offering for the channel backed,managed, and supported by technical expertise and infrastructure from COMPUTERLINKS. The suite will continue to be developed by COMPUTERLINKS to enable its partners to provide expertly delivered services to their customers. www.alvea-services.com ALVEA Infrastructure ALVEA Infrastructure offers virtualised on-demand servers, designed to behave just like physical servers. Via the easy-to-use web control panel, enterprise class cloud infrastructure can be deployed in minutes - including the ability to provision cloud system, servers, and networks and then to only pay for what is used, whilst at the same time being assured that data is secure and always accessible. Designed to bring the full benefits of secure IT on demand to organisations of any size, ALVEA s cloud architecture gives access to IT infrastructure resource when it s needed, without all the expense and fuss associated with traditional solutions. Once finished, it s simply turned off until the next time it s needed. Flexiant Flexiant is a leading international provider of cloud orchestration software for on-demand, fully automated provisioning of cloud services. Headquartered in Europe, Flexiant s software gives cloud service providers business agility, freedom and flexibility to scale, deploy and configure cloud services, simply and cost-effectively. Vendor agnostic and supporting multiple hypervisors, Flexiant Cloud Orchestrator is a software suite that is service provider ready, enabling cloud service provisioning through to granular metering, billing and reseller management. Used by over one hundred organisations worldwide, from small hosters to large Managed Service Providers (MSPs) and Enterprises, Flexiant Cloud Orchestrator is simple to understand, simple to deploy and simple to use. Flexiant customers include Cartika, FP7 Consortium, IS Group, ITEX, and NetGroup. www.flexiant.com 10 BILLING HOW IT CAN MAKE OR BREAK A CLOUD SERVICE
THIS WHITE PAPER IS FOR INFORMATIONAL PURPOSES ONLY AND MAY CONTAIN TYPOGRAPHICAL ERRORS AND TECHNICAL INACCURACIES. THE CONTENT IS PROVIDED AS IS, WITHOUT EXPRESS OR IMPLIED WARRANTIES OF ANY KIND. COMPUTERLINKS UK LTD Contact ALVEA w: www.alvea-services.com e: info@alvea-services.com t: +44 (0)1638 569 889