Chargeback: The Value Added Pitch

Our chargeback policy for virtual machines was not clearly defined. To encourage adoption, the provisioning fee for a virtual machine was $500 regardless of system requirements. In lieu of a host being added and other considerable investments being made hardware, the chargeback policy needed to be revised. Virtual Machines within our matured Virtual Infrastructure cost more to provide but add a considerable amount of value.

After a bit of reading at vmMBA and watching BM15 Managing Chargeback with VMware Infrastructure 3 from VMworld 2007 we decided to go with a tiered chargeback method. The chargeback method has three tiers – low, middle, and high. The lowest tier is designed to be cheapest by far to encourage adoption on a larger scale. Our goal is to instill the confidence we have in our virtual infrastructure to our users.

Feature

Physical System

Virtual Machine

Redundant Power

Standard in higher-tier servers, lower-tier servers ~$100

Standard on hosts

Redundant CPU

Duplicate hardware required

Through multiple hosts and high availability

Redundant RAM

Duplicate hardware required

Through multiple hosts and high availability

Redundant Storage

Not required; additional costs for RAID levels or multiple storage adapters (HBAs)

Standard through multiple HBAs, SAN switch redundancy, SAN RAID levels

Redundant Network

Standard in higher-tier servers; switch redundancy not always implemented

Through multiple hosts, multiple NICs, & multiple switches

Warranty

Optional – increases total cost between $350-$1500

Standard on hosts

System Lifetime

Server MTBF, then reordered, and moved (With an outage)

N/A

Testability

Risky, requires downtime or “test” hardware

Live servers can be placed into snapshot mode; Local copies can also be downloaded for extensive tests

Hardware Maintenance

Outage/Maintenance Windows Required

Transparent to users via vMotion

Recoverability

File level only, requires OS & application reloads

File level and Image level

Illustration of added value with virtual machines

Let’s take this a step further with a Dell server. Quotes generated with the using Dell Higher Education website.

The server I will be using is the PowerEdge 2970. Base cost: $5,330.

Feature

Physical System

Virtual Machine

Redundant Power

Added Cost: $0

Included.

Redundant CPU

Duplicate hardware required. Added Cost: $5,330

Included.

Redundant RAM

Included in the above duplicate hardware. Requires downtime to replace.

Included.

Redundant Storage

RAID 5 Standard

Cost: 0

Included.

Redundant Network

Standard; must instruct staff to use different switches

Added Cost: $0

Included.

Warranty

3 year warranty standard

Added Cost: $0

Included.

Total

($5,330 + $5,330) = $10,660

 

 

This is probably a mid to high tier VM, which would depend on disk IO rates and load. I could see charging anywhere from $3,000-$4,500 for this VM. I will eventually post the details on how that number was derived.

Total value added: ($10,660 – $4,500) = $6,160. That’s the high estimate on what would be charged. That’s not even including the depreciation that the server would incur each year. Or the value added from faster recovery times with VMware Consolidated Backup or SAN based snapshots. Or the value added from being able to deploy a virtual machine much faster than acquire physical equipment. Or the zero downtime VMware hosts can have with hardware maintenance via vMotion. Or the downtime that was not incurred because virtual machines have ability to be placed in snapshot mode, protecting from potentially disruptive changes.

Of course, this is all just talk unless you to have an SLA to back the value added claims up. In your SLA it is important to note that high availability with CPU/RAM is not fault tolerance. That’s coming soon, but VMware Fault Tolerance has not hit the market yet. While the SLA cannot guarantee zero downtime, an SLA backed by VMware HA can guarantee much less downtime than a non clustered physical system.

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One Comment

  1. It all depends on how you look at it — and you’ve done a good job showing that you definitively have to view it from another perspective.

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