Monday, November 28, 2011

Cloud Computing Billing Realities

Cloud computing Billing Realities : IaaS Industry and Real time billing for IaaS providers

Author: balubojja4u

With advent of development in virtualization and other supporting technologies, many data centers are coming up with cloud servers. They are providing physical resources like RAM, storage, CPU cycles as service bundles and are able to provision these resources on a real time basis making the users to pay exactly for what they use.

This has been widely accepted by many companies as it comes with 2 major benefits.

Reduction in Capital Expenditure:
Reduction of capital expenditure is a major benefit for the IaaS users. This helps them to distribute the cost evenly over a span of few months or a year. This has optimized the way in which a company spends on its infrastructure needs as the IaaS user pays either less than a conventional data center option or get more out of the same expenditure.

Meeting fluctuating demand for resources:
This is the second and perhaps one of the most important reason that made cloud computing so popular among not just startups but also huge IT giants. Companies needed server resources in an adhoc manner where planning cannot help meeting demand. Traditional data centers could not do that as they sold servers as units(You can buy a fixed number physical servers). Hence scaling up the server capacity meant physically adding servers. But virtualization servers have overcome that limitation. They could ramp up the server capacity as and when there was a requirement. And the user has to pay for resources for the amount of time he has used the resource.

But IaaS providers find it very difficult to operate with traditional support systems in place which also includes a billing solution and it is affecting their bottom line severely. To discuss more about that, let us consider a simple use case of an IaaS provider.

An example:
Let us assume that an IaaS provider provides a set of services, like CPU, RAM, Bandwidth etc., in the following way which costs $40/Month
10GB-Storage(µ50/GB/Hour)
2GB-RAM(µ40/128MB/Hour)
512MB-Burstable RAM(µ80/128MB/Hour)
10GB-Bandwidth,Metered($1/1GB/Hour)
2Cores-CPU

This is typical case where the IaaS provider is providing the service at an initial cost of $40/Month and will be changing extra depending on the usage. This usage charges keeps reducing as the users choose for higher plans. Now that we have seen the offering let us discuss about the operational activities that support this kind of flexible offering.

Operational woos:
An IaaS provider’s server management is taken care by the virtualization tools, which also takes care of creating various VMs(Virtual Machines), managing resources, maintaining the log of activities, etc,. But these virtualization platforms do not take care of the billing related activities. This can be a gap in the operation when it comes to billing the customers for their services based on usage.

Let us just discuss a little about billing before moving on to usage based billing. Advent of cloud has raised the bar for expectations from a billing system. Cloud providers need billing system that is agile at the same time it has to have a set of comprehensive set of features in it. A typical cloud billing system will have the ability to generate bills based on flexible price plans, ability to integrate with wide range of 3rd party systems, real time billing(we will discuss more later), transparent and accurate information management, etc. The above mentioned features are necessary for cloud providers to offer flexible services billed accurately.

IaaS providers are unique when it comes to the services they offer. All the other cloud providers like SaaS or PaaS provide services on a ‘pay as you go’ model but IaaS provide physical resources. While the virtualization platform takes care of provisioning, the usage data should be automatically pulled and applied to the predefined price plans. Without such systems, the billing process will involve manual process which brings down both efficiency and accuracy. Apart from this, automation of updating the usage data of a particular user will not be possible.

Requirements of a billing system:
Ability to integrate with virtualization platforms for real time provisioning and billing.
Ability to define and manage flexible price plans.
Payment gateway integration for automated billing.
Real time billing for real time provisioning.
Effective information management.
Ability to integrate with 3rd party systems in eco system.
Automatic usage based billing.
Some of the common benefits from having a cloud centric billing system are
Automated work flows for accuracy and efficiency.
Customer can use the service in no time.
Information flow between different departments can be done with glitches.
Accurate billing will be possible.
Customers can see their usage.
Accounting process simplification.
Supports high scalability.

A brief on eVapt:
eVapt Inc provides billing solution to IaaS, SaaS, PaaS and On-demand providers. Our product’s core ability is managing flexible/complex price plans and automating the billing. Over the years our solution has evolved into a comprehensive end to end customer management system while specializing in our core competencies. Today many enterprise grade cloud solution providers trust eVapt’s billing solution.

Challenges of Usage Metering in Cloud Computing