Charge IT Back

By Cameron Sturdevant  |  Posted 2011-11-01

The magic of information technology comes with a price tag. If your IT organization has taken a couple of steps down the virtualization road, you're likely coming to that part of the trail where you need to know "how much is all this costing?" and "is the cost being shared equitably across the business?"

Back in the "good old days" when applications ran on individual hardware servers (it seems odd even describing such a horribly inefficient use of compute resources) it was relatively easy to provide cost information to business units. Hardware and licenses are easy to track and bill relative to today's more flexible, virtual environment.

I recently tested VMware's vCenter Chargeback. Earlier this year I reviewed SolarWinds Virtualization Manager, which includes a chargeback module. I'm setting the stage to look at other cost tracking tools, as I believe that operational cost tracking is only going to grow in importance.

So far, I'd have to say that while the tools are a good first step, there is clearly a lot of room for growth. The tools require a fair amount of fine tuning to work accurately. And IT operators need more experience in using the tools to provide the appropriate data to the accounting department so that charges are up to snuff when it comes to complying with budget rules.

As I wrote in my review of VMware's vCenter Chargeback, "Formal chargeback, according to most vendors in the space, is fairly uncommon because the cost numbers provided must usually conform to generally accepted accounting principles. These principles are quite strict when it comes to associating costs with physical assets including servers, storage arrays and network equipment, which have definite depreciation rates. Further, many of these physical assets have come with tax implications that govern how the value of the equipment is measured.

For example, if a virtual machine runs on physical server A and then moves to physical server B, neither of which are at the same point in the depreciation process, it is a non-trivial problem to figure out how much to charge the department using the virtual machine.

Furthermore, a practical chargeback system must be integrated with an internal accounting system so that bills can be presented for payment.

Showback is an informal way of associating estimated costs for virtual machine operation without any money changing hands, thereby avoiding the sticky accounting rules. Reports can be provided to managers as a guide to budgeting decisions without entering the regulated world of tax accounts."

IT still needs to make magic happen, but we need to make sure the rest of the business knows how much they are paying for the very real infrastructure that makes the miraculous possible.

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