The 10 biggest metering and billing mistakes

The 10 Biggest Metering and
Billing Mistakes that Cloud
Service Providers Make
Alex Bligh
COO & CTO, Flexiant Ltd.
www.flexiant.com
© 2012 Flexiant Ltd
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§  Why conventional “Hosting billing”
and “Telco billing” approaches do
not work

§  Why many companies are losing
revenue and margin every hour

§  What cloud customers demand
from cloud billing and why existing
systems are unsuitable

§  What you need to support
resellers and white labelling,
multiple price plans, and multiple
currencies

§  How you can overcome the
implications of handling big data
sets

§  How to remove complexity from
your customer billing models
www.flexiant.com
3 §  And much more...

Why us?
•  Heritage

•  Made the journey from
hosting

•  Launched Europe’s first
public cloud services

•  Over 100 customers using
Flexiant Cloud Orchestrator

•  Metering & Billing is an
acknowledged strength
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Metering and Billing

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Metering and billing is...

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But they turn this...

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…into this

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What is it?

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What is it?
Ø  Metering
§  Measuring consumption of
resources
Ø  Rating
§  Correlating resource
consumption with a product that
has been purchased
§  Combining the two to form a
charge
Ø  Billing
§  Aggregating charges to form a
monetary amount to be
invoiced
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What is it?
Ø  Invoicing
§  Producing an invoice in respect
of a charged amount
§  Handling of sales taxes
Ø  Collection
§  Automated / semi-automated
collection of amounts owing
§  Credit card processing, direct debit/
credit processing
Ø  Dunning & Credit Control
§  Maintenance of accounts receivable
§  Handling of credit limits, aged
debtors and credit exceptions
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Why Conventional Billing Won’t Work

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Why conventional billing won’t work

“Hosting Billing”
Ø  Subscription billing
Ø  Fixed bill per month
Ø  One bill per month per
customer
Ø  Non-real time

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“Telco Billing”
Ø  CDR based
Ø  Non-real time
Ø  Inflexible

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Cloud customers expect:
Ø  Real time billing
Ø  Instant signup
Ø  Their bill to be
comprehensible

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Typical Issues for the Cloud Provider

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Typical issues for the cloud
provider
Ø  Multiple existing systems
§  All typically unsuitable for
cloud billing
Ø  Strategies to reduce the
number of invoices
Ø  Resellers and white labeling
Ø  Multiple price plans
Ø  Multiple currencies
Ø  Flexibility

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Did We Forget to Mention Big Data?

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Big data sets
Mobile phones in UK
Ø  Number of handsets approx.
60 million
Ø  Number of calls per month
per subscriber, approx. 150
Ø  One year, number of records
about: 100,000,000,000
Ø  Records per customer per
year: 1,800

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Big data sets
Cloud IaaS platform
Ø  50,000 customers, 2 running servers
per customer
Ø  100,000 virtual servers
Ø  Hourly billing
Ø  6 components per server
Ø  Around 200 inserts per second
Ø  One year, number of records: about
1,000,000,000,000
Ø  Records per customer per year:
10,000 - 5,000,000

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Pricing Policy

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Pricing Policy
Ø  Our single most common post-
sale question:
§  “How do I price my products?”

Ø  First understand your cost
structure
§  Model your platform
§  Cost every component
§  Recognise some are linked (e.g.
RAM/CPU)
§  Marginal cost basis often helpful

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Pricing Advice and Pitfalls
Ø  Use pricing components that are
§  Measurable
§  Aligned with your own costs
§  Verifiable
§  Explicable
§  Necessary
Ø  Obscure components sometimes cost more than
less obscure ones
§  e.g. Disk I/O will cost you far more than disk space
Ø  Don’t be tempted to ignore these costs because
§  Your costs and revenue will be unaligned
§  Worse, you will attract unprofitable customers

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Pricing Advice and Pitfalls
Ø  Remember where the
components are measured
§  Consider thin provisioning,
caching

Ø  Linked Components
§  e.g. RAM/CPU ratio set by your
hardware choice
§  If customers use a different ratio,
you will end up with suboptimal
utilisation
§  Use economic incentives to drive
desired behaviour

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The Dangers of Complexity

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Try to do this...

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…and not this

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Simplicity
Ø Some billing systems are very
powerful
Ø Do not be tempted to use every
feature
Ø Start off with a small number of line
items
Ø Add more later if necessary
Ø Remember, your pricing model needs
to be explained:
§  by you to your customer
§  by you to your reseller
§  by your reseller to their customers
Ø Remember, one day someone will
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query their bill
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•  Single pane of glass

•  Multi-hypervisor

•  Multi-cluster

•  Highly configurable UI

•  Flexible self-service

•  Multi-level metering & billing

•  Fine-grained permissions

•  Application management

•  Intelligent workload placement

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Who has the first Question?

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Photo Attributions:
•  Seattle Municipal Archives
•  Jo Jakeman
•  Svadilfari
•  Liz Marie AK
•  Images of Money
•  Dave Dugdale
•  Ed Yourdon
•  Believe Kevin
•  NeoSpire
•  401(K) 2012
•  Nodespt
•  ClaraDon

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The 10 biggest metering and billing mistakes

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