The 10 biggest metering and billing mistakes

www.flexiant.com © 2012 Flexiant Ltd 1

The 10 Biggest Metering and Billing Mistakes that Cloud Service Providers Make

Alex Bligh COO & CTO, Flexiant Ltd.


www.flexiant.com © 2012 Flexiant Ltd

§  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

§  And much more...

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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


Metering and billing is...


But they turn this...


…into this


What is it?



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


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


Why Conventional Billing Won’t Work



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



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



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

comprehensible


Typical Issues for the Cloud Provider



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


Did We Forget to Mention Big Data?



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


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


Pricing Policy



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


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


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


The Dangers of Complexity



Try to do this...


…and not this


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 query their bill


•  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?




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

The 10 biggest metering and billing mistakes

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The 10 biggest metering and billing mistakes