New online tools for virtualization platforms can give you a more granular view of usage and expenses.

Despite the recession's gradual abatement, pressures to reduce IT costs continue and IT managers are looking for ways to free up money for the new investments that have been put off for the past year or more. While virtualization and cloud computing hold the promise of increased efficiencies, they introduce a level of complexity that makes tracking costs more difficult.

Getting a handle on IT costs can be challenging, and the problem is exacerbated when moving to the cloud. How do you measure the cost and value of cloud-based computing? Wouldn't it be nice if a single, unified solution were available for managing cost and value across multiple cloud services, vendors, and platforms?

Managing IT Costs

Digital Fuel Technologies, a company with a SaaS-based IT financial management solution, offers a suite it calls IT Cost Management solutions, including IT Cloud Cost Management. It recently announced it has extended this solution to encompass cloud and virtual environments enabled by VMware and its vSphere virtual infrastructure platform. Digital Fuel is a pioneer in the field of IT cost and financial management and offers out-of-the-box solutions to measure the cost of cloud computing. IT organizations using Digital Fuel's solutions can track the total cost of operation (lesser than total cost of ownership), unit cost, and performance of services in order to help optimize the business value of cloud and virtual environments.

VMware's virtual infrastructure platform, called vSphere, supports a Web service API that Digital Fuel has recently made use of to map cloud and virtual VMware entities and collect performance and usage data. Digital Fuel then combines those results with its application capabilities and cost information to give IT organizations a better understanding of what an application costs or what an IT service costs running on top of a virtual environment. The calculations are based on resource utilization.

Managing the Cloud Environment

IT executives looking for more control over the cost and business value of their cloud and virtual infrastructures will welcome the Digital Fuel tie-in to the vSphere platform. IT managers and CIOs can not only obtain total cost of operation and unit cost from the Digital Fuel IT Cloud Cost Management solution but also help the entire IT department manage its service-level agreements (SLAs) of virtual and cloud environments. This means accurately billing and charging based on usage, making use of underutilized resources, and identifying resource bottlenecks.

"VMware is revolutionizing enterprise computing by supporting virtualized solutions for nearly any IT need, from server and desktop virtualization to business continuity and resource consolidation," says Yisrael Dancziger, president and CEO of Digital Fuel. "This progress creates opportunities for impressive gains from understanding and measuring the cost and value of cloud-based computing," Dancziger says.

Mapping the Virtualization Topology

While IT Cloud Cost Management is a SaaS solution, and therefore easy to implement and access, it is hard to imagine how it can discover a user's VMware topology, map virtual data centers, or compute resources and associated virtual machines—but that is what it's designed to do and apparently does so with aplomb. It uses what is known as the Digital Fuel VMware Connector to document the topology and then collect performance data, including CPU, memory, network, and disk space usage. Having collected all that information, the Digital Fuel solution combines it with application capabilities and cost information, presumably supplied by the user, giving the IT department a collection of reports that it can use to measure unit cost, reveal total cost of ownership, and even drill down into various components. It displays underutilized resources that may be free and helps reduce or eliminate bottlenecks that can contribute to application or service outages, according to the company.

If a department is interested in consolidation and virtualization initiatives to trim costs, Digital Fuel's utilization reports will provide a firm basis for proceeding forward—or not. The reports identify underutilized host and cluster resources so the user can migrate virtual machines to different hosts to help reduce costs. VMware has a tool to do that, and a number of third-party solutions in the IBM world do that as well. In the meantime, Digital Fuel's platform detects the migration changes automatically and continues collecting the data without interruption.

What-If Scenarios

IT Cloud Cost Management has modules for cost allocation, budgeting, SLA management, and billing and charge-back options, but what's even more impressive is the "what-if  analyzer" that models costs of IT services, including cloud-based cost drivers. The analyzer gives the IT manager the tools to better plan and optimize based on different available options, whether they be technology or business scenarios. The solution even provides a means of meeting tax and regulatory compliance mandates in an auditable and justifiable manner based on usage, the company says. It offers a full range of reports, dashboards, benchmarks, templates, and cost models for optimizing and controlling cloud-based IT environments.

IT costs need to be trimmed, but the low-hanging fruit has been harvested long ago. Needless to say, services usually cannot be scaled back, and the mandate as often as not is to increase them. While the solution is to identify waste in the IT budget—or areas that don't deliver value to the business—it's difficult to do that if you can't accurately track costs. In an IT environment, it becomes challenging because the cost of any service is more than the initial cost of the hardware and software but also includes maintaining backups, offering service-desk support, and providing redundant server capacity for such things as production or high availability.

While government organizations like to cut costs a like amount across all departments, that's probably not the wisest way to reduce costs in a business. Some services have more value to the business than others; the problem is determining which ones have the most value. Certain tasks are mission-critical, and other key functions must continue without disruption. How do you identify those areas that are not as strategic and wouldn't be missed if they were cut? The solution, according to Digital Fuel, is to obtain detailed visibility over IT costs so as to control and predict them, make well-informed decisions about tradeoffs between costs and business needs, and ensure that costs are allocated properly in order to meet regulatory and tax requirements.

Seven Cost-Saving Tips

The company offers seven tips for optimizing IT costs that may be summarized as follows:

1. Consider removing applications that have high support-of-license costs but low business criticality or usage.
2. Identify candidates for virtualization that would result in higher cost savings but low risk.
3. Identify candidates for consolidation (such as servers and desktops with a high cost per CPU that are approaching end of life), compare various storage costs, and compare service-level requirements to actual utilization.
4. Defer upgrades by identifying servers and applications with both low costs and low business criticality, look for excess capacity, and run "what-if" scenarios to compare the cost of replacing servers and storage systems against upgrading.
5. Evaluate refreshing system hardware based on the cost and benefits of a refresh, including utilization patterns and business criticality, and look for cost drivers such as power, cooling, and facilities usage.
6. Identify end-of-life application candidates by looking at high cost versus lower usage and business criticality. Look for lower-cost alternatives such as SaaS-based solutions and outsourcing.
7. Reduce service levels as applications fall off in use, and reduce hardware to applications that have excess capacity. Rank applications in terms of criticality to the business and migrate less important ones to lower support levels.

Lowering IT costs will continue to be a challenge throughout this year and beyond, and the issue will become even more difficult as virtualization and cloud computing increase IT complexity. Specific tools exist, however, that can provide the visibility needed to allocate hardware, software, and services to reflect their level of importance to the business.

Chris Smith was the Senior News Editor at MC Press Online from 2007 to 2012 and was responsible for the news content on the company's Web site. Chris has been writing about the IBM midrange industry since 1992 when he signed on with Duke Communications as West Coast Editor of News 3X/400. With a bachelor's from the University of California at Berkeley, where he majored in English and minored in Journalism, and a master's in Journalism from the University of Colorado, Boulder, Chris later studied computer programming and AS/400 operations at Long Beach City College. An award-winning writer with two Maggie Awards, four business books, and a collection of poetry to his credit, Chris began his newspaper career as a reporter in northern California, later worked as night city editor for the Rocky Mountain News in Denver, and went on to edit a national cable television trade magazine. He was Communications Manager for McDonnell Douglas Corp. in Long Beach, Calif., before it merged with Boeing, and oversaw implementation of the company's first IBM desktop publishing system there. An editor for MC Press Online since 2007, Chris has authored some 300 articles on a broad range of topics surrounding the IBM midrange platform that have appeared in the company's eight industry-leading newsletters. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..