Welcome!

Blog Feed Post

Tune into the Cloud: Das Model

Tune into: Direct Container Costing

It is the day that you knew was coming, namely the day IT costs finally transitions from indirect overhead cost to direct attributable costs. This of course was to be expected with digital business becoming the norm(al). But the actual transition may still take a little longer than we might expect. The final transition needs what many would call a perfect storm, with all the ingredients lining up at the right time. A number of these ingredients is already present:

For one, we have seen – especially when the sold products themselves and the distribution thereof are becoming more digital – the share of IT cost in the total product cost increase, resulting in a greater need to account for these cost directly in the cost of each product. As a logical result of this we see the responsibility for these costs moving into the line of business departments. In addition we see the costs of the Internet of Things and smart machines shift to the line organization while we signaled years ago that in many industries the chief marketing officer may well have more to spend on IT than the CIO.

On a technical level we can – largely thanks to the introduction of containers – identify individual micro services costs and attribute them to the individual products or services that directly benefit from using these. Very much like we allocate the cost of wheels, saddles and gears in a bicycle factory to each produced cycle and not as a kind of convoluted overhead tax on the cost of the frames. What helps here is that we can start software containers per use and stop again. And that’s just the key difference between direct costs (such as mounting a wheel) and indirect costs (such as lighting or heating the factory).

This also opens the opportunity to move away from budget driven IT management. For digital business a budget driven approach is as inefficient as the budget-driven factories of the former Soviet Union. Where often already in August production had to be shut down for the rest of the year because the budget for saddles, tires or even bicycle bells was exhausted.

The scheduling of all those containers is by the way a challenge that is quit comparable to the challenges of planning production in a modern bicycle factory:  pretty complex. Especially if we want to do a certain amount of long-term planning and set ambitious but achievable cost targets. Calculating  how much it cost to produce an individual product after the fact is relatively simple, namely simply summing the individual cost of all the resources. But to set an upfront target cost (what should this product or service cost), we get stuck without a model that can be used to describe the service. In production we have known such models for years under the name of bill of material or formulation. In the cloud we often hear the term “services blueprint”, but in terms of maturity and acceptance of this, we are still some time away from beauty parades and model of the year elections.

For a sensible move to using direct costs, it is also necessary that we can pay our cloud providers based on the individual containers services used. With function platforms (fPaaS) such as Amazon’s Lambda we have seen this indeed become possible. Here we on pay per function called (in millionths of cents) and for the actual memory used (in tenths of seconds). But for many of the more generic container services payment is still a kind of flat fee calculated based on the cost of the underlying VMs, regardless of how many or what type of containers are actually running. That’s a bit like a bicycle factory which pays its supplier by the cost of the machine that produces wheels, instead of by the actual number of wheels consumed,.

The song “Das Model” from 1978 of the German band Kraftwerk is about a catwalk beauty parade. In the UK it originally came out as secondary B-side of as song called ‘Computer Love’, but the market was quick in deeming it the primary A-side, elevating it to the number 1 position in the UK top 75 singles.

Read the original blog entry...

More Stories By Gregor Petri

Gregor Petri is a regular expert or keynote speaker at industry events throughout Europe and wrote the cloud primer “Shedding Light on Cloud Computing”. He was also a columnist at ITSM Portal, contributing author to the Dutch “Over Cloud Computing” book, member of the Computable expert panel and his LeanITmanager blog is syndicated across many sites worldwide. Gregor was named by Cloud Computing Journal as one of The Top 100 Bloggers on Cloud Computing.

Follow him on Twitter @GregorPetri or read his blog at blog.gregorpetri.com

Latest Stories
Automation is enabling enterprises to design, deploy, and manage more complex, hybrid cloud environments. Yet the people who manage these environments must be trained in and understanding these environments better than ever before. A new era of analytics and cognitive computing is adding intelligence, but also more complexity, to these cloud environments. How smart is your cloud? How smart should it be? In this power panel at 20th Cloud Expo, moderated by Conference Chair Roger Strukhoff, pane...
Cloud Expo, Inc. has announced today that Andi Mann and Aruna Ravichandran have been named Co-Chairs of @DevOpsSummit at Cloud Expo Silicon Valley which will take place Oct. 31-Nov. 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. "DevOps is at the intersection of technology and business-optimizing tools, organizations and processes to bring measurable improvements in productivity and profitability," said Aruna Ravichandran, vice president, DevOps product and solutions marketing...
@DevOpsSummit at Cloud Expo taking place Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center, Santa Clara, CA, is co-located with the 21st International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is ...
SYS-CON Events announced today that CA Technologies has been named "Platinum Sponsor" of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business - from apparel to energy - is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...
SYS-CON Events announced today that IBM has been named “Diamond Sponsor” of SYS-CON's 21st Cloud Expo, which will take place on October 31 through November 2nd 2017 at the Santa Clara Convention Center in Santa Clara, California.
What's the role of an IT self-service portal when you get to continuous delivery and Infrastructure as Code? This general session showed how to create the continuous delivery culture and eight accelerators for leading the change. Don Demcsak is a DevOps and Cloud Native Modernization Principal for Dell EMC based out of New Jersey. He is a former, long time, Microsoft Most Valuable Professional, specializing in building and architecting Application Delivery Pipelines for hybrid legacy, and cloud ...
In his session at Cloud Expo, Alan Winters, an entertainment executive/TV producer turned serial entrepreneur, presented a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to ma...
We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA
SYS-CON Events announced today that Cloud Academy named "Bronze Sponsor" of 21st International Cloud Expo which will take place October 31 - November 2, 2017 at the Santa Clara Convention Center in Santa Clara, CA. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud com...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
21st International Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Me...
DevOps at Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to w...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...