Have you thought about charging your “customers” for IT services you are providing? I bet you have and I thought about that model for quite some time.
The promise of cloud computing, virtualization, usage metering, and IT as a Service often spawn the thoughts of billing the end customer, i.e. business units in a corporation. This is a world where super flexible infrastructure can flip the switch on applications, server workloads, entire desktops and user accounts in a heart beat.
Niel Nicholaisen writes about the topic in this article?
Let me add a few of my own thoughts:
• IT departments can count on (or hope for) a small percentage of a company’s annual revenues as a budget for capex and opex. IT is asked to provide literally the entire workspace and infrastructure for all users and often has to do more with less compared to the previous year. In the healthcare industry, that number stands at roughly 3% of revenues in the US and only about 2% in Europe.
• IT departments often get frustrated, because they have to provide expensive and complicated applications to a handful of users that chew up a large portion of resources and expenditures to do so.
• With the dawn of desktop and broader application virtualization, IT departments are tempted to charge for their services on a per user or per application basis. $30 per month for a desktop, $20 per month for Internet access, $5 per month for anti virus, etc.
• The model is obviously tempting for two reasons: It discourages the use of complex and expensive applications and brings the true cost of computing back to the business and it also holds the promise of increasing the IT budget linearly with the services that are provided.

However, as Niel points out, this can alienate the users. First of all, as a user I may find that I get really shoddy service for the $70 per month or so for basic services per user. As a business, I don’t have the choice to go get my Internet access or email service from someplace else . Sometimes (as a business) I think I can, and I may go to a cloud-based email service or attempt to buy my own backup service, but all of that comes at the cost of increasing complexity and introducing expensive integration points.
Keep in mind that IT is just another corporate service. I am not getting charged for payroll processing, legal support, marketing support, etc. Larger companies tend to cross charge for internal consulting services and sometimes for recruiting activities, but that’s pretty much it.

So, here is my recommendation for IT: Go ahead and charge your business units. Be aware of the pushback this may generate. In order to prevent backlash, do the following:
• Be the best in the industry. That’s right. Users will be tempted to compare the service you are providing (at the price you are charging) to consumer-grade services that are available online and that are provided by much larger organizations with better economies of scale. The expectation for the quality of your service goes up as you start charging for it.
• Virtualize applications and desktops. This will not only centralize the data, but make cost more transparent and predictable. If you do this right, you can reduce costs. If you don’t, you can end up driving up your costs, so choose wisely.
• Consider using third party, cloud based services for certain types of apps. Just because you managed something in-house in the past, doesn’t mean that this is the best modality going forward. CRM and web hosting services are examples of apps that have been pushed (or elevated) to the cloud for a while now in the industry.
• Monitor your resource use and utilization to get a grip on the human cost of environment support. The smaller your organization, the more difficult this is going to be. After all, you can’t hire a fraction of a SQL Administrator.
• Ensure that you explain (via your executives) that you have much higher data availability and reliability standards to meet than any publicly available service and that the company is required to provide the services internally to maintain control and ensure compliance.
• Consider implementing a “Bring Your Own Computer” model. We’ve had it at my employer for a while and it’s great. I own the endpoint, and I can manage my computer just fine, thank you very much. I can now have my own desktop, anti-virus, and other consumer grade services to dabble around and get a corporate Windows 7 image (a virtual desktop) from IT with the key apps I need to do my work.
• Expect to get charged by your accountants for the support they may need to lend to you as part of this process

Questions? Comments? Let me know what you think and how you have been managing the cost of providing IT services.

Florian Becker
Twitter: @florianbecker
Virtualization Pulse: Tech Target Blog
Ask the Architect – Everything Healthcare

There’s an interesting debate going on about the value of online meetings and web conferencing compared to face-to-face in-person meetings. Airlines don’t want always want airport visitors to see the “Next Time Meet Online” GoToMeeting ads. And Hyatt is defending business travel.

This is a false choice. Of course, face-to-face meetings are great. The question is are there situations where the benefit of saving time and travel costs outweighs the value of meeting in person? Can you sell to a wider audience? Train people more easily? Attend more productive meetings? Employ (or retain) people in more locations? And, if so, how much time and travel costs do you save exactly? What’s the ROI on online meeting tools?

Consider this graph from our finance dept correlating increased use of GoToMeeting and GoToWebinar at Citrix and decreasing travel cost per employee.

In this example, the $150 savings is a roughly 3X return compared to the cost of a GoToMeeting license, but reduced travel isn’t the only benefit of online meetings. 
For instance, a greater benefit for us is simply including a GoToMeeting link in all on-site meetings. That way people can join from other offices, their home, wherever they happen to be, even if it’s just down to road. 

From marketing, to sales, to service, to training, HR, engineering -- what’s remarkable is how impactful online meeting tools are across the organization on everyday productivity. It takes time, but usage grows and they become habitual and indispensable. It is becoming a competitive disadvantage to not use them.

One caveat to that is that if you have a web conferencing solution but people don’t use it widely (because it’s not easy, not reliable or otherwise problematic) than you are missing out on the benefits. The key is usage.

Yes, I am saying it…the cost of desktop virtualization is finally going in the right direction! For those of you who know me from my Forrester Research days, you will know that I was a huge proponent of desktop virtualization for reasons of security, manageability, compliance, flexibility, business continuity…the list goes on. However, I was quite vocal that desktop virtualization should NOT be considered for cost reduction, as the infrastructure costs were just too high.

By way of introduction, my name is Natalie Lambert and I am a new director of product marketing for Citrix XenDesktop. I came to Citrix in November of last year from Forrester where I covered desktop virtualization, among other things. While I loved being an analyst, I really wanted to jump over to the “other side” to start truly getting involved in the technologies that I have been consulting on for the past 7 years.

Given that I have only been at Citrix for 2 months, I still consider myself unbiased. So, when I say that the cost of desktop virtualization is going down, I really mean it. Yesterday, Citrix announced dramatic improvements in the scalability of XenDesktop. So, what does this mean? Let me compare this with what I found when I was at Forrester and wrote the report Inquiry Insights: Client Virtualization, Q3 2008. At a high level, I estimated that it costs organizations approximately $1,760 per user for hosted VM-based desktop virtualization (VDI). I got this number by assuming the following: 1) $300 per thin client; 2) $10,000 per server that can accommodate 10 users; 3) $200 storage costs per user (20 GB at $10 per GB); 4) $110 per device for the Windows VECD license (assuming the customer was not a Microsoft Software Assurance customer); and 5) $150 per user for the virtualization license. What I want to highlight here is the server cost: 10 users on a $10,000 server cost organizations approximately $1,000 per user. That was common back in July 2008 – especially for users getting started with desktop virtualization.

However, with the latest Intel® Xeon® processor™ 5500 technology, Citrix can now support 125 users per server when delivering hosted VM-based desktops. If we use the servers that Citrix just verified, the Dell PowerEdge R710, at $8,886 per server, the cost for the server infrastructure drops to $71 per user – instead of $1,000! Just that small change cuts the cost of desktop virtualization in half, if not more!! Now, I am aware that storage costs have changed as well, as cost per GB per user is not an accurate way to measure storage costs, I will leave this for another day and only say that those costs are going down as well.

In the end, desktop virtualization is still expensive (especially VDI), however, the costs are much more in your favor than ever before.