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AM chargeback/ TCO reporting for business services

Mike Grainge, AM Product Manager Mark Bradley, Product Marketing Manager #HPDiscover-CMS

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“Reduce AM chargeback/TCO reporting for business services”

September 29, 2015

#HPDiscover-CMS

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Mark Bradley

Product Marketing Manager

HP Software

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Today’s Speakers

Mark Bradley

Product Marketing Manager

HP Software

Michael Grainge

Senior Product Manager

HP Software

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Questions

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Full screen/window mode.

There was a time when every household had its own water well. ?

Compelling and

realistic business

cases

What should ITFM professionals do to prepare their organizations?

Validate current

cost models

Top three cloud-related challenges

Chargeback and

showback

Determine new

unit

Cost models

Evaluate

Procurement

Models

Identify

accounting & tax

effects

Alignment of

vendor contracts

“Pay as you go”

pricing

Assess

subscription

based models

Evidence of

cost

savings

Shifting to usage-

driven pricing

Compelling and

realistic business

cases

What ITFM professionals do to prepare for Cloud

The opportunity

Maximize investment of company funds and resources to make a difference

Communicate IT value through IT spend trends and baselines by business service, application, business unit, and IT budget categories

Deliver business innovation/growth

Cut costs and manage budgets well

• Visibility

• Resource allocation

• Investment capital

What is your current IT financial baseline?

Total spending

Operations spending

31.9%

63.5%

4.6%

New IT

investments

Operations

and support

Planning

and strategy

Source: Planning and Budgeting Best Practices Benchmark Survey

23%

11%

13%

11%

3%

5%

16%

8%

10% Application management

S/W licenses

Data Center

End user support

Security and continuity

Outside services

Network

Shared service

Other

Source: Implementing Service & Support Management Processes: A Practical Guide Page: 276 -- By Mark E.

Bradley

Expectation/s

IT Services

Performance/$

Request

for service

SLA SLA

Highly

satisfied

Highly

dissatisfied

Consumers

IT Organization

Service Catalog

Gold

Silver

Bronze

Options

Parameters

Levels

OLA UC

Balancing demand and supply Having visibility into your environment is critical

Demand management

Financial management

IT cost / budget

(Volume and price) IT FTEs

IT operating budget

IT demand drivers

Internal business initiatives

Regulatory compliance

requirements

External market forces

IT cost control

strategies

Sustainable

structural improvements

Discretionary cuts

Short term

measured activities IT demand management

Chargeback/cost allocation

Project portfolio management

Service catalog

IT demand

(Quantity and quality)

Internal IT end users

External IT end users

Production and consumption of IT are changing radically … at the same time

Consumerization New consumption demands

The living room The marketplace The back office

Public

cloud

Private

cloud Traditional

provisioning

Mobility: • Bring your own device

Systems of engagement: • Evaluation venues

• Social media

Systems of record New architectures

Cloud New production and sourcing methods

Multiple delivery options emerging for businesses Differentiated by service level agreements (SLAs), price points and length of financial commitment

Private Cloud Managed Cloud Public Cloud Traditional

SLAs

Availability, security, performance, compliance, cost

Customer-defined Negotiated Standard, published Customer-defined

Produce (build and run)

on-premises cloud services

Systems of Engagement

External platform

(Facebook, Google Apps,

Apple Apps)

‘Open services are upon you, whether you would risk them or not’.

Consumers

Broker, integrate and monitor

Building a business service catalog becomes critical Business insight into the IT enabled business services

Cost of IT Infrastructure (monthly)

Server •$125 per CPU

Storage •$0.12 per GB

Cost of IT Service (monthly)

Email service •$5 per User

Payroll Service •$15 per User

?

Business service catalog

Service definition

Consumption rules

Agreed service levels

Service price

Internal solution

Platform (HW)

(Exchange)

Software

(Exchange)

Databases

(Exchange)

Documents

(Exchange)

System

(Exchange)

System

(Lotus Notes)

Service

Email

Server 1

Server 2

Server 3

Exchange

SW

SQL

DB

Policy

Size Limit

Object model and IT services

Logical:

Logical:

Logical:

Physical:

Object model and IT services

Service costing and usage

Business Application

service

Business service

Management

Each stage aggregates cost based on what it consumes in terms of labor, depreciation and external services

Infrastructure services stage (compare to IaaS)

Application services stages (compare to SaaS)

Business services stage

Application

instance

Support Depreciation Projects

opex

Internal External

Labor Non-

Labor

Labor Non-

Labor

Computing Database Data

protection

Storage Network Facilities

Raw cost data

Financial cost automation example

Stage 1

Facility costs

Project

initiation

Project

execution

Project

completion Stage 2

Power costs

Stage 3

Security costs

Stage 4

Labor costs

Calculate Linux server service cost scenario

Stage 1

Backup costs

Project

initiation

Project

execution

Project

completion Stage 2

Patch costs

Stage 3

DR costs

Stage 4

Labor costs

Stage 1

Hardware costs

Project

initiation

Project

execution

Project

completion Stage 2

Software costs

Stage 3

Maint. Costs

Stage 4

Cost per server

Calculate

data center

hosting costs

Calculate

managed

service costs

Calculate

server costs

Full lifecycle use case: Linking project cost to service cost

Depreciation Support Computing

Consumption

Volume

Consumption

Volume

Allocation

Rule

Allocation

Rule

Storage

Proposal

Estimation in

Application

Development: • Run assumptions

based on

Infrastructure

Service price list

• Forecast into

Infrastructure

Service demand

Run rate costs in

Operations

tracked by

service

Project analyst selects quantity of units

Infrastructure Service Price

List (Unit Cost)

Capex Opex

Proposal assumptions:

build, run and maintain

Project forecast & actuals

Project final

Common IT data model: Projects mapped to services

Maintenance

Total Run Rate

Cost of Business

Service X

Showback

Budgeting

Cost control

BSM, NNM, SE Insight-Control

PPM AM

SM Service Providers

CSA Excel\External

Cost Allocation Engine

uCMDB (topology)

HP IT Financial Management

Financial Management Chargeback with Asset Management

The HP Software Asset Management solution

Business Information Sources

Procurement Financial

Management

Contract Management

Software Asset Management

Asset Portfolio Management

Dashboards, Reports, Scorecards

Content

Content

Asset Management

TCO / IMAC processes / Assets Statuses / Software Compliance /

Costs allocation / Contracts

ERP

•Purchase orders

•Catalogues

•Costs Contract

Management

•Terms and conditions

•Leasing contracts

Financial Management

•Budets

•Depreciations schemes

Project Management

•Projects

•Labor costs Inventory Management / Application

mapping

•Network devices

CMS

•Business Services definitions

•Application mapping

Active Directory

•Employees

•Departments

•Locations

•Roles

Service Management

•Calls

• Incidents

•Changes

Asset Management is part of an eco system Information owned by each system

AM tracks the associated costs… and more

report cost for compliance

reconcile users, assets, projects and contracts

automatic allocation, chargeback

Acquisition (lease or not)

Operational

Changes costs

Maintenance contracts costs

Links and categorize costs

Assets

Users

Cost Center

Cost categories

Reconcile with Budget Center and budgets

Financial periods

Track Costs

Re-allocates costs

Manages contracts

Tracks software compliance

• Chargeback to end users induces expense optimizations

• Entitlement Management and Software counters that include usage and entitlement dimensions allow software investments optimizations

• Automation around leasing contracts return allow to avoid late return penalties

• Reflect of real status of asset and integration to ERP fixed assets allow fixed asset taxes decrease

29

Beyond cost understanding, Asset Manager allows savings

• Charge back rules reflect your business organization • Triggered by periodic or database events • On certain objects • For a certain amount • From a source cost center • To a target cost center

• Two expense lines are created for each charge back • One crediting a cost center • One debiting a cost center • Operation is balanced, no wealth created, but accountability for costs is modified for financial reporting

• You manage your IT as a real P&L

Chargeback engine allows to reallocate costs

Examples of expense lines

• Each time a server is moved, its cost center is charged with $400

• A new development software license received is charged to IT for 20% of its purchase value and 80% to Development

• An access to the SAP business service will be charged back to the business unit of the user for 200$ / year

Examples of chargeback rules

• Example of Software Compliance

Asset Manager can also simulate costs

• AQL engine allows advanced calculation for TCO • Retrieve all expenses on an Asset

– Acquisition cost – Maintenance cost – Operational costs (work orders, logistics costs)

• An economic depreciation of costs is applied

– For instance • Purchase price on 4 years for IT assets • Yearly maintenance on one year

• A yearly TCO is calculated for the asset • This asset yearly TCO is aggregated at asset class level

• TCO optimizes your IT financial Management • Vendor selection • Cost forecasting • Basis for charge back rules…

TCO calculation

• Service Management (change costs), out of the box integration

• ERP (purchase cost)

• Suppliers catalogues imports

• UCMDB (get definitions of the business services)

• Cloud Service Providers - Integrates seamlessly with HP Cloud Service Automation (CSA), HP CloudSystem Matrix and Amazon EC2 for billing activities

OOB integrations with other tools of the IT ecosystem brings value to cost tracking

HP Asset Management Chargeback Use Case Charging Human Resources system access to end users

SAP clients

(Client)

Application Server

(Resource / client): 100%

Web Server

(Client): 23%

Oracle Db server

1 (resource): 60%

Oracle Db server 2

(resource): 30%

SAP Web clients

(Client)

Human Resources

AM provides TCO of the HR service (includ. HW, licenses, contracts and operational costs)

This information is available in the Business Services screen

And Yearly TCO is available on the ROI tab of the business service tab

Yearly TCO of the business service uses each Yearly TCO of the resources including all costs

• Fixed price

– (Yearly TCO + Margin)/nr of uses = Use Price

• A pricing based on Usage is possible but needs appropriate reporting on usage

HR Service Manager can build his price

• Managed through requests (possibly out of Asset Manager, can be in SM too)

• Approval workflow in AM

• Users are associated to the service and tracked

User can request access to the HR Service

• Charge each user’s cost center of the HR Service

• Monthly

• For a fixed Cost (amount can be calculated too)

A charge Back Rule is set

Detail of the charge back rule

A charge back rule can also be set for non respect of SLAs in AM

• AM is much more than a repository that gets costs from other sources, it

• Captures costs in a highly automated way

• Reallocates when need the costs automatically way (charge back)

• Aggregates costs into TCO, and even business services TCOs

• Captures links to users, locations, cost center, budgets and categories…

• Keeps the links updated along the whole asset life cycle.

• AM prepares and automates all the financial analysis angles that FPA will propose!

The Value of AM

• Assets (Individual tracking on barcode, precise categorization)

• Purchase costs (and vendors)

– Initial purchase cost

–Leasing rents

• Maintenance costs

–Yearly rents

• Operational costs (from Change Management tool: OOB integration with SM to capture change time and apply technician hourly cost)

• Internal charges cost for Service

• Penalties

• All sums that are charged back to end users by the business services

Costs coming from AM

Conclusion & resources

49

Date Platform Partner Topic Presenter

Tuesday, October

6, 2015

12pm PT / 1pm ET

/ 8pm GMT

HP Software

IT Experts

Community

Leverage

Discovery Showcasing the flexibility of the HP CMS developers framework

Rarely does a shrink-wrapped product have everything a customer needs. So the question becomes,

how flexible and extensible is the product? An extensible product allows you the ability to add what isn’t

available out-of-the-box. And you can do so with internal FTEs, HP professional services, HP partners,

and freelance consultants. By extending the ability to create missing parts, it puts the control back in the

customer’s hands.

This presentation will showcase the power and flexibility of HP’s UCMDB and UD developers framework,

through screen shots and brief explanations of solutions developed:

Dynamic discovery and mapping of software components without knowing anything to start (use cases

include: app-dev inclusion in ITSM disciplines, datacenter migrations, security vulnerability)

Reporting perspectives specific to data set (use cases: include disaster recovery, datacenter migrations,

data comparisons with CMS product upgrades)

Dynamic calculations for Total Cost of Ownership with applications (use cases include: charge-back,

asset management)

Chris

Satterthwaite

(Leveraged

Discovery)

October 7th

Wednesday, 8:00 -

9:00 AM PDT (Los

Angeles), 11:00 AM

-12:00 PM EDT

(New York) 17:00 -

18:00 CEST

(Frankfurt)

HP Software

IT Experts

Community

RevealIT

Solutions Software Asset Management with HP Asset Manager and HP Universal Discovery: A Primer Description:Join RevealIT Solutions as they share their deep expertise with Software Asset

Management, HP Asset Manager and HP Universal Discovery to help you get additional value out of your

HP software investment. We'll review a number of use stories around software asset management and

how the HP solution can help you know more about your software positions and make the business

decisions to get the most out of your software investment while meeting your contractual obligations with

your vendors.

Wally Waltner

(RevealIT

Solutions)

October 8th

Thursday, 8:00 -

9:00 AM PDT (Los

Angeles), 11:00 AM

-12:00 PM EDT

(New York) 17:00 -

18:00 CEST

(Frankfurt)

HP Software

IT Experts

Community

HPE Security Compliance & Automated Remediation Description: In most cases, IT security runs its own scans and maintains its own repository of assets

and their configuration status and report upon it. By leveraging technologies like uCMDB, AM, SA, NA

and OO we can provide IT security up to date and continuous visibility into IT assets and enable them to

patch and automate remediation at scale. Technologies as SA and NA report upon CVE’s and can take

automatic action. As the majority of security exploit still happen by poor patch and configuration

management we need to help to establish patch management processes and automate deployments to

minimize risk.

Boris

Schneider

(HP)

Gerben

Verstraete

(HP)

Resources

Plus – brochures, whitepapers, demo videos, case studies

• www.hp.com/go/Software

• www.hp.com/go/itsmblog

• www.twitter.comn/hpitsm

• http://discover.hp.com/Discover

HP Discover 2015 London

• December 1-3, 2015 - London

• Register Now via the unique Vivit link: http://hpsw.co/y9T3Bzj

• Check out Vivit Breakout Session!

Details to come.

Materials you can use:

Resources

• Transformation Area promotional videos are on hp.com/discover

• Internal discussion from leaders is here: http://hpnn.hp.com/Articles/2015/July/AEM/Hewlett-Packard-Enterprise-AEM-video-1-%281%29.aspx?pk_campaign=Email&pk_kwd=Newsflash

• Top 10 reasons to attend Discover:

• https://irock.jiveon.com/docs/DOC-125263?et=watches.email.document

• Article/email template to drive attendance:

• https://irock.jiveon.com/docs/DOC-125264?et=watches.email.document

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