@ Interop's Enterprise Cloud Summit: Cloud Costs and Billing Models

Paying for It: Cloud Costs and Billing Models

Moderator:
Allan Leinwand, Venture Partner, Panorama Capital

Speakers:

Thorsten von Eicken, CTO and Founder, Rightscale
Grace Kim, Sr. Manager, Marketing, WebEx (Cisco)
Jesse Robbins, Co-Founder and CEO, Opscode
Richard Dym, Chief Marketing Officer, OpSource

Allan Leinwand opens with telecommunications innovation story, how "friends and family" plan broke AT&T's monopoly and points out that "friends and family" is back now in cell phones. As such, he sub-heads the panel as "Why Pricing Matters".

What do you use as pricing model for cloud based service, has it evolved over time?

Webex has 3 pricing models: named user model, ports model, minutes model. Ports model is attractive with global companies, port use follows the sun.

Rightscale has a per hour model, but there is a floor in place, so minimum buy-in. The floor covers start-up expense.

Opscode hasn't publicly released product. Jesse is very interested in metered billing models.

OpSource hasn't released product either, cpu hours with monthly billing is probable. believe enterprises will look for annual type contracts with bulk purchase discounts.

Allan points out that base unit isn't at a level the CIO typically thinks (plans).

Richard - Amazon has done phenomenal job and has set the tone for units and billing.

Thorsten - What's important is the visibility and control, not the base unit.

Jesse - The kind of monitoring and metrics that exist in the cloud, should exist in the enterprise. This is a huge opportunity for anyone building or operating infrastructure should start thinking about this now, then you can do an apples to apples comparison of on-premise versus cloud. [Jesse used to run Amazon's operations]

Need to understand more than aggregate install, need to understand usage as percent of aggregate and remove the waste. This is an opportunity with virtualization.

Thorsten - The visibility provided by the bill often triggers application optimization efforts.

Length of contracts? What type of bill should people expect?

WebEx is typically a one-year contract. There are options to sign-up for shorter term, higher price. WebEx has free trials and pay per use models.

Rightscale started with one-year contract and monthly billing. Became administration issue. Need to align contract and billing. Rightscale does their own metering, but outsources the billing.

Jesse sees movement towards no upfront contract, ease of startup, then transition from free to pay as usage grows, at this point, the enterprise has bought into the solution, and you remove the long pre-sales contract work.

Would you ever offer flat based pricing? Allan cites recent trend in telecommunications from variable to flat.